2024 (5) TMI 479 - AT - Customs

Re-determination of value - Misdeclaration - ​​​​​​​ reclassifying of the impugned goods - chargeable to duty - confiscation - Penalty - Consequent upon first check , the goods were not waste and scrap but alloy steel powder meriting re-classification thereon and consequent re-valuation - HELD THAT - The demand for imposition of fine in lieu of confiscation and of penalty without issue of notice, or waiver of notice in the full knowledge of such intent on the part of customs authorities, is in excess of law and not admissible in the context set out in the grounds of appeal. The grounds of appeal have not established that respondent had been placed on oral notice and, at his request, for that to suffice as proposal to confiscate the goods and impose penalty. The grounds of appeal have not essayed upon incorrectness of exercise of mind by the adjudicating authority and in the stated circumstances, on the declaration before him, that no offence u/s 111(m) of Customs Act, 1962 was evident. It is not their case in the grounds of appeal that every revision of classification and valuation is statutorily to be followed by invoking of section 111(m) of Customs Act, 1962 and section 112 of Customs Act, 1962. Thus, there is no merit in the appeal which is dismissed.

Summary

Issues Involved:
The appeal concerns the failure to confiscate goods and impose penalty under sections 111(m) and 112 of the Customs Act, 1962.

Issue 1: Failure to Confiscate Goods and Impose Penalty

The appeal was filed by the Committee of Chief Commissioners against an order of the Commissioner of Customs (Exports), Nhava Sheva. The order stopped at re-determining the assessable value of goods and reclassifying them, leading to a levy of differential duty under section 129D(1) of the Customs Act, 1962. The key contention was the failure in the impugned order to confiscate the goods under section 111(m) and impose an appropriate penalty under section 112 of the Customs Act, 1962. The importer had imported 'waste and scrap of high speed steel dry grindings' but subsequent inspections revealed the goods to be 'alloy steel powder'. The importer accepted the liability for differential duty and the denial of exemption from duties. The impugned order did not invoke section 28 of the Customs Act, 1962, as the duty liability had been discharged while the goods were stored in a warehouse as per section 49 of the Act. The appeal raised concerns regarding misdeclaration by the importer, eligibility for duty exemption, and the necessity of confiscation and penalty.

Issue 2: Compliance with Notice Requirements

The appeal highlighted the mandatory requirement of issuing a show cause notice before confiscation of goods or imposition of penalties under section 124 of the Customs Act, 1962. The impugned order did not demonstrate explicit communication of intent to confiscate goods and impose penalties to the importer. While the importer had waived the show cause notice orally, the grounds of appeal argued that such waiver did not fulfill the legal obligation of informing the owner of the goods about the proposed action. The adjudicating authority's decision not to confiscate the goods or impose penalties was based on the importer's request for a first check appraisal and the absence of deliberate evasion of duty. The appeal contended that the demand for fine in lieu of confiscation and penalty without proper notice exceeded the legal provisions and was not justified in the circumstances outlined.

Outcome:
The appeal was dismissed as it failed to establish merit based on the grounds presented. The judgment emphasized the importance of complying with legal procedures, including issuing proper notices before confiscation and penalty imposition under the Customs Act, 1962.