2024 (8) TMI 1112 - AT - Customs

Confiscation and redemption of goods - levy of penalty u/s 114A of CA - Suction pumps - capacity of suction pumps - Were they of 75GPD capacity as asserted by the appellant or were they of 100 GPD capacity but mis-declared as of 75GPD as asserted by the department? - If they were of 100 GPD capacity, was the method of redetermination and the value determined by the adjudicating authority correct? - Excess quantity of the non-textured fabric. Capacity of pumps - Burden of prove - HELD THAT - Since the department is disputing the declaration made by the appellant, the department has to produce evidence - In this case, the appellant filed the Bill of Entry making some declaration regarding the nature of the goods and their value. If Revenue asserts that the declarations are not correct, it has to produce evidence in support; otherwise it would fail. The capacity declared by the appellant has not been established to be false or incorrect by the Revenue either through the certificate of the Chartered Engineer or through any other evidence. Consequently, there is no ground to reject the transaction value of the pumps. The value of the pumps declared in the Bill of Entry should therefore, have been accepted. Excess quantity of the non-textured fabric - HELD THAT - The appellant does not dispute that excess quantity was found and that duty has to be paid on the excess quantity. It has already paid the duty. Jurisdiction to make re-assessment - HELD THAT - It is clear that section 28 can be invoked only after the goods have been cleared for home consumption because until then, the assessment is still open and if any discrepancies are found or any adjustments have to be made, they can be done by the proper officer through re-assessment under section 17. In this case, the appellant filed the Bill of Entry and selfassessed duty and before it could be re-assessed by the proper officer, the officers of the Commissioner of Customs (Preventive) intervened and the Additional Commissioner has done this reassessment instead of allowing the proper officer to do it. Thus, the demand which he confirmed is only a re-assessment under section 17 and is not a demand under section 28. Consequently, section 28AA and section 114A which are linked to section 28 do not apply to this case. This is simply a case of assessment of the goods where excess quantity of one of the goods was found on examination on which the appellant agreed and paid the excess duty. The proper officer could have done it in due course but the Additional Commissioner of Customs (Preventive) took over and did it. Confiscation of the goods and the redemption fine - HELD THAT - Section 111 makes certain goods liable for confiscation but does not mandate such confiscation. It is for the adjudicating authority to exercise his discretion and see if goods need to be confiscated in the facts of the case or not. In this case since the only violation is of import of excess quantity of one of the goods, it is found that no sufficient ground to confiscate the goods. Therefore, the confiscation of the goods and the redemption fine also deserve to be set aside. The confirmation of demand of duty on the excess quantity of PU Fabric is upheld - rest of the order set aside - appeal allowed in part.

Issues Involved:
1. Excess quantity of non-textured fabric found.
2. Capacity and valuation of suction pumps.
3. Assessment and confirmation of duty under section 28(4).
4. Confiscation and redemption of goods.
5. Imposition of penalty under Section 114A.

Detailed Analysis:

1. Excess Quantity of Non-Textured Fabric Found:
The appellant filed Bill of Entry No. 7301366 on 02.11.2016 to clear imported goods, including non-textured fabrics. Upon examination, officers found an excess quantity of 1629 square meters of non-textured fabric. The appellant agreed to the excess quantity and paid the duty on it. The appellant does not dispute the duty paid on this excess quantity even before the Tribunal. Therefore, the confirmation of demand of duty on the excess quantity of non-textured fabric was upheld.

2. Capacity and Valuation of Suction Pumps:
The appellant declared the suction pumps as 75 Gallons Per Day (GPD) capacity. However, the department disputed this declaration, asserting the pumps were of 100 GPD capacity. The burden of proof lies with the department to establish that the pumps were mis-declared. The department produced a certificate from a Chartered Engineer, who opined that the pumps "seem to be suitable for 100 GPD capacity." However, the Chartered Engineer did not conclusively determine the capacity, nor did he provide a formula or tests conducted to ascertain the capacity. In the absence of definitive evidence, the Tribunal accepted the appellant's declaration that the pumps were of 75 GPD capacity and imported at the prices indicated in the invoices. Consequently, the transaction value of the pumps declared in the Bill of Entry should have been accepted.

3. Assessment and Confirmation of Duty under Section 28(4):
The appellant argued that the duty could not have been confirmed under section 28(4) because the process of assessment was not completed. The Tribunal accepted this submission, noting that the proper officer must pass a Speaking Order within 15 days if the importer does not agree to the re-assessed duty. The Tribunal further explained that once the proper officer makes an order permitting clearance of goods for home consumption under section 47, the goods cease to be imported goods and dutiable goods, and the importer ceases to be an importer. Therefore, there can be no assessment of duty after this point, and any modifications to the assessment must be done through appeal or the process under section 28. In this case, the Additional Commissioner of Customs (Preventive) reassessed the duty instead of allowing the proper officer to do it, making it a reassessment under section 17 rather than a demand under section 28. Consequently, sections 28AA and 114A, which are linked to section 28, do not apply.

4. Confiscation and Redemption of Goods:
The goods were confiscated under section 111(l) and (m) and allowed to be redeemed on payment of a redemption fine. The Tribunal noted that section 111 makes certain goods liable for confiscation but does not mandate it. The adjudicating authority must exercise discretion to determine if confiscation is necessary. Since the only violation was the import of excess quantity of one of the goods, the Tribunal found no sufficient ground for confiscation. Therefore, the confiscation of the goods and the redemption fine were set aside.

5. Imposition of Penalty under Section 114A:
A penalty of Rs. 4,57,868/- was imposed on the appellant under section 114A. However, since the Tribunal found that the reassessment was under section 17 and not section 28, section 114A, which is linked to section 28, does not apply. Therefore, the penalty under section 114A was also set aside.

Conclusion:
The Tribunal partly allowed the appeal, upholding the confirmation of demand of duty on the excess quantity of non-textured fabric but setting aside the rest of the order, including the reassessment of suction pumps, confiscation of goods, redemption fine, and penalty under section 114A.

[Order pronounced in the open court on 23.08.2024]

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