2016 (11) TMI 395 - AT - Customs

Re-assessment - Notification no. 53/97-Cus dated 3rd June 1997 - Confiscation - Penalty - Misdeclaration - 100% Export Oriented Unit - Held that - he addition of cost element to the declared value would have rendered the value of the imports to be in excess of the value of capital goods permitted for import as it was at the time of import but not in excess of the limit as enhanced subsequently. No evidence of deliberate suppression of this with intent to evade duty is on record - It is only on the expiry of the term of the Letter of Permission that liability to duty may arise if warranted and, that too, on the depreciated value. There is no liability to customs duty at the time of import and section 14 of Customs Act, 1962, along with its attendant Rules, can be invoked only in relation to payment of duty. We agree with that contention and, considering their eligibility for duty-free import as well as the deferment of any duty liability on warehoused goods, we hold that the goods are not liable for confiscation. The recourse to penal provisions under section 112 in the impugned order without a finding that the goods are liable to confiscation under section 111 is also improper - Decided in favor of the assessee.

Summary

Issues:
1. Re-assessment of warehousing bills of entry for import of a used plant for manufacturing lenses by a 100% Export Oriented Unit.
2. Misdeclaration of expenditure by the importer and penalties imposed under sections 112 and 114A of the Customs Act, 1962.
3. Contention by Revenue regarding confiscation of goods, imposition of penalty, and failure to charge interest under relevant provisions.
4. Allegations of contravention of exemption conditions and import restrictions by the importer.
5. Premature reassessment of duty liability on warehoused goods and procedural irregularities in the impugned order.

Analysis:
1. The Commissioner ordered re-assessment of warehousing bills of entry filed by the importer for the import of a used plant for manufacturing lenses. The importer claimed exemption from customs duties under a specific notification for 100% Export Oriented Units.

2. The adjudicating authority found misdeclaration of expenditure by the importer but deferred recovery to allow for enhancement of value. Penalties were imposed under sections 112 and 114A of the Customs Act, 1962.

3. Revenue contended that the goods should have been subject to confiscation and challenged the penalties imposed. They raised concerns about the legality of the impugned order, including the failure to charge interest and impose mandatory penalties.

4. The importer argued that there was no deliberate attempt to suppress import values and highlighted the permission granted by the Development Commissioner for enhancing the import limit of capital goods.

5. The Tribunal concluded that the importer, being a 100% Export Oriented Unit, was entitled to duty exemption. They emphasized that the importer followed the prescribed procedures for warehousing goods and that reassessment was premature. The Tribunal dismissed Revenue's appeal and set aside the penalties imposed.

This detailed analysis covers the issues and key points addressed in the judgment, providing a comprehensive understanding of the legal aspects involved in the case.