2016 (3) TMI 840 - AT - Customs

Demand of Safeguard duty - In terms of notification no.71/2009-Cus dated 10,06.2009 - Whether thickness of Aluminium foils imported is 7 micron or above or not - Assessee asked department to conduct test 3 times as he is not satisfied - Held that - the argument of the assessee is not fully convincing regarding variation in different reports and it is not so easy to correctly determine the exact thickness of Aluminium Foil. While the thickness in microns is to be ascertained by the accurate scientific methods, it is not contested that the competent labs including a private independent competent lab is not having facility or expertise to conduct such tests. None of the reports indicated any figures nearer to 6 Micron as declared by the assessee while importing the impugned goods. Also the assessee placed a reliance of 8% tolerance limit prescribed by the Bureau of Indian Standards of Aluminium Foil but the standards prescribed there are for the quality purpose and have no relevance to determine the correct thickness and thereupon tax liability based on such thickness. It is to be noted that the samples were re-tested twice with a request and concurrence of the assessee in approved laboratories. Therefore, the assessee is liable to pay safeguard duty. Imposition of penalty - Section 114A of the Customs Act, 1962 - Held that - penalty against the managing director of the assessee is not reduced. But the penalty imposed on Authorised Signatory is not justifiable being a salaried employee of the assessee and has been discharging assigned duties as per the direction of the Managing Director, There has been no allegation of personal gain to him in this transaction. He acted as an employee of the assessee company and it is not established that he abetted any offence of the assessee. Therefore, the penalty imposed on him is not sustainable. - Decided against the assessee

Summary

Issues: Determination of thickness of imported Aluminium Foils for safeguard duty; imposition of penalties on appellants.

Analysis:
1. Thickness of Imported Aluminium Foils: The case revolves around the determination of the thickness of the imported Aluminium Foils to ascertain the applicability of safeguard duty. The Central Revenue Control Laboratory (CRCL) reported the thickness as 14.4 and 7.4 Micron, triggering a demand for safeguard duty. The appellant contested these findings, arguing that the test reports were unreliable due to variations and presented an independent report showing a thickness of 6.7 Micron. However, multiple tests conducted by different laboratories consistently indicated a thickness of 7 Micron or above. The tribunal noted that the appellant's argument lacked merit as no report aligned with the declared thickness of 6 Micron, emphasizing the accuracy of the testing methods employed.

2. Compliance with Standards and Procedures: The appellant raised the issue of tolerance levels prescribed by the Bureau of Indian Standards for Aluminium Foils, advocating for an 8% margin of error. However, the tribunal clarified that these standards are for quality control purposes and do not impact tax liability based on thickness. Additionally, the appellant questioned the lack of opportunity for cross-examination of the individuals conducting the tests. The tribunal observed that such a plea was raised at the appellate stage and found no record of a formal request for cross-examination before the Original Authority. The tribunal concluded that the testing procedures followed were appropriate and upheld the findings based on the test results.

3. Penalties Imposed: The tribunal deliberated on the imposition of penalties on the appellants. While affirming the penalties on the appellant company and its Managing Director, it found the penalty on the Authorised Signatory unjustifiable. Noting that the Authorised Signatory was a salaried employee following directives and not personally benefiting from the transaction, the tribunal deemed the penalty on him unsustainable. Consequently, the tribunal dismissed the appeals of the company and the Managing Director but allowed the appeal of the Authorised Signatory, setting aside the penalty imposed on him.

In conclusion, the tribunal upheld the findings regarding the duty liability and penalties on the appellant company and its Managing Director but overturned the penalty on the Authorised Signatory, emphasizing the lack of personal gain and the employee's role in the transaction.