2009 (9) TMI 156 - AT - Customs

Order of Confiscation of the imported ATM machines and terminal computers Final disposal of appeal itself not proper at stay stage - misdeclaration of value and fraud statements accepting misdeclaration not retracted undervaluation not challenged prima facie case for demand of duty and penalty appellant admitted that what was imported was modem only so question of remanding the matter for ascertaining correct classification not arises Whether this case is fit for remand without pre-deposit at the stay stage Case remanded by Member (Judicial) for denovo adjusidcation while hearg stay application without examinng merits Member (Technical) noting that order was reserved and during hearing remand aspect not before Departmental Representative and matter argued only for stay petition - held that remand cannot be ordered without putting other side to notice and noting its objections who may be ill prepared for such eventuality reasoning of Member (Technical) against allowing appeals at stay stage by way of remand without pre-deposit, agreed with by Third Member Pre-deposit directed However, bank not being party to mis-declartion, entitled to waiver of pre-deposit of penalty Indian subsidiary of foreign supplier prima facie liable to penalty as entire conspiracy was hatched to overcome import restrictions but penalty cannot be imposed on company u/s 112(b) of Customs Act, 1962 since destruction of documents not contested in writ appeal and hence plea on violation of natural justice not acceptable

Issues Involved:
1. Confiscation of ATM machines and terminal computers.
2. Demand of customs duty.
3. Imposition of penalties under Section 112 of the Customs Act, 1962.
4. Alleged smuggling and mis-declaration of imported goods.
5. Violation of principles of natural justice.
6. Requests for cross-examination and document inspection.
7. Classification and valuation of imported goods.
8. Separate judgments by judicial and technical members.

Issue-wise Detailed Analysis:

1. Confiscation of ATM Machines and Terminal Computers:
The adjudicating authority confiscated the ATMs and terminal computers, giving an option to redeem them on payment of a fine. The confiscation was based on the conclusion that the goods were imported in a completely knocked down (CKD) condition and mis-declared as parts to evade customs duty.

2. Demand of Customs Duty:
The customs duty was confirmed against Hindustan Engineering Corporation and others for importing ATMs and terminal computers by mis-declaring them as parts. The adjudicating authority concluded that the imported goods were complete machines and not parts, thus confirming the demand for customs duty.

3. Imposition of Penalties under Section 112 of the Customs Act, 1962:
Penalties were imposed on thirteen individuals and entities involved in the importation process, including Hindustan Engineering Corporation, J.P. Mody, Peico Electronics, and their employees. The penalties were based on the alleged mis-declaration and evasion of customs duty.

4. Alleged Smuggling and Mis-declaration of Imported Goods:
The investigation revealed that J.P. Mody had imported ATMs and terminal computers under the guise of parts, which were then sold to HSBC and Citi Bank. The authorities found that the imported goods were complete ATMs and terminal computers, and the mis-declaration was intended to evade customs duty.

5. Violation of Principles of Natural Justice:
The appellants argued that the adjudicating authority violated principles of natural justice by not providing essential documents, denying cross-examination requests, and not considering the Chartered Engineer's certificates. The Tribunal found merit in these arguments and noted the need for a fair hearing and examination of all relevant documents.

6. Requests for Cross-examination and Document Inspection:
The appellants requested cross-examination of the Assistant Commissioner and other witnesses, which was denied by the adjudicating authority. They also sought copies of bills of entry and examination reports, which were not provided. The Tribunal highlighted the importance of cross-examination and document inspection for a fair adjudication process.

7. Classification and Valuation of Imported Goods:
The classification and valuation of the imported goods were disputed. The appellants argued that the goods were parts and not complete ATMs, supported by Chartered Engineer's certificates. The adjudicating authority, however, concluded that the goods were complete machines based on the investigation and statements from various individuals.

8. Separate Judgments by Judicial and Technical Members:
There was a difference in opinion between the judicial and technical members of the Tribunal. The judicial member favored remanding the case for re-adjudication without pre-deposit, citing violations of natural justice. The technical member disagreed, emphasizing the need for pre-deposit and supporting the adjudicating authority's findings. The third member (Judicial) sided with the technical member, leading to a majority decision requiring pre-deposits.

Majority Decision:
The majority decision required the appellants to make pre-deposits of specified amounts within eight weeks, rejecting the judicial member's proposal for remand without pre-deposit. The decision emphasized the need for compliance with Section 129E of the Customs Act before proceeding with the appeals.

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