2018 (1) TMI 573 - AT - Customs

EPCG Scheme - N/N. 12/2012 CE dated 17.03.2012 - mis-classification of imported goods in order to avail ineligible exemption from payment to additional duty of customs (CVD) in terms of S.No.245 of N/N. 12/2012 CE dated 17.03.2012 - it was also alleged that the goods imported were actually second-hand/old and used machinery and, as such, were not eligible for zero duty EPCG scheme exemption under N/N. 22/2013 CUS dated 18.04.2013 and 16/2015-CUS dated 01.04.2015. Eligibility of the appellant for zero duty EPCG import of the impugned machinery - Held that - The appellants repeatedly pleaded that as the goods were second-hand/used and old, the adjudicating authority should have revised the value by rejecting the declared transaction value. It would appear that the appellants are trying to solvage something out of a lost case. When the goods were found not to be eligible for concession under EPCG scheme, having found to be old and used, the appellants took a plea that, that being so, the value should be accordingly reduced. We find such submission as untenable - it is strange that the appellants are pressing the adjudicating authority to re-determine the value only as a consequence of the fact revealed during investigation as the imported goods being old and used - the whole assertion of the appellant, in this regard, is a consequential after-thought to limit the damage which occurred due to deliberate mis-declaration on their part. Correct classification - availability of exemption under N/N. 12/2012 CE dated 17.03.2012 (S.No.245) for CV duty - Held that - after due consideration of the HSN explanatory notes, actual nature of the imported goods and applying the General Interpretation Rules, the original authority has rightly came to the conclusion that the classification of goods declared under heading 8434 is not correct and these were to be classified under various different headings like 8421, 8413, 8419,8418. On careful consideration of the finding, we have no reason to interfere with the same. There is no merit in the claim of the appellant regarding non-adherence of statutory provisions by the original authority before admitting evidences and report of examination. There is no basis for such claim. Redemption fine - penalty - Held that - The redemption fines were in the range of 20% of the value of goods ordered to be confiscated. We are satisfied that the quantum of redemption fines are reasonable and adequate - the penalties imposed under Section 112(a) and Section 114A were also found to be reasonable and within the parameters laid down in the legal provisions of the Act. Penalties on second appellant - Held that - Considering that the overall duty involved is more than ₹ 21 crores and the deliberate acts involved in such importation have been established in the investigation, we find no reason to interfere with the quantum of penalties. Appeal dismissed.

Summary

Issues: Alleged mis-classification of imported goods for duty exemption under EPCG scheme and confiscation of goods, demand for differential customs duty, and imposition of penalties under Customs Act, 1962.

Analysis:
1. The case involved two appeals against the order of the Additional Director General (Adj.), New Delhi, dated 19.05.2017. The main appeal was by an importer, M/s KK Milk Fresh India Limited, and the second appeal was by the Chairman-cum-Managing Director of the main appellant.
2. The main allegations against the appellants included mis-classification of imported goods to avail ineligible exemption from additional duty of customs (CVD) and importation of second-hand/old machinery not eligible for zero duty EPCG scheme exemption.
3. The original authority issued a show cause notice proposing confiscation of goods, demanding differential customs duty amounting to &8377;21,32,59,947, and imposing penalties under various sections of the Customs Act, 1962.
4. The appellants contested the allegations, sought cross-examination of connected persons, and argued against the impugned order, highlighting various grounds including valuation, mis-declaration, expert findings, and eligibility for exemption.
5. The appellants claimed that the goods were used in a dairy plant setup and were rightly eligible for exemption, challenging the inspection process, valuation determination, and classification of imported goods for duty exemption.
6. The appellate tribunal considered the eligibility of the appellants for zero duty EPCG import, finding that the goods were used and old, making the appellants ineligible for the scheme. The tribunal rejected the plea for re-determination of value based on the goods' condition.
7. The tribunal upheld the original authority's decision on correct classification and exemption availability under Notification No.12/2012 CE, relying on specific descriptions over general ones and legal precedents to classify the goods correctly.
8. The tribunal found no merit in the appellant's claim of non-adherence to statutory provisions by the original authority and upheld the quantum of redemption fines and penalties imposed on the appellants as reasonable and within legal parameters.
9. The penalties imposed on the second appellant were upheld considering the seriousness of the deliberate acts involved in the importation, leading to the dismissal of the appeals by the tribunal on 11.01.2018.