2017 (1) TMI 205 - AT - Customs

Valuation - Crude naphthalene or Refined naphthalene - the appellant claims that goods are reject of refined naphthalene which is in common parlance treated are crude naphthalene - whether the goods are crude naphthalene or refined naphthalene and is the value as enhanced by lower authority is correct? - Held that - It is admitted by the appellant itself that the goods is reject of refined naphthalene, therefore even though it is reject but it is of refined naphthalene therefore the nature of the goods will not get altered due to the rejection, therefore it cannot be treated as crude naphthalene. The analysis report made it very clear that it is 97.35 % purity therefore it cannot be said that it is crude naphthalene. In this facts, it is very clear that appellant has mis-declared the goods as crude naphthalene whereas the goods is refined naphthalene. Obviously the value of refined naphthalene is higher than the crude naphthalene, therefore the enhancement of the value was correctly done by the lower authority - appellant has not only mis-declared the description but also the value - appeal dismissed - decided against appellant.

Summary

Issues: Mis-declaration of goods as "crude naphthalene," enhancement of value by customs authorities, classification of goods under refined naphthalene, confiscation of goods under Customs Act, imposition of penalty.

Analysis:
1. The appellant filed a Bill of Entry for clearance of "Crude naphthalene" at a declared price of US$ 550/ PMT(CIF). The customs authorities found that the goods were actually refined naphthalene, valued at $100 to $125 more than crude naphthalene. The price was enhanced to $725 PMT, leading to confiscation of goods under Section 111 (m) of the Customs Act, 1962, with a fine and penalty imposed under Section 112(a). The goods were classified under the heading meant for refined naphthalene for assessment, which the appellant contested through appeals.

2. The appellant argued that the goods were reject material of refined naphthalene commonly treated as crude naphthalene, justifying the declared price of $550. The appellant cited various judgments to support their position. However, the Revenue authorities reiterated their findings that the goods were indeed refined naphthalene and not crude naphthalene, as mis-declared by the appellant.

3. The Tribunal considered the submissions of both parties and noted that the appellant had admitted the goods were reject material of refined naphthalene, with an analysis report showing 97.35% purity. The Tribunal concluded that the goods could not be considered as crude naphthalene due to their nature and purity level, upholding the customs authorities' decision to enhance the value based on the actual classification of the goods as refined naphthalene.

4. The Tribunal held that the appellant had mis-declared both the description and value of the goods, leading to the dismissal of the appeal and upholding of the impugned order. The judgment emphasized that the value of refined naphthalene is higher than crude naphthalene, justifying the enhancement made by the customs authorities.