2014 (5) TMI 244 - AT - Customs

Rate of Duty - Classification of Imported goods Split betel nuts - CTH 0802 8020 or CTHCTH 0812 9090 of the Customs Tariff Violation of DGFT Notification Mis-declaration - Liability for Confiscation of imported goods - Reduction of Redemption fine Suitability for immediate consumption - Whether redemption fine should not exceed the market price of the goods confiscated less in the case of imported goods less the duty chargeable thereon Imposition of Penalty Held that - Merely sulfuring heat treatment etc. for additional preservation will not alter their classification - Various test reports viz. Plant Quarantine Laboratory in its report dated 03.12.2012 and 27.11.2012 reported that recommended for release (for consumption purpose only) and Central Food Laboratory in its report dated 10.12.2012 mentioned that SO2 present within limit approved for nuts and opined the sample is found not adulterated in respect of tests mentioned above - CFL in its report dated 27.01.2014 clarified that conclusively the product was declared safe food on the basis of food safety parameters under its rules and regulations 2011 - The product could only be certified as safe food as u/s 3(q) of the F.S.S. Act 2006 in which Safe food means assurance that food is acceptable for human consumption according to its intended use - These reports have not been challenged by Ld. Advocate. It is found that the sample of the imported goods are not unsuitable for immediate consumption and therefore they would merit classification under CTH 080280 and not under CTH 0812 and chargeable to duty @ 100% BCD and 4% Additional duty - Since the declared CIF value is less than Rs.75/- their import is not free in view of the DGFT Notification - Accordingly the imported goods are liable for confiscation u/s 111(d) as they are imported in violation of the provisions of D.G.F.T. regulation - They are also liable for confiscation u/s 111(m) as they were mis-classified by assessee along with the mis-declaration regarding their suitability for immediate consumption in the state in which they were imported. The goods were sold @ Rs.70/- to 84/- per kg. and therefore considering the above facts the market price of imported goods works out to Rs.3.00 Crores(approx.) as against the declared CIF value of Rs.2, 00, 00, 524/- declared in the Bills of Entry - The duty involved in the present case has been worked out to be Rs.2, 16, 00, 566/- - Therefore the order of the adjudicating Commissioner is modified to the extent of reduction in the amount of redemption fine from Rs.1.25 Crore to Rs.1.00 Crore only - As regards the confirmation of the duty and imposition of penalty order of the adjudicating Commissioner is uphold i.e. differential duty of Rs.1, 42, 09, 369/- and penalty of Rs.50.00 Lakhs Decided partly in favour of assesse.

Summary

Issues Involved:
1. Classification of imported goods.
2. Applicability of DGFT Notification.
3. Confiscation of goods.
4. Quantum of redemption fine.
5. Imposition of penalty.

Issue-wise Detailed Analysis:

1. Classification of Imported Goods:
The primary issue was whether the imported goods, split betel nuts preserved with SO2, should be classified under CTH 0802 8020 or CTH 0812 9090. The Appellant argued that due to the presence of SO2, the goods should be classified under CTH 0812, which covers "fruit and nuts provisionally preserved" and unsuitable for immediate consumption. They cited various judgments and clarifications to support their claim. However, the department contended that the goods were suitable for immediate consumption and should be classified under CTH 0802 8020, which has a higher duty rate. Test reports from the Plant Quarantine Authority and Central Food Laboratory indicated that the goods were safe for consumption and not adulterated. The Tribunal concluded that the goods were not unsuitable for immediate consumption and thus classified them under CTH 0802 8020.

2. Applicability of DGFT Notification:
The DGFT Notification No.10(RE-2012)/2009-14 dated 14.08.2012 allows the import of split betel nuts only if the CIF value is Rs.75/- per Kg. or above. The imported goods had a CIF value of Rs.51/- per Kg., making them restricted. Since the Appellant did not produce the required license, the import was deemed in violation of the Foreign Trade Policy and liable for confiscation under Section 111(d) of the Customs Act, 1962.

3. Confiscation of Goods:
The Tribunal upheld the confiscation of the goods under Section 111(d) and 111(m) of the Customs Act, 1962. The mis-declaration of the classification and the suitability for immediate consumption led to the confiscation. The Tribunal noted that under the self-assessment system, it was the importer's responsibility to declare the correct classification. The mis-declaration was evident from the test reports, justifying the confiscation.

4. Quantum of Redemption Fine:
The Appellant argued that no market enquiry was conducted before fixing the redemption fine, citing the Apex Court judgment in the case of Mansi Impex. The Tribunal considered the market price of the goods, which ranged from Rs.70/- to Rs.84/- per Kg., and the declared CIF value. The Tribunal reduced the redemption fine from Rs.1.25 Crore to Rs.1.00 Crore, considering the market price and the duty involved.

5. Imposition of Penalty:
The Tribunal upheld the penalty of Rs.50.00 Lakhs imposed on the Appellant. The penalty was approximately 35% of the duty amount sought to be evaded. The Tribunal found the penalty justified considering the gravity of the mis-declaration and its potential revenue implications.

Conclusion:
The Tribunal modified the order of the adjudicating Commissioner by reducing the redemption fine from Rs.1.25 Crore to Rs.1.00 Crore. The confirmation of the duty and the imposition of the penalty were upheld. The appeal was disposed of accordingly.