2024 (3) TMI 1187 - AT - Customs

Classification of imported goods - Rubber Processing Oil (RPO) - enhancement the value - mis-declaration of the country of origin in the bills of entry. Whether the Rubber Processing Oil imported by the Appellant is classifiable under Chapter Heading No. 27101990 as classified by the Appellants or under Chapter Heading No. 27079900 as classified by the Revenue? - HELD THAT - From the judgment of this Tribunal in AMIT PETROLUBES P. LTD VERSUS C.C. -KANDLA AND HEMANT SHAH VERSUS C.C. -KANDLA 2023 (12) TMI 796 - CESTAT AHMEDABAD , it can be seen that in the identical fact the department s claim of classifying the RPO under 27.07 was rejected. Therefore with the support of the above referred judgment and particular facts of the present case, the impugned order on the issue of classification is not sustainable. Whether the value of the imported RPO can be enhanced based on the consent letters given by the directors of the Appellants at the time of release of the goods, without following the due process of law as contemplated under Section 14 of the Customs Act read with Customs (Determination of Value of imported value) Rules, 2017? - HELD THAT - In the present case neither any contemporaneous value was adopted nor any method as prescribed under Section 14 read with Custom Valuation Rules, 2007 was followed. Therefore, merely on the basis of statements of director valuation cannot be enhanced. Therefore, the enhancement of the value is not sustainable in the facts of the present case. This similar issue has been considered in the case of GURU RAJENDRA METALLOYS INDIA PVT LTD VERSUS C.C. -AHMEDABAD 2020 (6) TMI 68 - CESTAT AHMEDABAD wherein the tribunal held that only on the basis of the consent letters of the importer enhancement of valuation cannot be made - the enhancement of the value by the lower authorities is without any legal basis. Hence, the same will not sustain and accordingly, the enhancement of the value done by the Revenue is set aside. Whether the Appellants mis- declared the Country of Origin in the Bills of entry filed by them? - HELD THAT - The material information declared in the bill of entry mainly corresponds to the goods that are under import and mis declaration of country of origin is immaterial towards the valuation, description and other such particulars concerning the goods, and the appellant would have gained nothing as no preferential rate of duty was claimed by the appellant. Without prejudice, mis declaration of origin being an issue technical in nature does not seem to form any implication towards the revenue. Therefore, if there is a mis-declaration of country of origin the appellant being not the party to make any incorrect declaration cannot be held responsible and no consequential penalty can be imposed on the appellant. Whether the quantum of penalties and redemption fine imposed disproportionate to differential duty involved in the matter? - HELD THAT - This Tribunal held that for incorrect mention of country of origin, the importer cannot be penalized. Accordingly, in the present case also considering overall facts and the fact of incorrect declaration, if any, regarding country of origin in the Country of Origin Certificate, the appellant is not liable for any penalty or fine - As regard the appeals filed by individuals as observed, since there the impugned order against the main appellants is not sustainable, there is no reason to continue the personal penalty upon the individuals co- appellants. The impugned order is set aside - Appeals are allowed.

Summary

Issues Involved:
1. Classification of Rubber Processing Oil (RPO).
2. Enhancement of the value of imported RPO.
3. Mis-declaration of the Country of Origin.
4. Quantum of penalties and redemption fine imposed.

Summary:

1. Classification of Rubber Processing Oil (RPO):
The primary issue was whether the imported RPO should be classified under Chapter Heading 27101990 as claimed by the appellant or under Chapter Heading 27079900 as classified by the Revenue. The lower authorities based their classification on the test report from the Custom House Laboratory, Kandla, which indicated that the non-aromatic content was less than the aromatic content. The Tribunal found that the method specified under BIS was not adopted, making the test report unreliable. Referring to the case of Amit Petrolubes, the Tribunal concluded that the RPO should be classified under CTH 27101990, as the test reports provided by the supplier and accredited laboratories showed the aromatic content to be less than the non-aromatic content.

2. Enhancement of the Value of Imported RPO:
The Tribunal addressed whether the value of the imported RPO could be enhanced based on consent letters from the directors of the appellants without following the due process of law u/s 14 of the Customs Act read with Customs (Determination of Value of Imported Goods) Rules, 2017. The Tribunal held that the enhancement of value based merely on the directors' consent letters was unsustainable. The Tribunal emphasized that the proper methodology as per Section 14 and the Customs Valuation Rules was not followed, and no contemporaneous value was adopted. Thus, the enhancement of the value was set aside.

3. Mis-declaration of the Country of Origin:
The issue was whether the appellants mis-declared the country of origin in the bills of entry. The Tribunal noted that the appellants declared the country of origin based on documents received from the supplier and had no deliberate intention to mis-declare. It was highlighted that no preferential rate of duty was claimed based on the country of origin. Referring to the case of BEL India Trade Pvt. Ltd., the Tribunal concluded that the mis-declaration of the country of origin did not warrant penalties as it had no revenue implications.

4. Quantum of Penalties and Redemption Fine:
The Tribunal considered whether the penalties and redemption fine imposed were disproportionate to the differential duty involved. It was noted that there was no intention on the part of the appellants to evade customs duty, and the classification was based on the decision in Sah Petroleum Ltd. The Tribunal found the penalties and fines to be excessive and set them aside, providing consequential relief to the appellants.

Conclusion:
The Tribunal set aside the impugned order, allowing the appeals with consequential relief. The classification of RPO under CTH 27101990 was upheld, the enhancement of value was deemed unsustainable, the mis-declaration of the country of origin was considered non-penalizable, and the penalties and fines were found to be disproportionate.