2017 (12) TMI 1150 - AT - Customs

Misdeclaration of imported goods - Revenue came to a conclusion that the waste paper imported by appellant for use in manufacture of Newsprint Paper consisted waste paper as well as Kraft paper - Appellant s plea is that sorting out of waste kraft paper from the imported lot was manufacture - Held that - There is no difference in the quantity and value of the waste kraft paper sold to different buyers without use thereof in manufacture of news print. It is also an admitted fact that waste kraft paper is not generation of manufacturing process carried out by appellant. Appellant s plea that sorting out of waste kraft paper from the imported lot was manufacture is inconceivable. There is no doubt that the goods imported by appellant was declaring that as waste paper for use in manufacture of newsprint. But appellant s awareness that waste kraft paper were unusable in such manufacture cannot be ignored in view of the appellant s experience for some times past. Those were sold and appellant was benefited out of the sale of such goods. Customs should not suffer the loss of duty made at the time of import on the sold waste kraft paper - basic customs duty and additional customs duty as is prescribed by law shall be leviable - Central Excise duty if any paid is whether adjustable shall be examined by the learned adjudicating authority and appropriate order passed thereon. Interest - penalty - Held that - In view of interpretational difficulty there shall be no penalty against the quantum of demand on the appellant - Interest flow against the unpaid demand. Appeal allowed in part part matter on remand.

Summary

Issues involved:
1. Alleged violation of notification regarding the use of imported goods for the manufacture of newsprint.
2. Duty demand, confiscation, redemption fine, and penalties imposed by the Revenue.
3. Appeal against the adjudication order challenging the consequences.

Issue 1: Alleged violation of notification regarding the use of imported goods for the manufacture of newsprint:
The investigation revealed that waste Kraft paper imported by the appellant was sold to various buyers instead of being used in the manufacture of newsprint, raising concerns about compliance with the conditions of Notification No. 21/2002-Cus. The appellant contended that the segregation of waste Kraft paper amounted to manufacturing and excise duty was paid accordingly. The appellant argued that the term "for use" in the notification should be interpreted as "intended for use," citing relevant legal precedents. However, Revenue contended that the appellant should bear the duty forgone on the waste Kraft paper sold, as it was not used in the manufacturing process. The Tribunal noted that the appellant's awareness of the unusability of waste Kraft paper in newsprint manufacture was crucial, and duty should be levied on the sold goods not used as intended.

Issue 2: Duty demand, confiscation, redemption fine, and penalties imposed by the Revenue:
The adjudication order resulted in duty demand, confiscation of imported waste Kraft paper, imposition of redemption fine, and penalties on the appellant. The penalty was also imposed on the Chairman & Managing Director of the appellant. The appellant appealed against these consequences, arguing that they were engaged in the manufacture of newsprint and should not be penalized for the waste Kraft paper sales. The Tribunal observed that no penalty would be imposed on the appellant due to interpretational difficulties, but interest would apply to the unpaid demand. Regarding the redemption fine, the Tribunal directed a re-adjudication based on the goods' import conditions. The personal penalty on the Chairman & Managing Director was waived as there was no direct involvement in the alleged duty loss.

Issue 3: Appeal against the adjudication order challenging the consequences:
The appellant and the Chairman & Managing Director appealed against the adjudication order, contesting the duty demand, confiscation, fines, and penalties imposed by the Revenue. The appellant argued that they were entitled to the duty concession for the imported waste paper used in newsprint manufacture. The Tribunal remanded the appeal of the appellant for re-evaluation of the redemption fine and allowed the appeal of the Chairman & Managing Director, waiving the imposed penalty. Revenue's appeal was also remanded for further consideration.

This detailed analysis of the judgment addresses the alleged violation of the notification conditions, the duty demand and penalties imposed, and the appeals challenging the adjudication order's consequences.