2024 (5) TMI 573 - AT - Customs

Classification of goods - Valuation - liability to pay duty - Import of non-alloy steel slabs-seconds and defectives - confiscation of alloy steel - Penalty - dissonance with description of goods as slabs , classifiable against tariff item 7207 1990 - HELD THAT - According to Learned Counsel for appellant, the sole relief sought for in appeal of jurisdictional Commissioner of Customs is levy of differential duty for goods having been, as set out in impugned order, mis-declared, at least, as far as presence of alloy is concerned but that, notwithstanding the vigorous defence by Learned AR, the claim for ₹ 22,52,521 was below the threshold prescribed for pursuit of litigation by the Central Government in instruction dated 2nd November 2023 of CBIC from file of Judicial Cell to subordinate offices. Learned AR urged us to disregard this ground as one of the exceptions is an aspect of the appeal. Though the order impugned did take note of misdeclaration of alloy steel articles as those of non-alloy steel , the appeal of Revenue refers to descriptional deviation solely to reinstate the upward valuation that had been resorted to by the original authority. Thus, we find that the exception in the instructions supra does not guide the handling of this appeal. The appeal of Commissioner of Customs is dismissed for not being in compliance with threshold qualification in the litigation policy of the Central Government. The finding on confiscability is limited to alloy steel articles lying uncleared. That these were liable to confiscation is based on test report of sample which was extrapolated to the entirety of the consignment. The extent of misdeclaration has, thus, not been quantified. It is conceded in the impugned order that the goods are only technically offending. It is also clear that the extent of alleged misdeclaration is limited and, with no consequence to value or rate of duty, hardly qualifies to be of relevance in disposal of the declaration u/s 46 of Customs Act, 1962. We see no reason to sustain the confiscation. Appeal of importer-appellant is allowed. Appeal of Revenue is dismissed.

Summary

Issues involved:
The issues involved in this case are the liability to pay differential duty on imported goods, classification of goods, provisional assessment, confiscation of goods, misdeclaration of alloy steel, and compliance with litigation policy of the Central Government.

Liability to pay differential duty:
The dispute revolved around the import of 'non-alloy steel slabs-seconds and defectives' by M/s Prabhat Steel Traders P Ltd. The Committee of Commissioners contended that the importer should be liable for the differential duty amounting to Rs. 22,52,521 due to misdeclaration of alloy steel content. The Commissioner of Customs (Appeals) had absolved the importer of this liability, but the Commissioner of Customs (Import), Mumbai, challenged this decision. The appeal was based on the Customs Valuation Rules, 2007 and sections 111(m) and 112 of the Customs Act, 1962. The appellate tribunal ultimately allowed the appeal of the importer and dismissed the appeal of the Revenue.

Classification of goods and provisional assessment:
The issue of classification arose as the goods were initially described as 'slabs' but were later determined to be 'plates and sheets' of non-alloy steel. The goods underwent testing, provisional assessment, and adjudication. The provisional assessment was challenged before the appellate authority, leading to a partial success for both parties. The goods were found to be classifiable against tariff item 7225 of the Customs Tariff Act, 1975. The original authority re-determined the differential duty liability and confiscated a portion of the goods due to misdeclaration.

Confiscation of goods:
The first appellate authority found it unjust to confiscate 'plates and sheets' of non-alloy steel, as the distinction between alloy and non-alloy steel was not convincingly established. However, the technical liability to confiscation was upheld for a portion of the goods. The tribunal concluded that the confiscation of alloy steel articles was based on a test report that was extrapolated to the entire consignment, without quantifying the extent of misdeclaration. The tribunal deemed the goods to be only 'technically' offending and decided not to sustain the confiscation.

Misdeclaration of alloy steel and compliance with litigation policy:
The appeal involved allegations of misdeclaration of alloy steel as non-alloy steel. The Revenue sought to reinstate the upward valuation based on this misdeclaration. The tribunal noted the misdeclaration but dismissed the Revenue's appeal for not meeting the threshold qualification in the Central Government's litigation policy. The tribunal emphasized that the misdeclaration did not have a significant impact on the value or rate of duty, leading to the dismissal of the appeal.

Compliance with litigation policy of the Central Government:
The appeal of the Commissioner of Customs was dismissed for failing to comply with the threshold qualification in the Central Government's litigation policy. The tribunal found that the exception in the instructions did not apply to this case, leading to the dismissal of the appeal.