2023 (3) TMI 842 - AT - Customs

Classification of imported goods - import of de-natured ethyl for re-exports - classifiable under the Chapter Heading 22072000 of the Customs Tariff or under CTH 22071000? - confiscation alongwith option of redemption fine - penalty - case of the revenue in the present matter is that subject goods found to be Ethyl Alcohol in terms of test report dated 20.01.2021 and further clarification issued by the CRCL, Kandla. HELD THAT - In the present matter by relying the test report given by CRCL, Kandla revenue argued that sample of goods are not considered as denatured Alcohol as per the Indian Standard, Alcohol Denaturants Specification IS 4117 (2008). Therefore the impugned goods are Ethyl Alcohol and not denatured ethyl alcohol. In this context we noticed that Board issued circular 02/2006 dated 10.01.2006 wherein the requirement of IS 4117-1973(2008) related to alcohol denaturants is made. We agree with the argument of Learned Counsel that the aforesaid Circular is not applicable to the disputed goods under consideration because the above circular issued with regard to denaturation of ethyl alcohol that is to be allowed clearance for industrial use in India and not with regards the goods imported and bonded for re-export. There is no allegation against the appellant that the disputed goods was imported for industrial use in India. Since such goods are not meant for any use in India, the same are not required to be allowed clearances in India. Hence the charges of mis-declaration of goods against the appellant by citing the non-compliance with IS 4117-1973 (2008) is completely misconceived and cannot be sustained. Confiscation of goods on the non-compliant of IS 4117 (2008) - HELD THAT - As per the Board Circular No.2/2006 dated 10.01.2006 this requirement is applicable to goods meant for clearance into India and not to any such goods which are meant for re-export and use outside India, the goods which are admittedly meant for re-export. First of all, there is no violation of compliant of IS 4117 (2008) even if it is required in view of the goods being re-exported. There is no case of confiscation of goods under Section 111(m) of the Customs Act, 1962 accordingly, the penalty under Section 112 and 114 of the Customs Act, 1962 are not sustainable. Penalty under Section 114AA of the Customs Act, 1962 - charge of mismatch in the date of bill of lading in as much as the date mentioned in the bill of lading presented by appellant along with bill of entry was also reported by the master/agent in the Import General Manifest filed in the EDI system - HELD THAT - It is clearly mentioned in the bill of lading that the shipment of 1900 MT. was loaded on board of vessel as part of one original lot of 38,386.137 MT. as Galveston Tx, USA on 27.10.2020. This has been corroborated by the statement of various representative recorded by the officers in the course of inquiry therefore, in absence of contrary evidence, the allegation that the date of lading mentioned in the bill of lading is incorrect and not justified. There are force in the appellant s submission as reliance placed on Commercial Certificate of Quality No. LABORATORY JOB NO.DP 20-11252.004 dated 29.10.2020 when the goods were mentioned as Undenatured Ethyl Alcohol is misplaced in as much as the said invoice was issued prior to denaturation at the Galveston anchorage. After arrival into India, the Chemical Examiner of Custom House laboratory at Kandla has certified that goods have been denatured with Bitrex/Denatonium Benzoate. On this basis, the conclusion of the authorities below that the bill of lading is incorrect and false in respect of description of goods as well as imposing penalty on the appellant under Section 117 of the Customs Act, 1962. The order of confiscation and subsequent penalties is bad in law as well in fact - the confiscation and redemption fine are set aside - Penalties also set aside - appeal allowed.

Summary

Issues Involved:
1. Mis-declaration of goods.
2. Requirement of IS specified denaturants.
3. Confiscation and penalties under various sections of the Customs Act, 1962.
4. Applicability of Board Circular No. 2/2006.
5. Alleged mismatch in the date of the bill of lading.

Summary:

1. Mis-declaration of Goods:
The appellant imported 1900 MT of Denatured Ethyl Alcohol for re-export and declared it under CTH 22072000. The Adjudicating Authority reclassified the goods under CTH 22071000, alleging mis-declaration. The Commissioner (Appeals) upheld the charges but reduced the penalties. The Tribunal found that the goods were denatured with Bitrex, a globally used denaturant, and thus, the requirement for IS specified denaturants was not applicable. Consequently, the allegation of mis-declaration was deemed unsustainable.

2. Requirement of IS Specified Denaturants:
The appellant argued that the requirement for IS specified denaturants, as per Circular No. 02/2006, applies only to goods meant for consumption in India. Since the goods were for re-export, this requirement was not applicable. The Tribunal agreed, stating that the circular is not applicable to goods meant for re-export and use outside India.

3. Confiscation and Penalties:
The Adjudicating Authority ordered the confiscation of the goods under Sections 111(m) and 113(i) of the Customs Act, 1962, and imposed fines and penalties. The Tribunal found that the goods were correctly denatured and not fit for drinking, thus setting aside the confiscation and penalties. The Tribunal also noted that there was no mala fide intention behind the alleged mis-declaration.

4. Applicability of Board Circular No. 2/2006:
The Tribunal held that the circular, which prescribes BIS standards for denaturation, is applicable only to goods meant for clearance into India, not for re-export. Therefore, the charges of non-compliance with IS 4117-1973 (2008) were found to be misconceived.

5. Alleged Mismatch in the Date of the Bill of Lading:
The Tribunal found that the date mentioned in the bill of lading was corroborated by the Import General Manifest filed in the EDI system and the statement of the appellant's representative. Thus, the allegation of an incorrect date was deemed unjustified.

Conclusion:
The Tribunal set aside the order of confiscation and penalties, allowing the appeal with consequential relief. The judgment emphasized that the goods were correctly denatured and the requirements for IS specified denaturants were not applicable to goods meant for re-export.