2019 (5) TMI 989 - AT - Customs

Scope of SCN - Classification of imported goods - Wireless Data Device or mobile phones - whether classified under CTH 85176290 or otherwise? - HELD THAT - In their appeal revenue has raised the issue which was never there before the adjudicating authority. In the present case no show cause notice has been issued and matter adjudicated by the Commissioner on the basis of waiver to show cause given by the importer. The impugned order does not refer even remotely to the issue sought to be raised by the revenue in appeal. In our view such approach cannot be justified. Classification of the goods - HELD THAT - When the product catalogue and other documents in relation to the imported goods do not describe the goods as mobile phone, then the act of describing the goods as Mobile Phone on the Bill Of Entry cannot be anything other act of deliberate misdeclaration as have been held by the Commissioner - Since the present case is not of misclassification simplicitor but case of deliberate misdeclaration leading to misclassification we do not find any merits in such submissions of the importer. Importer has in the appeal raised lot of procedural safeguards built in the system of assessment and has claimed that, all these should be taken into account while adjudging the offence against them. In our view procedural relaxations and facilitation measures are for facilitating the speedy clearance of the imported goods and are not for the purpose of perpetuating fraud/ misdeclaration. In our view such an argument should be rejected at the very first stage. The appeal filed by the importer is allowed to the extent of reducing redemption fine imposed to ₹ 10,00,000/- - other part upheld - appeal allowed in part.

Summary

Issues Involved:
1. Classification of imported goods.
2. Confiscation of goods under Section 111(m) and Section 111(d) of the Customs Act, 1962.
3. Imposition of redemption fine and penalty under Section 112(a) of the Customs Act, 1962.
4. Requirement of WPC license for the imported goods.

Detailed Analysis:

Classification of Imported Goods:
The Commissioner classified the imported goods under CTH 85176290, rejecting the importer’s claim of classification under CTH 85171290. The goods were declared as "Mobile Phone" but were found to be "Wireless Data Devices" without telephony or VOIP features, used for industrial purposes like ticketing and billing. The importer admitted the correct classification but paid the duty under protest.

Confiscation of Goods:
The Commissioner ordered the confiscation of goods under Section 111(m) of the Customs Act, 1962, due to misdeclaration of the goods as "Mobile Phone" instead of "Data Transfer Device." The importer was given an option to redeem the goods on payment of a redemption fine of ?15,00,000/-. The Tribunal upheld the confiscation, noting that the misdeclaration was deliberate, as the product catalog and invoice did not describe the goods as mobile phones.

Imposition of Redemption Fine and Penalty:
The Commissioner imposed a penalty of ?5,00,000/- on the importer under Section 112(a) of the Customs Act, 1962. The Tribunal found no infirmity in the penalty imposition but reduced the redemption fine from ?15,00,000/- to ?10,00,000/-. The Tribunal agreed that the error was not bona fide and the procedural relaxations in the system should not be used to perpetuate fraud or misdeclaration.

Requirement of WPC License:
The Revenue raised a new issue on appeal, claiming that the imported goods required a WPC license under Section 3 of the Indian Wireless Telegraphy Act, 1933, read with Section 11 of the Customs Act, 1962. The Tribunal dismissed this claim, citing the Reliance Communication Limited case, which held that the Indian Wireless Telegraphy Act deals with possession, not import prohibition, and that the goods were freely importable under the Import-Export Policy.

Conclusion:
The Tribunal dismissed the revenue's appeal, finding no merit in the new issue raised. The importer's appeal was allowed to the extent of reducing the redemption fine to ?10,00,000/-, but the confiscation and penalty imposed by the Commissioner were upheld. The Tribunal emphasized that the misdeclaration was deliberate and not a bona fide error, justifying the confiscation and penalty under the Customs Act, 1962.