2023 (4) TMI 512 - AT - Customs

Classification of imported goods - modified Tapioca Starch, Industrial Grade - classificable under Chapter Heading 35051090 or under Tariff Heading 1108? - rejection of value and its re-determination of the duty - retraction of statements - willful mis-statement of facts or not - extended period of limitation - HELD THAT - The differential duty worked out in this case has the effect of changing both the classification and the valuation. However, there is no proposal whatsoever in the SCN to change the classification and the impugned order and the order-in-original also do not indicate any proposak to change the classification of the goods. Therefore, the change of classification cannot be sustained. As far as the valuation is concerned, the entire proposal of the Revenue is on two legs. The first is the appellant admitted in his statement that there was a difference between modified Tapioca Starch and Tapioca Starch and that he had imported Tapioca Starch in the disputed consignments. The TTSA prices during the relevant period were much higher. Based on these two facts, the assumption of the Revenue is that the prices were mis-declared by the appellant with an intent to evade duty and, therefore, the declared prices can be rejected retrospectively and a demand under Section 28 (4) can be issued because there was a willful mis-statement by the appellant. After examining the statements and the evidence available on record, we do not find any substantial evidence to reject the declared value. The only thing which goes in favour of Revenue is that the Managing Director of the appellant had given statements which, he retracted later. If the statements and the retraction are both considered, nothing survives in this demand. If neither is considered also, nothing survives. Appeal allowed.

Summary

Issues involved:
The issues involved in this case include the classification of imported goods, rejection of declared value, re-determination of duty, demand for differential duty, appropriation of deposited amount, imposition of penalty, and the admissibility of statements made before customs officers as evidence.

Classification of Imported Goods:
The appellant imported "modified Tapioca Starch" classified under Chapter Heading 35051090, but the officers alleged that the goods were "Native Tapioca Starch, Industrial Grade" classifiable under Tariff Heading 1108. The investigation was initiated based on this suspicion.

Rejection of Declared Value and Duty Re-Determination:
The Additional Commissioner rejected the declared value of the imported goods and re-determined it at a higher amount under the Customs Valuation Rules. A demand for differential duty was confirmed and ordered to be recovered along with interest. The penalty was also imposed on the appellant.

Contentions of the Appellant:
The appellant argued that the case was solely built on statements from the Managing Director, without substantial evidence. They contested that the re-classification was not proposed in the Show Cause Notice (SCN) and that the extended period of limitation was unjustified. The appellant maintained that the goods were correctly classified and that there was no misdeclaration of value.

Admissibility of Statements as Evidence:
The Revenue contended that the statements made by the Managing Director and the customs house agent were admissions against interest and should be considered as evidence. They argued that the declared value was lower than market prices, justifying the demand for differential duty.

Judgment:
The Tribunal found that there was insufficient evidence to reject the declared value and uphold the demand for differential duty. The retraction of statements by the Managing Director weakened the Revenue's case. The Tribunal set aside the impugned order, allowing the appeal with consequential relief to the appellant.

Separate Judgment:
The judgment was delivered by the Appellate Tribunal CESTAT NEW DELHI, with Members P.V. Subba Rao (Technical) and Binu Tamta (Judicial) presiding over the case.