2014 (1) TMI 1017 - AT - Customs

Classification of goods - Clearance of Non Alloy Steel Round Bars of various grades & sizes - Confiscation of goods - Held that - Bill of Entry has been filed as per the packing list and the goods on examination have been found to be prime quality except 10% of the goods - Appellants have declared the goods as per the packing list and the confiscation of the goods is not sustainable in law. Accordingly, the confiscation of the goods is set aside. So far as the enhancement of value of the goods is concerned, we find the same is without any basis. Further the department s case is that the goods are not prime quality but defective/secondary. The value of defective/secondary cannot be more than the value of prime quality. Hence the enhancement of value is not justified. We also find that it is not in dispute that 10% of the goods in the consignment were not prime quality, and will not be eligible for the benefit of Notification 21/2002 (Sl. No. 190C), therefore duty is required to be determined - case remanded back to the lower adjudicating authority for limited purpose of determining the duty in respect of 10% of the goods in the consignment after granting the appellants a reasonable opportunity of hearing - Decided in favour of assessee.

Summary

Issues:
- Appeal against the order upholding confiscation and penalty
- Misdeclaration of goods
- Examination by Chartered Engineer
- Enhancement of value without basis
- Duty determination for defective goods

Analysis:
The appellants filed an appeal against the order upholding the confiscation of goods and imposition of a penalty. They declared 'Non Alloy Steel Round Bars' in the Bill of Entry, but upon examination, 10% of the goods were found to be secondary/defective. The Chartered Engineer confirmed this without challenge from either side. The adjudicating authority then increased the assessable value, ordered confiscation, and imposed fines. The appellants argued that since they declared the goods as per the packing list and only 10% were defective, misdeclaration charges were unfounded. They also disputed the enhancement of value. The department contended that misdeclaration justified confiscation.

Upon review, the Tribunal found that the goods were declared as per the packing list, with only 10% being defective. The appellants' description aligned with the stock lot criteria. Consequently, the confiscation was deemed unsustainable. The Tribunal also noted the absence of justification for the value enhancement, especially since the defective goods' value should not exceed that of prime quality. As 10% of the goods were not prime quality, they were ineligible for certain benefits, necessitating duty determination. Therefore, the Order-in-Appeal was set aside, and the case remanded to determine the duty for the defective goods after granting the appellants a fair hearing opportunity.

In conclusion, the appeal was disposed of by setting aside the confiscation order, remanding the case for duty determination regarding the defective goods, and rejecting the basis-less value enhancement.