2013 (9) TMI 584 - AT - Customs

Misdeclaration of goods - SEZ unit - importing seconds and defective metal sheets and clearing them to domestic tariff area Held that - It was strange that after opening the container for one month the assesse did not chose to intimate either SEZ or customs port about the goods found which were not according to declaration one of the customers to whom the goods were sold had clearly admitted that he was aware that goods had to be classified under Chapter 80 and stated that he did not know why the supplier did not do so - This was a strange situation - The buyer who was receiving goods knows what are the goods and their classification but the seller/importer/manufacturer does not know. Jurisdiction - Whether Commissioner had the power to confiscate or initiate proceedings against the appellant had to be considered Held that - The matter was remanded back to the original adjudicating authority with a direction that all the issues are kept open and he should decide the issue afresh - The observations regarding bills of entry assessment and mis-declaration had come out of the consideration of legal provisions and the regulations while considering the issue - the assesse did not had the opportunity to consider the aspect and make submissions and it would be a totally new legal observation which would be unjustified to rely upon to come to a conclusion order set aside decided in favor of assesse.

Issues:
1. Mis-declaration of imported goods by the appellant.
2. Confiscation of goods and imposition of penalties.
3. Applicability of import restrictions to units in Special Economic Zones (SEZs).
4. Jurisdiction of the Commissioner to confiscate goods and impose penalties.
5. Compliance with regulations for importation of goods into SEZs.

Issue 1: Mis-declaration of imported goods by the appellant:
The case involved M/s. Palmon Exports (PAL) importing metal sheets and mis-declaring them as tin plate sheets instead of steel plates with tin. The mis-declaration led to the classification of goods under the wrong category, resulting in the confiscation of the consignment and penalties imposed on PAL. The appellant argued that they had not mis-declared the goods intentionally, as they relied on documents provided by the original exporter, V-3 Exim. However, the Revenue contended that the mis-declaration was deliberate to avoid import restrictions and prohibitions applicable to the correct classification of goods.

Issue 2: Confiscation of goods and imposition of penalties:
The Tribunal noted that the goods were confiscated and penalties imposed based on the mis-declaration of goods by PAL. The appellant challenged the confiscation and penalties, arguing that they were not at fault as they followed the documents provided by the original exporter. The Revenue, on the other hand, maintained that the mis-declaration was intentional to circumvent import restrictions and prohibitions, allowing the goods to be diverted to the domestic tariff area.

Issue 3: Applicability of import restrictions to units in Special Economic Zones (SEZs):
The appellant contended that being located in a Special Economic Zone, they were not subject to the same import restrictions as units outside the SEZ. The Tribunal examined Regulation 4 of the Special Economic Zone (Customs Procedures Regulation, 2003), which allows SEZ units to import goods not prohibited for their operations. The original adjudicating authority did not consider this aspect, leading to the need for further examination regarding the applicability of import restrictions to SEZ units.

Issue 4: Jurisdiction of the Commissioner to confiscate goods and impose penalties:
The Tribunal raised concerns about the jurisdiction of the Commissioner to confiscate goods and impose penalties on PAL without considering the specific regulations governing imports into SEZs. The Commissioner's reliance on a letter from the DGFT regarding port restrictions was deemed inconclusive for applying restrictions to SEZ units. The Tribunal highlighted the need for a proper assessment of jurisdiction and compliance with regulations before confiscation and penalties could be justified.

Issue 5: Compliance with regulations for importation of goods into SEZs:
The Tribunal emphasized the importance of compliance with regulations for importing goods into SEZs. Regulation 4 outlines the procedures for importing goods into SEZs, including filing a bill of entry and obtaining permission for clearance without examination based on trust in SEZ units. The Tribunal noted discrepancies in the appellant's actions, such as not notifying authorities about discrepancies in imported goods and the seizure of goods from another entity, raising questions about compliance with import procedures.

In conclusion, the Tribunal set aside the impugned order and remanded the matter to the original adjudicating authority for a fresh adjudication. The Tribunal directed a reevaluation of all issues, including the applicability of import restrictions to SEZ units, the mis-declaration of goods, and the jurisdiction of the Commissioner. The Tribunal stressed the need for a comprehensive review of the case to ensure proper consideration of legal provisions and regulations before making a final decision on confiscation and penalties.

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