2017 (10) TMI 813 - AT - Customs

Classification of imported vehicle - misdeclaration - it was alleged that The car is a converted vehicle originally designed for transport of less than 8 persons but apparently converted to carry more than 13 persons - violations of Policy with reference to Motor Vehicles Regulations in India - confiscation - Held that - when the proceedings for reassessment were initiated by a show-cause notice, the original authority is bound to decide on the correct valuation. It is not sustainable for him to delegate such work to further proper officer. The original adjudicating authority was in fact acting as proper officer for reassessment and there is no other proper officer for such work. In any case, redetermination of value was not proposed with reference to specific value and legal provision and with supporting evidence in the show-cause notice. Similarly reclassification, with reasons, was not proposed in the show-cause notice. Incidentally it is noted that para 20(iv) of the original order rejected the classification under CTH 8703 and ordered reclassification under CTH 8702. We note that in fact, the appellant in their Bill of Entry classified their product under CTH 8702 only. It would appear that the said finding of the original authority is, perhaps, an error. In any case, when there was no proposal with reasons in the notice, reclassification without such proposal is not sustainable. We also note that the appellant contended on the correctness of the classification. We are not going into the details as that will be beyond the scope of the proceedings. Absolute Confiscation of imported car - section 125 of CA - Held that - this imported car cannot be considered as a prohibited item. No evidence to such assertion has been provided by the lower authorities. Violations of certain conditions with reference to freely importable items cannot make the items as a prohibited item. Even in such a situation of holding the item as prohibited item, still Section 125 provides for option for redemption. In the present case, the lower authorities allowed reexport of goods only, though no such prayer has been made by the importer. We find that the reliance placed by the appellant on the decision of the Tribunal in Subramanyam Iyyer Vs. CC 2002 (7) TMI 621 - CEGAT, BANGALORE , in similar set of facts are appropriate and applicable to the present case. Considering the prayer of redemption, we find that the same can be redeemed for clearance on payment of fine of ₹ 20,000/- as fixed by the original authority. Regarding fixation of redemption fine, we note that the learned counsel for the appellant pleaded that the goods were in detention from March 2017 onwards increasing demurrage and cost. Factoring that, we hold that the said redemption fine is sufficient - penalty on importer upheld. Appeal allowed in part.

Summary

Issues:
1. Redetermination of assessable value and reclassification of imported car
2. Confiscation of the imported car under Customs Act
3. Validity of penalty imposed on the appellant

Analysis:

Issue 1: Redetermination of assessable value and reclassification of imported car
The appeal arose from the rejection of the transaction value and the direction to refix the assessable value by the proper officer using the Customs Valuation Rules, 2007. The original authority also reclassified the item under a different classification than declared by the importer. The appellant contested that the show-cause notice did not propose redetermination of value or reclassification, depriving them of a fair defense. The Tribunal found that the original authority's decision to re-determine value without specific proposals in the notice was unsustainable. The reclassification without a proposal was also deemed unsustainable, especially as the appellant had classified the product correctly in their Bill of Entry. The Tribunal held that reclassification without a proposal and evidence was not valid.

Issue 2: Confiscation of the imported car under Customs Act
The lower authorities ordered confiscation of the imported car under Section 111(d) of the Customs Act, with an option for redemption on payment of a fine for re-export. The appellant argued that the car was not a prohibited item and that the confiscation was not justified. The Tribunal analyzed Section 125 of the Customs Act, which provides for confiscation and redemption of goods. It noted that the imported car was freely importable under the Policy and was not considered a prohibited item. The Tribunal found that the lower authorities did not provide reasoning to support the confiscation as a prohibited item. It held that the imported car could not be considered prohibited, and therefore, the confiscation without an option for redemption for home consumption was not legally sustainable.

Issue 3: Validity of penalty imposed on the appellant
The penalty of &8377; 10,000 imposed on the appellant under Section 112(a) of the Customs Act was contested. The Tribunal upheld the penalty, noting that the appellant had admitted errors in declaring the value by not including freight. The learned AR supported the penalty, citing errors in value declaration and classification. The Tribunal found the penalty justified based on the errors admitted by the appellant.

In conclusion, the Tribunal set aside the impugned order, upheld the penalty imposed on the appellant, and allowed redemption of the imported goods on payment of a fine. The decision highlighted the importance of proper proposals in show-cause notices for redetermination of value and reclassification, as well as the necessity for legal reasoning in confiscation orders under the Customs Act.