2008 (9) TMI 363 - AT - Customs

Mis-declaration - Violation of principle of natural justice mis-declaration detected later on and found that goods imported were not eligible for exemption under Customs notification no. 21/2002 - benefit was available to non-alloy steel wire rod classifiable under CTH 7213 99 90 of the Customs Tariff Schedule. Later on, the appellants imported two more consignments of identical goods and claimed the same benefit since no SCN issued in respect of earlier consignments was issued, there is violation of principle of natural justice moreover, no personal hearing was allowed in respect of later two consignments as requested by appellants while waiving SCN - As the impugned proceedings of confiscation and penalty have been found to be, ex facie, illegal the appellants are entitled to refund of the amount illegally collected from them. Case remanded

Summary

Issues involved:
1. Classification of imported goods under Customs Tariff Schedule.
2. Principles of natural justice in adjudication process.
3. Burden of proof on Revenue for classification.
4. Confiscation and penalty under Customs Act.
5. Differential duty on earlier imports.
6. Refund of amounts collected from the party.

Classification of imported goods under Customs Tariff Schedule:
The appellants imported goods declared as "non-alloy steel wire rod" under concessional duty rate. Subsequently, they imported similar goods classified as "steel 7-ply wires," leading to a dispute with Customs authorities regarding classification under different tariff entries. The Commissioner classified the goods as "steel 7-ply wires," denying the concessional duty rate under the notification applicable to non-alloy steel wire rods. Confiscation and penalty were imposed, with the party paying the differential duty on earlier imports along with fines and penalties.

Principles of natural justice in adjudication process:
The appellants challenged the adjudicating authority's failure to follow natural justice principles, citing the absence of show-cause notices for earlier imports and alleging inadequate classification scrutiny. They contended that the burden of proof for classification rested with the Revenue, emphasizing the need for fair proceedings. The appeal raised concerns regarding confiscation, penalty, and differential duty on previous imports, questioning the Revenue's assessment consistency.

Burden of proof on Revenue for classification:
The appellants argued that the Revenue did not properly discharge its burden of proof for classification, relying excessively on the appraiser's opinion without independent assessment. They emphasized the Commissioner's alleged failure to apply due diligence in classification, leading to erroneous conclusions and subsequent penalties. The appeal highlighted discrepancies in the assessment of earlier imports, challenging the necessity of paying differential duty based on unchallenged assessments.

Confiscation and penalty under Customs Act:
The Commissioner's order included confiscation of goods under Section 111(d) of the Customs Act due to misdeclaration, with redemption permitted upon payment of a fine. Additionally, a penalty of Rs. 10 lakhs was imposed under Section 112(a) of the Act. The appellants contested these punitive measures, questioning the legality and procedural fairness of the penalties imposed.

Differential duty on earlier imports:
Regarding differential duty on earlier imports, the appellants argued that since the Revenue did not challenge the assessments of previous bills of entry, the obligation to pay differential duty did not arise. They contended that the assessments for earlier imports were not contested by the Revenue, implying no grounds for demanding additional duty payments. This discrepancy formed a critical aspect of the appeal against the Commissioner's order.

Refund of amounts collected from the party:
Following a thorough review of the submissions, the Tribunal remitted the case back to the Commissioner, emphasizing adherence to natural justice principles and Customs Act provisions. The Tribunal directed the refund of amounts collected from the appellants, excluding duty paid on goods covered by specific bills of entry. The decision highlighted the illegality of the impugned proceedings, warranting the refund of unlawfully collected amounts within a specified timeframe to ensure procedural fairness and compliance with legal standards.