2018 (1) TMI 1460 - Commission - Customs

Benefit of Sl. No. 106 of N/N. 12/2012-Cus., dated 17-3-2012 - Mis-declaration and mis-classification of imported goods - import of Protein Meal Animal Feed Supplement in the guise of Organic Manure Composite Fertilizer - evasion of customs duty - allegation based on evidences and statement recorded from various entities involved - the applicant and the co-applicant have paid the entire differential customs duty demanded during the course of investigation, even before the issue of SCN; however, they are before the Bench with a prayer to extent the benefit of Customs Exemption Notification No. 12/2012-Customs, dated 17-3-2012 (Sl. No. 106) which is applicable to Feed additives or premixes falling under CTH 2309 90 10 attracting basic Customs duty of 20%. Held that - The evidence gathered during the course of investigation have clearly proved that the invoice, packing list etc., have been fabricated with false description of the goods and the goods imported have been sold to poultry agencies directly as animal feed. The poultry agencies have not carried out any further manufacturing activity with the goods purchased and sold them directly in the market as a animal feed supplement . Further, when the goods imported vide B/E No. 5420683, dated 27-5-2016 and B/E No. 5490477, dated 2-6-2016 were referred to Animal Quarantine and Certification Service, Govt, of India, reported that the goods referred to them contained Meat and Bone meal which comes under the category of Livestock products and is categorized as high risk commodity. As per N/N. 2666(E), dated 16-10-2014, the import of the said product can be done only after obtaining Sanitary Import Permit (SIP) in advance from the Ministry of Agriculture & Farmers Welfare, New Delhi. Secondly Tuticorin port is not authorized for import of livestock products. It clearly proves that the goods imported cannot be termed as Feed additives or premixes and in fact is animal feed and therefore, the Bench is of the considered view that the benefit of the exemption notification cannot be extended to the goods in question and accordingly, rejects the claim of the applicant for extending the benefit. Finalization of provisional assessments - Held that - The Bench orders finalization of all the 4 Bills of Entry treating the goods as Protein Meal animal Feed Supplement and not Organic Manure-Composite Fertilizer , as claimed by the applicant and hold that the goods are classifiable under CTH 2309 90 10 which the applicant admitted while filing this application. Penalty - Held that - The act of the main-applicants and co-applicants attract penalty under the provisions invoked in the SCN. However keeping in view the full and true disclosure of additional duty liability, co-operation extended during the investigation and the proceedings before the Settlement Commission, the Bench considers this as a fit case for extending partial immunity from penalty to the main-applicants and co-applicants. Prosecution - Held that - The Bench is inclined to consider grant of immunity from prosecution to the main-applicants and co-applicants.

Summary

Issues Involved:
1. Misdeclaration of imported goods to evade customs duty.
2. Classification and applicability of customs duty exemption.
3. Confiscation and re-exportation/destruction of seized goods.
4. Penalty and prosecution of main applicants and co-applicants.

Detailed Analysis:

1. Misdeclaration of Imported Goods to Evade Customs Duty:
The applicants, M/s. Shiva Biochem and M/s. P.N. Enterprises, were found to have misdeclared "Protein Meal Animal Feed Supplement" as "Organic Manure Composite Fertilizer" to evade higher customs duty. The investigation revealed a scheme orchestrated by Shri Hiren Bhavanji Kalariya, involving multiple companies and fabricated documents to misdeclare the goods and evade customs duties. The differential duty demanded was ?1,58,67,518/- for M/s. Shiva Biochem and ?16,29,100/- for M/s. P.N. Enterprises, which was paid during the investigation.

2. Classification and Applicability of Customs Duty Exemption:
The applicants sought the benefit of Customs Exemption Notification No. 12/2012-Customs, claiming the goods were eligible for a reduced duty rate of 20%. However, the investigation and evidence indicated that the goods were "animal feed supplement" and not "feed additives or premixes," which are eligible for the exemption. Consequently, the benefit of the exemption notification was denied, and the goods were classified under CTH 2309 90 10, attracting a duty rate of 30.9%.

3. Confiscation and Re-exportation/Destruction of Seized Goods:
The goods imported under two live Bills of Entry were seized due to the absence of a valid Sanitary Import Permit and the fact that Tuticorin port was not authorized for such imports. The jurisdictional Commissioner proposed re-exportation of the seized goods on payment of redemption fine, which the Bench agreed to. The goods were ordered to be re-exported, and the demand for differential duty on these consignments was dropped.

4. Penalty and Prosecution of Main Applicants and Co-applicants:
Penalties were imposed on the main applicants and co-applicants for their roles in the misdeclaration and evasion of customs duty. M/s. Shiva Biochem was fined ?12,00,000/-, and M/s. P.N. Enterprises was fined ?80,000/-. Co-applicants, including Shri Hiren Bhavanji Kalariya, Shri Vipul Laljibhai Bavarva, and Shri Ameet K. Dedhia, were also penalized. Immunity from prosecution was granted to the main applicants and co-applicants upon payment of the penalties.

Conclusion:
The Bench settled the case by confirming the differential duty and interest liabilities, ordering the re-export of seized goods, and imposing penalties on the applicants and co-applicants. The exemption benefit was denied, and the goods were classified under the appropriate tariff heading. Immunity from prosecution was granted subject to the payment of penalties.