2015 (4) TMI 68 - AT - Customs

Denial of drawback claim - Confiscation of goods - Imposition of redemption fine and penalty - Held that - It is an admitted position that the brass electrical wiring accessories sought to be exported by the appellant predominantly consists of brass. It also contained certain metal screws which were made of materials other than brass. In order to fall under Entry No. 853802 of the drawback schedule, the item should be made wholly of brass. In other words, it should be of 100% brass and nothing else. Therefore, in the present case, the appropriate classification is Entry No. 853899 which provides for a drawback of 1% of the FOB value of the goods exported. Therefore, the finding of the lower authorities to that extent cannot be faulted - it is not warranted since the goods were made of 90% brass the appellant entertained a bona fide belief that the same merited classification under Entry No. 853802 and accordingly, claimed the drawback benefit. That by itself does not constitute a mis-declaration. The decision of the hon ble apex Court in the case of Northern Plastic Ltd. vs. Collector of Customs & Central Excise 1998 (7) TMI 91 - SUPREME COURT OF INDIA case refers. Therefore, confiscation of the goods with an option for redemption and imposition of penalty is clearly unwarranted considering the fact that the appellant is a small-scale manufacturer-exporter of brass items. Accordingly, I set aside the fine and penalty imposed on the appellant. - Decided partly in favour of assessee.

Summary

Issues:
Classification of goods for drawback claim under Entry No. 853802, mis-declaration allegations, confiscation of goods, imposition of penalty.

Classification of Goods for Drawback Claim under Entry No. 853802:
The appeal challenged the rejection of the drawback claim by the appellant-exporter, contending that the goods exported were not wholly made of brass, leading to a classification issue. The lower appellate authority determined that since the goods contained materials other than brass, they should be classified under Entry No. 853899, allowing a drawback of 1% of the FOB value. The Tribunal acknowledged that the exported goods predominantly consisted of brass but also contained non-brass components, thus not meeting the criteria of being 'wholly' made of brass as required under Entry No. 853802. Consequently, the classification under Entry No. 853899 for a 1% drawback was deemed appropriate, upholding the lower authority's decision in this regard.

Mis-declaration Allegations, Confiscation of Goods, Imposition of Penalty:
The appellant argued that there was no deliberate intention to mis-declare the goods, as they believed that since 90% of the item was brass, it would qualify under Entry No. 853802. The Revenue, represented by the Assistant Commissioner, contended that the appellant had a history of mis-declaration in previous exports, justifying the confiscation of goods, imposition of a redemption fine, and a penalty. The Tribunal noted that the appellant's belief that the goods qualified under Entry No. 853802 due to the significant brass content did not amount to mis-declaration. Citing a relevant Supreme Court case, the Tribunal found the confiscation and penalty unwarranted, especially considering the appellant's status as a small-scale manufacturer-exporter of brass items. Consequently, the Tribunal set aside the fine and penalty imposed, upholding the confiscation of goods under Entry No. 853899 for a 1% drawback. The appellant was directed to be refunded the fine and penalty amount paid, as unjust enrichment provisions did not apply to these.

Conclusion:
The Tribunal partially allowed the appeal, modifying the decision by upholding the classification under Entry No. 853899 for a 1% drawback, setting aside the fine and penalty, and ordering the refund of the amounts paid by the appellant. The judgment emphasized the importance of accurate classification for drawback claims and considered the appellant's belief in good faith while addressing the mis-declaration allegations and penalties imposed by the Revenue.