2022 (5) TMI 1639 - AT - Customs

Misclassification of goods - Tape Ribbons Strips for labels (for industrial use) - classified under tariff item i.e. 58063190 or not - duty assessment based on revised invoice - Confiscation - redemption fine - penalties - HELD THAT - It is not the case of the revenue that appellant had intentionally misdeclared the goods. In fact he has declared the goods as per the purchase order, invoice and packing list of the supplier. This fact is also established by the fact that he had actually made the payments to the foreign supplier as per the purchase order and invoice treating the impugned goods to be made of Cotton. All these facts if taken into account would establish that appellant had not caused any fraudulent or false document to be filed before the Custom Authorities at the time of filing the Bill of Entry. It also point to the fact that there was certain errors were made by the foreign supplier by shipping the goods of polyester against the invoice declaring the same to be made of Cotton. Supplier did not deny the error made and admitted the same. The findings are contrary to the assessment finalized determining the duty payable to be less than the duty assessed on Bill of entry originally filed by the Appellant. Commissioner (Appeals) has in his order directed assessment to be made as per the revised invoice which revises the value downwards. Further when the appellant had filed the B/E as per the documents which are true as per his information and knowledge penalty imposed cannot be justified as he has not knowingly and intentionally , filed the documents which department claim to be erroneous. Hence penalty under section 114AA cannot be justified. It is agreed that certain incomplete descriptions were made in the bill of entry for which the goods became liable for confiscation under Section 111 and appellant liable for penalty under Section 112 (a) - But without much justification for such errors which have been committed by the foreign supplier the redemption fine and penalties imposed in terms of Section 125 and section 112 (a) seem to be on higher side - the ends of justice will suffice if the Redemption fine is reduced from Rs. 1,50,000/- to Rs. 50, 000/- and penalty from Rs. 60,000/- to Rs. 30,000/-. Petition allowed in part.

Summary

Issues Involved:
The issues involved in this case include misclassification of goods, duty assessment based on revised invoice, confiscation of goods, imposition of redemption fine, and penalties under various sections of the Customs Act, 1962.

Misclassification of Goods:
The appellant filed a Bill of Entry for goods declared as 'Tape Ribbons Strips for labels (for industrial use)' composed of cotton, but on examination, they were found to be of polyester. The goods were reclassified under Tariff Item 58063200 instead of the declared Tariff Item 58063190. The appellant accepted the error, and the supplier revised the invoice value accordingly.

Duty Assessment Based on Revised Invoice:
The Additional Commissioner re-assessed the duty at a higher rate based on the reclassified goods, leading to a lower duty payable by the appellant. The Commissioner (Appeals) upheld the re-assessment as per the revised invoice but reduced the redemption fine and penalties.

Confiscation of Goods and Imposition of Redemption Fine:
The Additional Commissioner ordered the confiscation of the goods under Section 111(m) of the Customs Act, 1962, due to misdeclaration. The appellant was given the option to release the goods on payment of a redemption fine, which was later reduced by the Commissioner (Appeals) from Rs. 3,00,000 to Rs. 1,50,000.

Penalties Imposed:
Penalties were imposed on the importer under Section 112(a) and Section 114AA of the Customs Act, 1962, for misdeclaration and false documentation. The Commissioner (Appeals) upheld the penalties, but the final judgment partly allowed the appeal by setting aside the penalty under Section 114AA and reducing the redemption fine and penalty under Section 112(a).

Conclusion:
The judgment addressed the misclassification of goods, duty assessment based on the revised invoice, confiscation of goods, imposition of redemption fine, and penalties under the Customs Act, 1962. The final decision partly allowed the appeal by modifying the penalties imposed and reducing the redemption fine, considering the circumstances of the case.