2024 (4) TMI 916 - AT - Customs

Classification of imported goods - Navigation System - Multifunctional Devices or not - classifiable under CTH 8527 2900 or under Chapter Heading 8526 9190? - penalty u/s 114A of the Customs Act, 1962 - Extended period of Limitation - HELD THAT - The Bills of Entry placed on record is seen, where the description of the products was mentioned as Navigation System . However, on investigation, after verifying the catalogue and the instructions manuals, it was found that the goods were actually described as infotainment system . The importer is an accredited client where certain privileges are extended to them and the Bill of Entry was cleared under RMS, the lapse was noticed only after SIIB investigation and therefore, the Commissioner (Appeals) was right in invoking suppression/mis-declaration, since the goods were mis-declared by the appellant knowing very well as per the catalogue and the manual that they were multifunctional devices. The appellant s only defence is that though the catalogue/technical literature is only for the purpose of marketing to show that it is a one stop solution to all the features required in the car cannot absolve them from the responsibility from making a true and correct declaration of the description of the product so as to decide its appropriate classification by the assessing authorities. Also, this itself proves that the appellant was well aware of all the features but still decided to declare them only as a navigation equipment thus wilfully mis-declaring the products. Penalty under Section 114A of the Customs Act, 1962 - HELD THAT - The appellant s only defence is that though the catalogue/technical literature is only for the purpose of marketing to show that it is a one stop solution to all the features required in the car cannot absolve them from the responsibility from making a true and correct declaration of the description of the product so as to decide its appropriate classification by the assessing authorities. Also, this itself proves that the appellant was well aware of all the features but still decided to declare them only as a navigation equipment thus wilfully mis-declaring the products. Therefore, the Commissioner (A) was justified in invoking the suppression on the ground that the facilities provided to the appellant being an Accredited client was misused by mis-declaring the facts. Accordingly, the differential duty with interest is upheld along with mandatory penalty under Section 114A of the Customs Act, 1962. Extended period of limitation - HELD THAT - The Hon ble Supreme Court in the case of Commissioner of Central Excise Ahmedabad Versus M/s. Urmin Products P. Ltd. And Others 2023 (10) TMI 1112 - SUPREME COURT observed Thus, in the event of mis-description, wrong description or erroneous description or intentional improper classification of the product manufactured, would not tie the hands of the Competent Authority from piercing the corporate veil to ascertain the true nature of the product and reclassify the same, necessarily after affording an opportunity of hearing which would be in compliance of the doctrine of natural justice. In view of the above, it is found that the Commissioner was justified in invoking the extended period of limitation. The impugned order is upheld - the appeal is rejected.

Summary

Issues Involved:

1. Classification of imported goods.
2. Suppression of facts and invocation of extended period of limitation.
3. Imposition of penalty u/s 114A of the Customs Act, 1962.

Summary:

1. Classification of Imported Goods:

The appellant imported 'Navigation System' classifying them under Chapter Heading 8526 9190. Upon investigation, the authorities determined that the goods were 'Multifunctional Devices' and should be classified under CTH 8527 2900. The appellant argued that the principal function of the imported item was navigation, citing various features like GPS Navigation, TFT screen, AM/FM tuner, etc., and relied on Interpretative Rules, specifically Rule 3(b), which considers the essential character of a product. However, the Tribunal found that the device was a 'Multifunctional Device' with functions such as listening to music, making calls, and navigation, and thus, correctly classifiable under CTH 8527 as per specific Chapter Headings.

2. Suppression of Facts and Invocation of Extended Period of Limitation:

The appellant was accused of suppressing the multifunctional status of the product to avail lower duty rates. The Tribunal noted that the appellant, being an accredited client, misused the facility by declaring the wrong classification at the time of filing the Bill of Entry. The Commissioner (Appeals) invoked suppression/mis-declaration as the goods were mis-declared by the appellant, knowing well that they were multifunctional devices. The Tribunal upheld the invocation of the extended period of limitation, referencing the Supreme Court's observation in Commissioner of Central Excise Ahmedabad Versus M/s. Urmin Products P. Ltd. And Others: 2023-TIOL-148-SC-CX.

3. Imposition of Penalty u/s 114A of the Customs Act, 1962:

The appellant contended that there was no suppression of facts or willful misdeclaration and cited various case laws to argue against the imposition of penalty. However, the Tribunal found that the appellant was aware of all the features but still declared the goods only as 'navigation equipment', thus willfully mis-declaring the products. Consequently, the differential duty with interest and mandatory penalty u/s 114A of the Customs Act, 1962, were upheld.

Conclusion:

The Tribunal upheld the impugned order and rejected the appeal, confirming the classification of the imported goods under CTH 8527, the invocation of the extended period of limitation, and the imposition of penalty u/s 114A of the Customs Act, 1962. The order was pronounced in Open Court on 10.04.2024.