2016 (5) TMI 737 - AT - Customs

Imposition of Redemption fine and penalty - Re-determination of assessable value - Proper classification of goods i.e. Indian Hand knotted Woollen Carpet - No intention to evade any duty or violate any license prohibitions - Held that - the issue of proper classification of goods is to be decided and it is seen that the department has done so on physical examination of the sample drawn, and on the basis of an earlier test report of similar goods. As regards valuation, it is observed that the Dept. has made market inquiries and the final value was re-determined on the basis of local prices and ECDB data. It is observed that ECDB data relied upon is not for identical goods. It is for similar goods of 50% wool, and/or 80% jute and 20% cotton. Hence, the case not found to be fit to warrant imposition of redemption fine under Section 125 or penalisation under the provisions of Section 114 of the Customs Act 1962. - Decided in favour of appellant

Issues involved:
Imposition of penalty under Section 114 of the Customs Act 1962, proper classification of goods, valuation of goods, imposition of redemption fine.

Analysis:

1. Imposition of Penalty under Section 114 of the Customs Act 1962:
The case involved the imposition of a penalty under Section 114 of the Customs Act 1962. The appellant had filed a shipping bill under the Drawback Scheme, and Customs authorities reclassified the goods based on examination and market inquiries. The Assistant Commissioner did not impose any penalty, but the Department appealed for the imposition of a redemption fine and penalty. The Commissioner (Appeals) allowed the appeal, directing the imposition of a redemption fine and penalty. However, the Tribunal found that there was no intention to evade duty or violate prohibitions, and the reclassification was a technical issue decided by Customs. The Tribunal concluded that the case did not warrant the imposition of a redemption fine or penalty under Section 114.

2. Proper Classification of Goods:
The Customs authorities reclassified the goods from "Indian Hand knotted Woollen Carpet" to "carpet made of other textile material, not of wool" based on physical examination and market inquiries. The appellant's classification under the Drawback Scheme was disputed, leading to the re-determination of the assessable value. The Tribunal noted that the proper classification of goods is a matter for Customs to decide, and in this case, the reclassification was based on examination and market data.

3. Valuation of Goods:
The valuation of the goods was re-determined based on local market prices and ECDB data. However, the Tribunal observed that the ECDB data relied upon was not for identical goods but for similar goods with different compositions. The final value was set based on local prices and market inquiries. The Tribunal found that the valuation process was done appropriately based on available data and market conditions.

4. Imposition of Redemption Fine:
The Department sought the imposition of a redemption fine on the goods, but the Tribunal found that there was no justification for such a fine. The Tribunal concluded that the case did not meet the criteria for imposing a redemption fine under Section 125 of the Customs Act 1962.

5. Conclusion:
After analyzing the facts and legal provisions, the Tribunal upheld the impugned Order in Original, which did not impose any penalty or redemption fine. The Order in Appeal by the Commissioner was set aside, and the appeal was allowed in favor of the appellant.

This detailed analysis of the judgment highlights the key issues of penalty imposition, proper classification, valuation, and redemption fine, providing a comprehensive understanding of the Tribunal's decision in the case.

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