2008 (11) TMI 113 - AT - Customs

Import of duty free raw material (SS Coils) under DEEC Scheme - exported stainless steel utensils during visit of officers, stock about 34 MT of SS utensils were found test result indicated that some of SS utensils were not of same category as SS Coils imported revenue has not shown that any samples were drawn from this stock of utensils to show that they were mfd. from other than 304 category - demand on the entire quantity of SS coils holding that they were diverted, is not justified

Summary

Issues:
1. Confiscation of imported goods under EXIM Policy 1997-2002.
2. Detention and examination of exported consignment.
3. Findings of the Commissioner regarding diversion of imported raw materials.
4. Discrepancies in the classification of stainless steel materials.
5. Adverse findings and penalties imposed by the Commissioner.
6. Appeal against the Commissioner's order.

Analysis:
1. The case involved the confiscation of imported stainless steel (SS) coils under the EXIM Policy 1997-2002. The appellant had obtained an annual advance license and imported 13 consignments of SS sheets while exporting stainless steel utensils. One consignment was detained at Nhava Sheva port for examination, leading to the discovery of discrepancies in the material classification.

2. The detained consignment had samples that did not conform to the required 304 category. The Commissioner ordered confiscation of the entire 308.658 MT of SS coils, valued at approximately Rs. 2 crores. Additionally, a penalty of Rs. 15 lakhs was imposed, along with the demand for duty and interest at 24%.

3. The Commissioner's findings regarding the diversion of imported raw materials were challenged by the appellant. They argued that the seized materials were used in manufacturing and exporting final products that met the required standards. The Tribunal noted discrepancies in the Commissioner's conclusions and found the confiscation order unsustainable.

4. The appellant contended that the discrepancies in the classification of stainless steel materials were due to the presence of magnetic grade (430 grade) in one consignment. They argued that the exported consignment detained at Nhava Sheva port contained utensils of 403 grade, which explained the non-conformity to the 304 category.

5. The Commissioner's adverse findings and penalties were based on the test results of samples and the admission of the company director to pay the duty. However, the Tribunal found the Commissioner's conclusions erroneous and lacking substantial evidence to support the confiscation and penalties imposed.

6. The Tribunal carefully considered submissions from both sides and concluded that the Commissioner's findings were flawed. They highlighted discrepancies in the examination, classification, and confiscation processes, ultimately setting aside the Commissioner's order and allowing the appeal with consequential relief.