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2023 (12) TMI 797 - AT - CustomsClassification of imported goods - Automotive Diesel Fuel misdeclared as Mixed Glycol or Base Oil - restricted goods or not - validity of the test reports on the ground that the samples have not been tested on all the 21 parameters specified in IS 1460 2005 (BIS standard for Automotive Diesel Fuel) - undervaluation of imported consignments - misdeclaring the net weight of the consignments to evade proper payment of customs duty - Penalty under section 112(a) and section 114AA. Classification of imported goods - HELD THAT - According to the appellant, the two reports have given different findings for same parameters and since there is no other corroborative evidence, the impugned order is unsustainable. There are no merit in the submissions made by the learned Counsel for the simple reason that test have been conducted by highly specialized government laboratories, i.e., CRCL and SFPL and no fault can be found on the test reports submitted by them. From the two reports, it is clear that the impugned goods are Automotive Diesel Fuel and conform to the standards of IS 1460 2017 and therefore the challenge that the samples have not been tested on all the 21 parameters is baseless and does not establish that the goods are not Automotive Diesel Fuel. The controversy that the goods have not been tested on all 21 parameters would not really make any difference and even on the basis of limited parameters the identity of the goods stands established in view of cogent and substantive evidence in the form of test reports by the two independent government laboratories. These test reports cannot be said to be incomplete or inconclusive. Consequently, the goods in question imported by the appellant were mis-declared as they were not Mixed Glycol and Base Oil but were Automotive Diesel Fuel, the import whereof is restricted only by State Trading Enterprises in terms of the Import Policy, 2017. Therefore, the impugned goods being Automotive Diesel Fuel was covered under CTH 2710 1944 and not under CTH 2710 1971 as per the declaration made by the appellant. The veracity of these test reports given by highly technical experts is not open to challenge on frivolous grounds of cross examination sought to be raised by the appellant and as rightly noted by the adjudicating authority that it is only an attempt by the appellant to delay the proceedings. The statement of the proprietor has been recorded under Section 108 which is admissible in evidence, wherein he accepted the test reports and refused to comment thereon and in that view no fruitful purpose would have been served by allowing cross examination. Moreover, the said statement has never been retracted by him. Valuation of the impugned goods - HELD THAT - In the present case, on the basis of the intelligence, the data of live import of subject goods were examined in respect of four individual importers, namely, M/s Mangli Enterprises, M/s Vishal Oil and Lubricants Co., M/s. Shobhag International Private Ltd and M/s Petro Lubes India Ltd. - the value declared by the appellant of Rs.66,31,08,429/- was rejected and the same was redetermined at Rs. 79,57,301/- under Rule 4 and 5 of the Customs Valuation Rules, 2007, read with Section 14 and Section 17(4) of the Customs Act. I, therefore, uphold the demand on account of value difference as calculated by the Authority. Mis-declaration of goods - HELD THAT - The appellant had mis-declared the goods, and therefore mis-classified them, which resulted in misdeclaration of the value of the goods, the authorities below rightly held that the goods were liable to confiscation under section 111(d)(f) and (m) of the Customs Act. The said goods are restricted goods as only State Trading Enterprises could import them and the appellant had no authorization to import the restricted goods. Since the import is contrary to the restrictions placed on such imports by the Government of India, hence, the seized goods have become prohibited goods in terms of section 2 (33) of the Customs Act and therefore order of absolute confiscation in the present case is justified - Also, considering the fact that the impugned goods are highly inflammable and require expertise to handle them, requiring special storage facilities, the adjudicating authority rightly rejected the redemption of these goods and ordered absolute confiscation. Penalty under section 112(a) and section 114AA - HELD THAT - The Adjudicating Authority had imposed penalty of Rs. 35 lakhs under Section 112 (a) and Rs. 20 lakhs under Section 114AA of the Customs Act, however, the Appellate Authority reduced the same to Rs. 15 lakhs and Rs 10 lakhs under section 112(a) and 114AA respectively, considering that the section prescribes only the upper limit of penalty that can be imposed and since the goods have been absolutely confiscated, the penalty needs to be moderate - the impugned order agreed upon that the penalty as imposed by the adjudicating authority was excessive. Appeal dismissed.
Issues Involved:
1. Validity of the test reports. 2. Valuation of the impugned goods. 3. Confiscation of goods and penalty imposition. Summary: Validity of the Test Reports: The appellant challenged the validity of the test reports on the grounds that the samples were not tested on all 21 parameters specified in IS:1460:2005. The court found no merit in this argument, emphasizing that the tests were conducted by highly specialized government laboratories (CRCL and SFPL). Both laboratories confirmed that the samples met the requirements of Automotive Diesel Fuel as per IS:1460:2017. The court referenced the High Court of Gujarat's decision in Raj Kamal Industries, which established that testing on limited parameters by multiple laboratories is sufficient to prove the identity of the goods. The appellant's acceptance of the test reports further solidified their validity. Valuation of the Impugned Goods: The adjudicating authority found that the appellant mis-declared the value of the goods by mis-declaring their nature. The department examined data from other importers and found evidence of undervaluation through WhatsApp chats. The declared value of Rs.66,31,08,429/- was rejected and re-determined at Rs.79,57,301/- under Rule 4 and 5 of the Customs Valuation Rules, 2007, read with Section 14 and Section 17(4) of the Customs Act. The court upheld the demand on account of value difference. Confiscation of Goods and Penalty Imposition: The court held that the goods were liable to confiscation under Section 111(d)(f) and (m) of the Customs Act as they were restricted goods, importable only by State Trading Enterprises. The appellant had no authorization to import these restricted goods, making them "prohibited goods" under Section 2(33) of the Customs Act. The court referenced the Delhi High Court's decision in Nidhi Kapoor Versus Union of India and the Supreme Court's analysis in Om Prakash Bhatia Vs. Commissioner of Customs, Delhi, to justify the absolute confiscation of the goods. The court also noted the inflammable nature of the goods, requiring special storage facilities, as a reason to reject their redemption. Penalty: The adjudicating authority initially imposed a penalty of Rs. 35 lakhs under Section 112(a) and Rs. 20 lakhs under Section 114AA of the Customs Act. The appellate authority reduced these penalties to Rs. 15 lakhs and Rs. 10 lakhs, respectively, considering the excessive nature of the initial penalties. The court agreed with the reduction and found no reason to interfere with the quantum of the penalty. Conclusion: The impugned order was affirmed, and the appeal was dismissed.
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