2022 (6) TMI 1140 - AT - Customs

Mis-declaration of imported goods - Scania 310 Chassis - one complete amphibian bus body mounted on chassis - whether the said mis-classification was with some malafide intention or not? - Confiscation of imported goods - redemption fine - penalty - HELD THAT - The appellant herein imported one amphibious bus body manufactured and supplied by M/s. Advanced Amphibious Design Inc. Honolulu mounted on Scania 310 chassis supplied by M/s. Scania CV AB Sweden claiming classification of goods under CTH 8901. The appellant had claimed the CTH 89019000 which pertains as per chapter Heading reads as Ships, boats and floating structures and further the explanatory notes to the said chapter heading clearly excludes Amphibious motor vehicles designed to travel over both land and certain tracks of water (swapms etc.) are classifiable as motor vehicles in Chapter 87. There is no dispute that mis-classification was there as the appellant have not challenged the re-classification by the revenue rather they have paid the differential duty alongwith interest before the issuance of the show cause notice and the only issue raised by the appellant is about redemption fine and penalty. The imported goods herein is Amphibious bus which is also a specialized motor vehicle which runs on road as well as on water. Thus, being a specialized transport vehicle, it is appropriately classifiable under CTH 87 Section XVII of Custom Tariff Act, which covers vehicles, aircraft, vessels and associated transport equipment. As per para 4(b) of Section XVII, amphibious motor vehicles are classified under the appropriate heading of Chapter 8703. However in bill of entry they claimed the classification of the goods under CTH 8901. As per the appellant, they merely goes by the advice of their consultant chartered accountant who vide his opinion dated 13.1.2017 advised them that amphibious bus shall be covered either under CTH 89019000 or 89069000. The law laid down by the Hon ble Supreme Court in the matter of NORTHERN PLASTIC LTD. VERSUS COLLECTOR OF CUSTOMS CENTRAL EXCISE 1998 (7) TMI 91 - SUPREME COURT which has been relied upon by learned Counsel, will not be of any help for the appellant as the said judgment was passed since there was bonafide belief as therein the appellant s earlier consignment bearing the same description, same classification, identical claim for exemption was cleared by the Delhi Customs House for the previous year, whereas in the instant appeal looking at their earlier import which was under adjudication at the time of the instant import, if the appellant had any doubt regarding classification then instead of taking shield of opinion from their chartered account they could have requested for first check examination and could have taken advice from the customs about the correct classification of the imported goods. The discussion made herein leads to an inevitable conclusion that the appellant had mis-classified the goods with an intention to evade payment of appropriate Custom duty. The appellant resorted to mis-classification / mis-declaration of description of goods showing number of packages as two instead of manifested number of packages as one and since the goods have been deliberately misdeclared/ mis-classified in the Bill of Entry they are liable for confiscation under Section 111(m) of the Customs Act, 1962 and appellants are therefore rightly held liable for penalty under Section 112(a) ibid. Appeal dismissed - decided against appellant.

Summary

Issues Involved:
1. Imposition of redemption fine and penalty for misclassification of imported goods.
2. Validity of the reclassification of the amphibious bus under a different tariff heading.
3. Determination of whether the misclassification was intentional or due to an error.
4. Applicability of penalties under Sections 111(m) and 112(a) of the Customs Act, 1962.

Issue-wise Detailed Analysis:

1. Imposition of Redemption Fine and Penalty for Misclassification:
The appellant challenged the imposition of a redemption fine of Rs. 15 lakhs under Section 125 and a penalty of Rs. 5 lakhs under Section 112(a) of the Customs Act, 1962, for the misclassification of an imported amphibious bus. The Adjudicating Authority reclassified the amphibious bus under CTH 8703 and confirmed the confiscation under Section 111(m) of the Customs Act, 1962. The Commissioner of Customs (Appeals) upheld the Adjudicating Order but reduced the penalty to Rs. 5 lakhs.

2. Validity of the Reclassification of the Amphibious Bus:
The appellant initially classified the amphibious bus under CTH 89019000, which pertains to "Ships, boats, and floating structures." However, the Revenue reclassified it under CTH 87032410, which pertains to motor vehicles, attracting a higher duty rate. The appellant paid the differential duty and interest before the issuance of the show cause notice but contested the redemption fine and penalty. The tribunal confirmed that the amphibious bus, being a specialized motor vehicle capable of traveling on both land and water, was appropriately classifiable under CTH 8703, as per the HSN Explanatory Notes.

3. Determination of Whether the Misclassification Was Intentional:
The appellant argued that the misclassification was based on the advice of their consultant chartered accountant and that there was no intention to evade duty as the customs duty paid would be reimbursed by Jawaharlal Nehru Port Trust (JNPT). However, the tribunal found that the appellant had a history of similar misclassifications and had adopted a modus operandi of bifurcating the amphibious bus into two parts to claim a lower duty rate. The appellant was aware of the correct classification from previous imports and investigations by the Directorate of Revenue Intelligence (DRI). The tribunal concluded that the misclassification was deliberate and intended to evade duty.

4. Applicability of Penalties Under Sections 111(m) and 112(a) of the Customs Act, 1962:
The tribunal held that the goods were liable for confiscation under Section 111(m) of the Customs Act, 1962, due to deliberate misclassification. Consequently, the appellant was liable for a penalty under Section 112(a). The tribunal dismissed the appeal, upholding the imposition of the redemption fine and penalty.

Conclusion:
The tribunal concluded that the appellant deliberately misclassified the amphibious bus to evade customs duty, making the goods liable for confiscation under Section 111(m) and the appellant liable for a penalty under Section 112(a) of the Customs Act, 1962. The appeal was dismissed, and the penalties imposed by the lower authorities were upheld.