2019 (1) TMI 82 - AT - Customs

Classification of imported goods - Low Aromatic White Spirit (ANYSOL-5) - ITC restrictions - goods confiscated by Revenue by changing the classification of the goods - whether classifiable under heading 2710 19 90 or under heading 2710 12 90? - Held that - The goods falling under Chapter Heading 2710 12 90 are restricted as per Import Policy and allowed to be imported through State Trading Enterprises (STE) only, as per policy condition-5 of the Chapter 27 of ITC (HS) Schedule-1 - Thus, if the imports are in violation of aforesaid condition, then the same would be liable to action under the Customs Act - The said restriction is specifically applicable to CTH 2710 12 90, claimed by Revenue and not to 2710 19 90, claimed by the appellant. Consequently, depending on the correct classification of the product, the ITC restriction would apply to the imports. Thus, the product imported by the appellant answers to specifications prescribed under sub heading note 4 and therefore, would fall under the description light oils and preparations of sub heading 2710.12. Imposition of redemption fine - penalty - Held that - The section is triggered when the prohibited or restricted goods are imported without due authorization. The bonafide or malafide intention of the importer is of no relevance so far as confiscation under section 111(d) of the Customs Act is concerned - Section 111 (m) relates to the description made by the importer at the time of import and, therefore, the bonafide or malafide of importer is of relevance. In case Section 111(d), the belief of importer is not relevant - as regards penalty, It is apparent that if the goods are held as liable to confiscation for whatever reason penalty under section 112 (a) can be imposed. Malafide/bonafide or the belief of the importer in all is of no relevance. There is no element of differential duty involved in this case - Keeping in view that the only element of violation involved was with reference to policy and that there was no element of duty involved the quantum of penalty and redemption fines are excessive - the penalty and redemption fines are reduced to ₹ 20 lakhs each. Appeal allowed in part.

Summary

Issues Involved:
1. Classification of imported goods.
2. Applicability of ITC restrictions.
3. Imposition of redemption fine and penalty.
4. Quantum of penalty and redemption fine.

Detailed Analysis:

1. Classification of Imported Goods:
The appellant, Venus Petrochemicals (Bombay) Pvt. Ltd., imported "Low Aromatic White Spirit (ANYSOL-5)" and classified it under heading 2710 19 90. The Revenue reclassified it under heading 2710 12 90, leading to the confiscation of the goods. The appellant argued that the product is a solvent and should be classified under 2710 19 90, supported by supplier reports, IS specifications, and data sheets from Shell Chemicals. The Customs Tariff classifies goods based on physical specifications, not their use. The CRCL reports confirmed that the product met the specifications of "light oils and preparations" under sub-heading 2710 12 90. The Tribunal rejected the expert opinion provided by the appellant, finding it inconsistent with the Customs Tariff and HSN scheme.

2. Applicability of ITC Restrictions:
The goods falling under Chapter Heading 2710 12 90 are restricted as per Import Policy and allowed to be imported through State Trading Enterprises (STE) only. The restriction does not apply to goods classified under 2710 19 90. The Tribunal found that the product met the specifications of sub-heading 2710 12 90, thus the ITC restrictions applied. The policy condition for Chapter 27 requires imports through specific entities, and violation of this condition triggers action under the Customs Act.

3. Imposition of Redemption Fine and Penalty:
The Tribunal upheld the confiscation under section 111(d) of the Customs Act, which does not consider the intention of the importer. The section is triggered when restricted goods are imported without authorization. The Tribunal found that the appellant's reliance on previous case law was misplaced, as the facts were different. The Tribunal also upheld the penalty under section 112(a) of the Customs Act, which applies when goods are liable to confiscation, irrespective of the importer's belief or intention.

4. Quantum of Penalty and Redemption Fine:
The Tribunal noted that there was no differential duty involved and the violation was solely related to policy. Considering this, the Tribunal found the initial penalty and redemption fines excessive. Consequently, the penalty and redemption fines were reduced to ?20 lakhs each.

Conclusion:
The appeal was partly allowed, with the Tribunal reducing the penalty and redemption fines due to the absence of differential duty and the nature of the violation being related to policy compliance. The classification of the imported goods under heading 2710 12 90 was upheld, along with the applicability of ITC restrictions and the imposition of fines and penalties under the relevant sections of the Customs Act.