2020 (9) TMI 902 - AT - Customs

Valuation of imported goods -steel nuts - misdeclaration of value - enhancement of value with the consolation of reducing the fine - primary contention of the appellant is that there has been no misdeclaration, that specific authority for adoption of London Metal Exchange (LME) prices is not on record and that the fine and penalty are not proportionate to the extent of alleged undervaluation - HELD THAT - On perusal of note 1 in chapter 72 of the First Schedule to Customs Tariff Act, 1975, it is observed that several forms of iron and steel have been described and while all of them are intended for determining the rate of duty in relation to goods enumerated in the said chapter, those of steel , stainless steel and other alloy steel in (d), (e) and (f) in the note are intended to apply to such descriptions anywhere in the schedule. The first appellate authority cannot be faulted for reference to these descriptions for the purpose of chapter 73 of the First Schedule to Customs Tariff Act, 1975. The lower authorities have relied upon the ascertained chromium content. It is abundantly clear that to conform to description as other alloy it should not be stainless steel which is distinguished by being alloy steel with the carbon content restricted to 1.2% or less and with chromium content of at least 10.5%. Consequently, it would appear that other alloy steel should have at least 0.3% of chromium content - As pointed out by Learned Consultant, the proceedings lack any record of determination of such contents. We also take note that the rate of duty is not in dispute. The evidence on record is not sufficient to determine the impugned goods either as stainless steel or as other ally steel and, in the absence of such evidence, the declaration cannot be faulted. There is no ground to dispute the valuation. Hence, the enhancement of values and detriment built upon alleged misdeclaration fails - Appeal allowed - decided in favor of appellant.

Summary

Issues: Misdeclaration of imported goods, enhancement of assessed value, confiscation of goods, imposition of fine and penalty, reliance on London Metal Exchange prices, compliance with Customs Valuation Rules, determination of steel classification.

The appeal before the Appellate Tribunal CESTAT MUMBAI involved the misdeclaration of imported goods by M/s Gel Exim, leading to the enhancement of the assessed value. The goods, initially classified as 'steel nuts' and 'steel nuts', were reclassified as 'stainless steel bolts' and 'alloy steel nuts' respectively based on chromium content determined by a 'hand held testing machine'. The revaluation was done using London Metal Exchange (LME) prices, resulting in a significant increase in assessed value and the imposition of differential duty, confiscation of goods, a fine, and a penalty under the Customs Act, 1962. The appellant contested the misdeclaration finding, arguing that the revaluation was unjustified and disproportionate, citing the lack of specific authority for LME prices adoption and non-compliance with valuation rules. The appellant also highlighted the absence of carbon content determination and the sequential application of valuation rules. The tribunal considered the descriptions of 'iron and steel' under the Customs Tariff Act, noting the distinctions between 'stainless steel' and 'other alloy steel' based on chromium and carbon content. The tribunal found the evidence insufficient to support the reclassification, emphasizing the importance of carbon content determination for accurate classification. Ultimately, the tribunal allowed the appeal, concluding that the goods were not correctly reclassified, and the enhancement of values based on alleged misdeclaration was unfounded.

In conclusion, the tribunal's decision centered on the proper classification of the imported goods, emphasizing the need for accurate determination of steel composition for classification purposes. The tribunal found that the evidence presented did not support the reclassification of the goods as 'stainless steel bolts' and 'alloy steel nuts', leading to the reversal of the misdeclaration finding and the consequent enhancement of assessed value. The tribunal's analysis focused on the discrepancies in the chromium and carbon content of the goods, highlighting the lack of sufficient evidence to justify the revaluation and the imposition of penalties. The tribunal's decision underscored the importance of adherence to valuation rules and the necessity of detailed content analysis for accurate classification in customs matters.