2017 (3) TMI 1344 - AT - Customs

Classification of imported goods - goods declared as Nylon knitted fabric and classified under CTH 60063100 - Revenue claims that the goods were not in the nature of knitted fabrics but were actually Net fabrics made out of Nylon (Polyamide) and was classified under CTH 58041090 - confiscation - penalty - Held that - the re-classification of the goods was done on the basis of test report of the specific samples drawn for the consignment, the same is required to be upheld. The Original classification of the goods stands over ruled because the goods have been found to be not Knitted fabric but is Net fabric . The confiscation of the goods is sustainable only in respect of the goods covered under the Bill of Entry No. 5301915, dated 26.11.2011. The goods covered under this Bill of Entry were seized and provisionally released pending adjudication of the case. The imposition of redemption fine amounting to ₹ 12,50,000/- for this consignment u/s 125 of the CA, 1962 is upheld. It cannot be said that the mis-declaration was willful with intention to evade customs duty. Consequently, in the facts and circumstances of the case, the penalty imposed on the appellant is also reduced from ₹ 10 lakhs to ₹ 5 lakhs u/s 112 A read with Section 114 AA of the CA. Appeal allowed - decided partly in favor of appellant.

Summary

Issues:
Classification of imported goods under the Customs Tariff Heading (CTH) 60063100 versus CTH 58041090; Confiscation of goods under Section 111(m) of the Customs Act; Penalty imposition under Section 112(a) read with Section 114 AA of the Customs Act.

Classification Dispute Analysis:
The appellant declared the imported goods as "Nylon Knitted fabrics" under CTH 60063100, but the test report from CRCL identified the goods as "White Net Fabric" composed of Nylon, leading to reclassification under CTH 58041090. The tribunal upheld the reclassification based on the test report, determining the goods to be "Net fabric" instead of "Knitted fabric." The classification was supported by the reclassification of identical goods from an earlier consignment and the specific sample test results.

Confiscation of Goods Analysis:
The tribunal found the confiscation of goods sustainable only for the consignment covered under a specific Bill of Entry, where intentional mis-declaration was evident to avail lower duty rates. The imposition of redemption fine for this consignment was upheld. However, for an earlier consignment where goods were already cleared and unavailable for confiscation, the tribunal set aside the redemption fine due to the absence of goods.

Penalty Imposition Analysis:
Considering the classification dispute resolved based on the test report, the tribunal reduced the penalty imposed on the appellant from ?10 lakhs to ?5 lakhs under Section 112 A read with Section 114 AA of the Customs Act. The mis-declaration was deemed non-willful, as the correct classification was dependent on the test report, indicating no intention to evade customs duty.

In conclusion, the tribunal disposed of the appeal by upholding the reclassification of goods, sustaining the confiscation for specific consignments, and reducing the penalty imposed on the appellant. The judgment emphasized the significance of test reports in resolving classification disputes and differentiated between intentional mis-declaration and non-willful errors in customs declarations.