2017 (10) TMI 1236 - AT - Customs

Classification of imported goods - Whether difference in percentage of the classification between the appellant as well as the Department should be considered as a reason for alleging misdeclaration? - Held that - the difference in percentage of the classification between the appellant as well as the Department should not be considered as a reason for alleging misdeclaration - reliance placed in the case of M/s. Saint Gobain Glass India Ltd. Versus CC (AIR) , Chennai 2011 (2) TMI 818 - CESTAT, CHENNAI , where it was held that finalization of the tariff heading under which the goods should fall is the ultimate job of the customs authorities and if the appellants have claimed wrong classification according to their limited understanding of the customs law, mens rea cannot be attributed to them nor confiscation and imposition of penalty can be resorted to. The appellant will be liable to pay differential duty as computed by the lower authorities - the order of confiscation of goods and imposition of redemption fine and penalty are set aside - appeal allowed in part.

Summary

Issues: Classification of imported goods, mis-declaration, differential duty, confiscation of goods, redemption fine, penalty.

Classification of Imported Goods:
The appellant filed a Bill of Entry for clearance of goods declared as "CNC cutting machine spare parts" under different headings falling under Chapter 84 & 85. However, custom officers observed that some spare parts were incorrectly classified under different chapters. The Department proceeded to recover the differential duty based on the re-classification of items.

Mis-declaration and Confiscation of Goods:
The Adjudicating authority not only demanded the payment of the differential duty but also confiscated the imported goods, imposing a redemption fine of ?3.4 lakhs and a penalty of ?50,000 for alleged mis-declaration. The Commissioner (A) upheld the order, except for reducing the redemption fine to ?2 lakhs.

Legal Arguments:
The appellant argued that they classified the items to the best of their knowledge and that re-classification by the Department should not lead to allegations of mis-declaration. Citing case laws like Saint Gobain Glass India Ltd. Vs. CC Chennai, the appellant contended that tentative incorrect classification by the importer should not result in confiscation or penalty.

Tribunal's Decision:
After hearing both parties, the Tribunal found that the customs officers changed the classification of some items, leading to additional duty. The Tribunal agreed with the appellant's argument that differences in classification should not amount to mis-declaration. Citing the case law precedent, the Tribunal set aside the order of confiscation, redemption fine, and penalty, allowing the appeal in part.

Conclusion:
The Tribunal held that the appellant is liable to pay the differential duty as computed by the lower authorities. However, the order of confiscation of goods and imposition of redemption fine and penalty were set aside. The appeal was partly allowed, as pronounced in the open court on 21.09.2017.