2018 (1) TMI 1060 - AT - Customs

Classification of imported goods - Zinc Ash in free flowing form - Department took the view that the imported goods being zinc ash should be classified under CTH 26201900 attracting BCD of 7.5% instead of CTH 79020090 declared by the appellant - Held that - goods were declared as zinc ash and have been found to be zinc ash. Appellants also declared that the goods contained minimum 65% zinc. This being so, goods will necessarily fall within the ambit of Ash and residues containing mainly of zinc and hence correctly classifiable under CTH 26201900 as held by the adjudicating authority. Valuation - enhancement of value - Department took the view that declared import value of US 220/MT should be rejected under Valuation Rules and redetermined at US 1024.42/MT - Held that - the enhancement has been caused based on NIDB data and that too of an import from Nigeria. Various judgments and decisions of courts have consistently held that enhancement of declared value cannot be done on the basis of NIDB data - the declared values will sustain. There cannot be any confiscation of the goods under Section 111 (m) and imposition of any redemption fine thereof - Penalty under Section 112 (a) is also set aside - appeal allowed in part.

Summary

Issues: Classification of imported goods under CTH, Enhancement of import value, Confiscation of goods under Section 111(m), Imposition of penalty under Section 112(a)

Classification of Imported Goods under CTH:
The appellant imported goods declared as "Zinc Ash" for the manufacture of Zinc Sulphate, classified under CTH 79020090 to claim a concessional rate of Basic Customs Duty. However, the department argued that the goods should be classified under CTH 26201900, attracting a higher BCD. The Commissioner confirmed reclassification based on the metallic zinc content in the goods, supporting the department's view. The Tribunal agreed with the department, stating that since the goods contained a minimum of 65% zinc, they fell within the category of ash and residues mainly of zinc, correctly classifiable under CTH 26201900.

Enhancement of Import Value:
The department proposed to enhance the import value based on NIDB data, comparing the appellant's import from Malaysia with similar imports from Nigeria. The appellant contended that the declared value was correct and should not be enhanced based on NIDB data. The Tribunal held that the enhancement of value solely on NIDB data was not permissible, citing previous court decisions. Therefore, the declared value by the appellant was upheld, leading to the dismissal of the proposal for confiscation of goods under Section 111(m) and the imposition of any redemption fine. Consequently, the penalty under Section 112(a) was set aside.

Confiscation of Goods under Section 111(m) and Penalty under Section 112(a):
The department issued a show cause notice proposing the confiscation of imported goods under Section 111(m) and the imposition of a penalty under Section 112(a). The adjudicating authority confiscated the goods but allowed redemption on payment of a fine. However, the Tribunal ruled that since the declared value was correct, there was no basis for confiscation or imposition of a redemption fine. Therefore, the penalty under Section 112(a) was also set aside, and the appeal was partly allowed on these grounds.

This comprehensive analysis of the judgment from the Appellate Tribunal CESTAT CHENNAI highlights the issues of classification, value enhancement, confiscation of goods, and penalty imposition, providing a detailed examination of the arguments presented by both parties and the Tribunal's final decision on each issue.