2013 (8) TMI 210 - AT - Customs

Mis declaration of goods assessee was claiming the benefit of Notification No.21/2002 on their import of steel coils - difference of opinion - matter referred to larger bench on the following issues 1. Whether to qualify as other alloy steel minimum one element in the proportion prescribed in Chapter Note 1(f) of Chapter 72, ( in addition to steel), is essential as held by Member (Technical) in para 5.1.2 of the order, or 2. Whether to qualify as other alloy steel not only one element is essential in proportion prescribed but if there are more than one element (in addition to steel) all should be in proportion prescribed in Chapter 1(f) of Chapter 72, are essential, as held by the Member (Judicial.)

Issues Involved:
1. Classification of imported steel coils as alloy or non-alloy steel.
2. Eligibility for the benefit of Notification No. 21/2002 Sr. No. 190C.
3. Allegations of mis-declaration and suppression of facts.
4. Liability for differential duty and penalties.
5. Confiscation and redemption fine.
6. Penalty on Customs House Agent (CHA).

Detailed Analysis:

1. Classification of Imported Steel Coils:
The primary issue was whether the imported CR/HR steel coils should be classified as "other alloy steel" as per Chapter Note 1(f) of Chapter 72. The appellants argued that for steel to be classified as alloy steel, all elements listed in Note 1(f) present in the steel must meet the specified proportions. However, the Tribunal held that the presence of any one element in the specified proportion is sufficient for the steel to be classified as alloy steel. The Tribunal found that the imported coils contained manganese and titanium in proportions exceeding the specified limits, thus classifying them as alloy steel.

2. Eligibility for the Benefit of Notification No. 21/2002 Sr. No. 190C:
The appellants claimed the benefit of Notification No. 21/2002 Sr. No. 190C, which provided a 0% Basic Customs Duty for non-alloy steel. However, since the imported coils were classified as alloy steel, they were not eligible for this benefit. The Tribunal upheld the denial of the benefit under the notification.

3. Allegations of Mis-declaration and Suppression of Facts:
The appellants were accused of mis-declaring the imported steel coils as non-alloy steel to evade customs duty. Statements from senior managers of the appellants confirmed that they were aware of the higher percentages of alloying elements and that the goods should have been classified as alloy steel. The Tribunal found that the appellants failed to declare the correct description of the goods, constituting mis-declaration and suppression of facts.

4. Liability for Differential Duty and Penalties:
The Tribunal confirmed the demand for differential duty of Rs. 3,82,16,162/- along with applicable interest under Section 28AB of the Customs Act, 1962. A penalty of the same amount was imposed under Section 114A of the Customs Act, with a provision for a reduced penalty if the duty and interest were paid within 30 days.

5. Confiscation and Redemption Fine:
The goods imported under 11 Bills of Entry were provisionally released, and the Tribunal upheld their confiscation under Sections 111(o) and 111(m) of the Customs Act, 1962. A redemption fine of Rs. 65,00,000/- was imposed. However, for goods valued at Rs. 49,25,29,561/- covered under 41 Bills of Entry, which were not physically available, the Tribunal set aside the redemption fine of Rs. 2,46,00,000/-.

6. Penalty on Customs House Agent (CHA):
The CHA was penalized Rs. 5,00,000/- under Section 112(a) of the Customs Act. However, the Tribunal found that the CHA acted on the instructions of the importer and had no knowledge of the mis-declaration. Citing precedents, the Tribunal set aside the penalty on the CHA.

Conclusion:
The Tribunal's judgment confirmed the classification of the imported steel coils as alloy steel, denied the benefit of the notification, upheld the differential duty and penalties, and set aside the redemption fine and penalty on the CHA. The appeals were disposed of accordingly.

← Previous Next →