2022 (4) TMI 1114 - AT - Customs

Classification of imported goods - Polyester Knitted Fabrics - Viscose Synthetic Fabrics - classifiable under CTH 60063200 and CTH 55162200 or not - rejection of declared value - sufficient opportunity of hearing not provided - Confiscation - penalty - HELD THAT - At the outset, it has to be stated that the appellant has not filed any reply to the SCN and has not attended the personal hearing. Ld. Counsel has submitted that there is sufficient evidence to show that the value of contemporaneous imports of identical goods are much different than the values given in the table in the SCN. So also, he disputes classification arrived at by the department on the basis of lab test reports. Taking into consideration the lengthy submissions made by the Ld. Counsel for appellant, it is opined that the appellant has to be given one more chance to contest the case on merits. The matter is fit for remand to the adjudicating authority who is directed to conduct de novo adjudication of the matter. The adjudicating authority are directed to complete the de novo adjudication within a period of three months from the date of receipt of this order - appeal allowed by way of remand.

Summary

Issues Involved:
1. Misdeclaration of goods with respect to description, quantity, and value.
2. Classification of imported fabrics.
3. Demand for differential customs duty and imposition of penalties.
4. Admissibility of evidence and procedural fairness.

Detailed Analysis:

Misdeclaration of Goods:
The primary issue revolves around the alleged misdeclaration by the appellant regarding the description, quantity, and value of the imported fabrics. The Customs officers found discrepancies during a 100% examination of 787 bales, noting undeclared fabric bales in addition to the declared cargo. The test report indicated that the goods were deliberately misdeclared to undervalue the fabrics and evade customs duties. Consequently, the entire 787 bales were seized, and a show cause notice was issued, proposing to demand differential customs duty along with interest and penalties.

Classification of Imported Fabrics:
The appellant declared the fabrics under CTH 60063200 and CTH 55162200. However, based on the test report, the adjudicating authority reclassified the goods under different tariff headings, resulting in a higher duty rate. The appellant contested this reclassification, arguing that the adjudicating authority did not provide sufficient reasons for the reclassification and that the goods should be classified under the headings declared in the Bill of Entry, which attract ad valorem duty. The appellant also cited Rule 3 of the General Rules for the interpretation of the Import Tariff under the Customs Tariff Act, 1975, emphasizing that when goods are prima facie classifiable under two or more headings, they should be classified under the heading which occurs last in numerical order.

Demand for Differential Customs Duty and Imposition of Penalties:
The adjudicating authority confirmed the description, classification, quantity, assessable value, and duty of the imported goods, leading to a demand for differential customs duty along with interest. Additionally, the authority ordered the confiscation of the goods under Section 111(m) of the Customs Act, 1962, with an option to redeem the goods upon payment of a fine and applicable duty. Penalties were also imposed under Sections 112(a) and 114AA of the Customs Act, 1962. The appellant argued that the value proposed in the show cause notice was not in accordance with the Customs Valuation (Determination of Value of Imported Goods) Rules, 2007, and that the value of contemporaneous imports of identical goods was not considered.

Admissibility of Evidence and Procedural Fairness:
The appellant did not file a reply to the show cause notice and did not attend the personal hearing. The appellant’s counsel argued that there was sufficient evidence to show that the value of contemporaneous imports of identical goods differed significantly from the values given in the show cause notice. The Tribunal acknowledged the appellant's failure to respond to the show cause notice and attend the hearing but decided to give the appellant another opportunity to contest the case on merits. The Tribunal remanded the matter to the adjudicating authority for de novo adjudication, directing the authority to provide the appellant with sufficient opportunity to adduce evidence. The adjudicating authority was instructed to complete the de novo adjudication within three months from the date of receipt of the Tribunal's order.

Conclusion:
The Tribunal decided to remand the case to the adjudicating authority for de novo adjudication, allowing the appellant another chance to present evidence and contest the issues on merits. All issues were left open, and the adjudicating authority was directed to complete the adjudication within three months, ensuring procedural fairness and a thorough examination of the evidence.