1989 (7) TMI 227 - AT - Customs

Summary

Issues Involved:
1. Validity of the import licenses.
2. Classification of the imported goods as PVC sheets or floor coverings.
3. Valuation of the imported goods.
4. Allegations of mis-declaration and under-valuation.
5. Imposition of redemption fine and penalty.

Issue-wise Detailed Analysis:

1. Validity of the Import Licenses:
The appellant sought clearance of 162 rolls of PVC sheets against four import licenses. The Collector of Customs held that the goods were floor coverings and not PVC sheets as claimed, thus not qualifying for importation under the licenses. The licenses were valid for items listed under Export Product Group C-11-3/C-11-4 of Appendix 17 of the Import Policy AM 1985-88. The Adjudicating authority noted that consumer goods listed under Appendix 2B were not eligible for import even under REP licenses. The Tribunal upheld this view, stating the goods imported were consumables in violation of the ITC Policy, thus rendering the import unauthorized.

2. Classification of the Imported Goods:
The Customs authorities classified the goods under Heading 3918.10 of the Customs Tariff as floor coverings, whereas the appellant claimed them under 3921.12 and 3920.11 as PVC sheets. The test report confirmed the goods were polyvinyl chloride sheets with designs and patterns, indicating they were finished products (floor coverings). The Adjudicating authority and the Tribunal concluded that the goods were indeed floor coverings, thus supporting the Customs' classification.

3. Valuation of the Imported Goods:
The appellant declared a value of US $0.60 per sq.m., while the Collector of Customs re-assessed it at US $1.157 per sq.m. The Collector noted that a sister concern had imported second quality PVC sheets at DFL 2.00 per sq.m., suggesting under-valuation by the appellant. The Tribunal upheld the re-assessed value, considering the goods' prime quality and comparable imports from the same region. The argument for weight-based valuation was rejected, affirming the value at US $1.157 per sq.m.

4. Allegations of Mis-declaration and Under-valuation:
The Customs authorities accused the appellant of knowingly mis-declaring the goods' description and value to evade customs duty, constituting an offense under Section 46 of the Customs Act, 1962. The Tribunal agreed with the findings of mis-declaration and under-valuation, supporting the confiscation of goods under Sections 111(d) and 111(m) of the Customs Act, 1962.

5. Imposition of Redemption Fine and Penalty:
The Adjudicating authority imposed a redemption fine of Rs. 1.5 lakhs and a penalty of Rs. 1 lakh under Section 112 of the Customs Act, 1962. The Tribunal, while upholding the confiscation and re-assessed value, reduced the redemption fine to Rs. 1 lakh and the penalty to Rs. 75,000, considering the totality of the case.

Separate Judgment by I.J. Rao, Member (T):
I.J. Rao dissented, arguing that the goods should be treated as PVC sheets and that the declared value should be accepted. He highlighted that the term 'PVC' is generic, and floor coverings are a type of PVC sheet. He also noted that the Collector's rejection of the declared value lacked valid reasons and that the comparison with other imports was inappropriate. Consequently, he allowed the appeal, opposing the majority view.

Final Order:
In terms of the majority view, the appeal was rejected except for the modification in the redemption fine and penalty as ordered by Member (Judicial) Shri Harish Chander.