2019 (9) TMI 289 - AT - Customs

Re-classification of imported goods - Import of stickers and license for Windows XPE Embedded software - recovery of duties - reliance on statement which was retracted later - section 28 of Customs Act, 1962 - denial of N/N. 12/2012-CE dated 17th March 2012 (at serial no. 266) - Imposition of penalties u/s 112(a) or section 114A of the Customs Act, 1962 - retraction of statement of deponent. HELD THAT - The value declared itself is not in doubt. The statement recorded from Shri Aditya Bhuwania is undoubtedly inculpatory but not against the claim of having been retracted which, even if not done before the authority which recorded the statement, was, nevertheless, placed later before the adjudicating authority, there can be no doubt that the contents of the said statement is not acceptable without some corroboration. It is clear that the adjudicating authority, or the investigating officers, were not privy to the contents of either the export or import goods and rely heavily on the declarations in the documents and the purported confessional statement. Though doubts are sought to be cast on the retraction, it may not be easily discardable. The acceptance of the shipping bills and the conclusion that the bills of entry were mirror images fortifies the claim of the appellant for eligibility to drawback under section 74 of the Customs Act, 1962. In these circumstances, the motive distances itself from the method and without motive there can be no offence. The adjudicating authority has placed overwhelming reliance on the statement of the Director and as the retraction of that statement has not been taken into consideration, we are of the opinion that the adjurement in KI. PAVUNNY VERSUS ASSTT. COLLR. (HQ.) , C. EX. COLLECTORATE, COCHIN 1997 (2) TMI 97 - SUPREME COURT mandates independent corroboration. The declaration in the shipping bill, according to us, in the absence of any other evidence must be accepted as truthful assertion of the contents therein - In view of the absence of any evidence of the imported goods being nothing other than licence stickers or licences, we are not inclined to agree that the motive for such an elaborate exercise has been established. Appeal allowed - decided in favor of appellant.

Summary

Issues:
Alleged evasion of custom duties on import of recorded discs mis-declared as 'Windows XPE embedded software license' and claimed under a different classification.

Analysis:
The appeal challenged an order confirming duty liability due to re-classification of goods imported as 'Windows XPE Embedded software.' The appellant claimed the goods were 'stickers' and 'licenses' for exporting customized software developed from the imported 'XPE embedded software.' The Revenue argued that the discs were also imported, leading to misclassification. The customs authorities contended that the appellant opted for an alternate classification to avoid controversy over eligibility as 'customized' software. The adjudicating authority relied on import documents and a statement from a director confirming the import of recorded discs, leading to the demand confirmation.

The appellant argued that the software was customized for specific clients and that the discs were for downloading the software at the destination. The Revenue claimed that the consignment-to-consignment comparison indicated the import of discs despite claims of only licenses or stickers. The appellant's eligibility for exemption under a notification was questioned, and the statement of the importing company's director admitting mis-declaration was emphasized.

The adjudicating authority heavily relied on the director's statement, which was inculpatory but later retracted. The appellant's motive for mis-declaration was questioned, and the retraction of the statement was debated. The tribunal emphasized the need for independent corroboration of the statement and the importance of examining the evidence for voluntariness and truthfulness. The lack of evidence supporting the import of discs led to the setting aside of the duty demand and penalties imposed.

In conclusion, the tribunal found no evidence supporting the import of discs, rejecting the Revenue's claims of misclassification. The tribunal emphasized the need for independent corroboration of statements and the importance of examining evidence for voluntariness and truthfulness. The lack of evidence supporting the mis-declaration led to the appeal being allowed and the impugned order set aside.