2017 (12) TMI 460 - AT - Customs

Classification of goods - unbranded Micro SD Cards - classified under CTH 85235220 or CTH 85235100? - Held that - the CBEC vide Circular dated 20.07.2016 has also clarified that the benefit of the said notification is extendable to Micro/Mini SD cards classified under CTH 85235100. Thus, it is apparent that change in classification of subject goods by the Department will not create any additional Basic Customs Duty liability for the appellant - the appellant is not liable to pay the Basic Customs Duty on the imported goods, even under the classification made by the Department, which was different than the classification made by it. So far as the issue of confiscation of impugned goods is concerned, we are of the view that the provisions of clause (m) of Section 111 ibid is attracted, inasmuch as, the value and declaration of the goods made in the post parcel do not correspond to the actual goods imported by the appellant. Thus, confiscation of goods and imposition of redemption fine in the impugned order is sustainable under the law - however, the quantum of redemption fine need to be reduced. Penalty u/s 112 and 114 AA of the Act - Held that - the statute mandates that penalty can be imposed for use of false and incorrect material, the authorities have to prove that in fact, the person concerned has deceived the exchequer for his wrongful gain - In this case, the Department has not brought on any evidence to prove appellant s guilt in mis-declaring the goods - in absence of any specific substantiation regarding the involvement of the appellant in fraudulent activities like mis-declaration in the present case, penalty set aside. Appeal allowed in part.

Summary

Issues: Classification of imported goods, Mis-declaration of goods, Confiscation of goods, Imposition of fines and penalties

Classification of imported goods:
The appellant imported unbranded Micro SD Cards, declaring them under CTH 85235220 with a 'Nil' rate of Basic Customs Duty. The adjudicating authority classified the goods under CTH 85235100 attracting a 10% Basic Customs Duty. The appellant argued for exemption under Notification No. 24/2005-Cus., which was clarified by CBEC Circular. The Tribunal noted that the change in classification would not create additional duty liability for the appellant due to the exemption. Thus, the appellant was not liable to pay Basic Customs Duty even under the Department's classification.

Mis-declaration of goods:
The appellant contended that the overseas supplier mis-declared the goods as 'artificial gift items', and the appellant was unaware of this until the goods were seized. The Tribunal observed that the appellant did not mis-declare the goods, and no documents were filed before the investigation. The impugned order rejected the declared value and re-determined it, leading to confiscation and imposition of fines.

Confiscation of goods:
The impugned order confiscated the goods under Section 111(d) and (m) of the Act, allowing redemption on payment of a fine. The Tribunal found that confiscation was justified as the declaration did not match the actual goods imported. However, considering the circumstances, the redemption fine was reduced to &8377; 20,00,000 in the interest of justice and commercial benefit.

Imposition of fines and penalties:
Penalties were imposed under Section 112 and 114 AA for contravening Section 82 of the Act. The Tribunal noted that penalties require proof of deceptive intent, which was lacking in this case. The appellant's submissions were ignored, and no evidence of fraudulent intent was presented. Therefore, the penalties imposed were set aside, as there was no substantiation of the appellant's involvement in fraudulent activities.

In conclusion, the Tribunal ruled in favor of the appellant, stating that they were not liable for Basic Customs Duty, reducing the redemption fine, and setting aside the penalties imposed under Sections 112 and 114 AA. The judgment highlighted the importance of proving fraudulent intent before imposing penalties and affirmed that mis-declaration by a third party does not necessarily implicate the importer.