2018 (5) TMI 448 - AT - Customs

Misdeclaration of imported goods - Crude Palm Stearin (Non-edible industrial grade) - the department was of the view that the importer misdeclared the goods and the same are liable for confiscation under Section 111 (m) of the Customs Act, 1962 and also liable for penalties under Section 112 (a) of the Act - Held that - All the documents such as purchase order etc. show that the goods for which the they had placed order was only Palm Stearin. On coming to know that the goods did not conform to the description in the documents, the appellant has requested for re-export of the goods. The goods imported were warehoused and to be cleared by following various procedures and therefore when the appellant came to know that the goods were not Palm Stearin, had opted for re-export of the goods. The redemption imposed for the purpose of re-export is hideously harsh and requires to be interfered. Redemption fine reduced from ₹ 25,00,000/- to ₹ 5,00,000/- - the penalty imposed of ₹ 5 lakhs is also on the higher side and is reduced from ₹ 5,00,000/- to ₹ 1,00,000/-. Appeal allowed in part.

Summary

Issues involved:
Classification of imported goods under Customs Notification, misdeclaration of goods, retesting of samples, imposition of redemption fine and penalty, intention to evade duty.

Analysis:

1. Classification of imported goods under Customs Notification:
The appellants filed three warehouse Bills of Entry for goods classified as "Crude Palm Stearin" under CTH 15119090, seeking benefits under Customs Notification No.21/2002. However, upon testing, the samples were found to contain less than 20% Free Fatty Acid (FFA), not meeting the required criteria for exemption under the notification.

2. Misdeclaration of goods and retesting of samples:
Upon retesting, it was revealed that the goods were actually Palm Oil and not Palm Stearin as declared by the importer. The department alleged misdeclaration and imposed confiscation under Section 111(m) of the Customs Act, 1962, along with penalties under Section 112(a). The importer requested retests, questioning the sudden change in classification from Palm Stearin to Palm Oil.

3. Imposition of redemption fine and penalty:
The original authority ordered confiscation of goods valued at ?7,04,15,033/- with an option for redemption by paying a fine of ?25 lakhs for re-export, along with a penalty of ?5 lakhs. The appellants contested, arguing that they had not intended to misdeclare or evade duty, and requested for the redemption fine and penalty to be set aside.

4. Judicial review and decision:
The Tribunal considered the facts presented, noting that the goods were initially reported as Palm Stearin by the Customs Laboratory, and the appellants had requested retests upon discovering the misclassification. The Tribunal found the redemption fine and penalty to be excessively harsh, reducing the redemption fine to ?5,00,000 and the penalty to ?1,00,000. The decision highlighted the lack of evidence of intentional misdeclaration on the part of the appellant, emphasizing that the retests were initiated by the appellants themselves.

5. Conclusion:
The Tribunal partially allowed the appeal, reducing the redemption fine and penalty imposed on the appellants. The decision emphasized the importance of considering factual circumstances and intentions behind the misclassification before imposing severe penalties, ultimately providing relief to the appellants based on the presented evidence and arguments.

This detailed analysis of the judgment highlights the key issues, arguments presented, and the Tribunal's decision, ensuring a comprehensive understanding of the legal proceedings and outcomes.