2024 (10) TMI 515 - AT - Customs

Re-classification and confiscation of goods under different tariff items - Samsung UHD TVs and LEDOVA monitors - television sets or not - smuggling of goods - burden to prove - applicability of section 123 of Customs Act, 1962 - HELD THAT - The monitors had been imported by the appellant against bill of entry no. 4716732/31.08.2019 and 4977959/ 20.09.2019. These were cleared as declared and it is upon seizure effected subsequently on search of premises of the appellant that the goods were proposed to be re-classified as television receivers and with consequent detriment. The sole ground for re-classification was the opinion of an employee of another commercial concern that these were usable as television receivers also. It is settled law that use cannot be a criterion for assessment and also it is found that the opinion of one individual does not make for re-classification merely to levy higher rate of duty. As far as the assembled television sets are concerned, the question of conforming to the stipulation of Bureau of Indian Standards (BIS) is the responsibility of the appropriate statutory authorities for enforcement at the point of sale; customs authorities are obliged to ascertain such certification only at the time of import - In the present case, it is the claim of the appellant that these had been imported in knock down condition ; there is nothing on record to evince otherwise. As pointed out by the Learned Counsel for the appellant, presumption of smuggling under section 123 of Customs Act, 1962 does not operate outside the goods specified therein. The decision of the technical advisory committee of 2nd April 2013 makes it clear that the specifications of Bureau of Indian Standards (BIS) do not require ascertainment when knock down goods are imported. It is for the appropriate authority to ascertain conformity once goods are assembled and ready to be sold in the domestic market. The duty liability has been fastened on television sets solely on the ground that these are smuggled. There is no evidence of smuggling and consequently the demand under section 28 fails. In view of other prescriptions not applying, confiscation under section 111(d) also fails. The impugned order is set aside - appeal allowed.

Issues:
1. Confiscation and duty liability on Samsung UHD TVs and LEDOVA monitors seized under Customs Act, 1962.
2. Re-classification and confiscation of goods under different tariff items.
3. Burden of proof in establishing goods as smuggled.
4. Use of goods as criterion for re-classification.
5. Compliance with Bureau of Indian Standards (BIS) specifications for imported goods.
6. Application of section 123 of Customs Act, 1962 in case of 'knock down' goods.
7. Evidence of smuggling for duty liability and confiscation under Customs Act, 1962.

Analysis:

1. The judgment involves the confiscation and duty liability on Samsung UHD TVs and LEDOVA monitors seized following a search of premises of M/s Moti International. The original authority had held the television sets liable for confiscation and differential duty, while the monitors were classified under a different tariff item with a separate duty liability and redemption option upon confiscation.

2. The re-classification and confiscation of goods under different tariff items were challenged in the appeal. The appellant contended that the Samsung television sets were assembled from imported parts for disposal in the local market, while the monitors were capable of being used as television receivers, leading to re-classification and differential duty demand.

3. The burden of proof in establishing the goods as smuggled was a key contention. The appellant argued that the burden should fall on customs authorities to prove smuggling, especially in the absence of evidence under section 123 of the Customs Act, 1962. The lack of evidence of smuggling raised doubts on the duty liability and confiscation.

4. The use of goods as a criterion for re-classification was disputed, with the appellant arguing that the opinion of an individual regarding the capability of monitors to be used as television receivers should not be the sole basis for re-classification and higher duty imposition.

5. Compliance with Bureau of Indian Standards (BIS) specifications for imported goods was raised, emphasizing that the responsibility for certification lies with the appropriate authorities at the point of sale, not at the time of import. The importation of goods in 'knock down condition' and subsequent assembly did not automatically trigger BIS compliance requirements.

6. The application of section 123 of the Customs Act, 1962 in the case of 'knock down' goods was debated, highlighting that the presumption of smuggling does not extend to goods specified under the section. The technical advisory committee's decision clarified that BIS specifications were not mandatory for 'knock down' goods upon importation.

7. The lack of evidence of smuggling led to the failure of duty liability and confiscation under the Customs Act, 1962. The judgment noted deficiencies in the lower authorities' findings and subsequently set aside the impugned order, allowing the appeal due to the insufficient grounds for duty imposition and confiscation.

This detailed analysis of the judgment addresses the various issues raised in the appeal, providing a comprehensive overview of the legal arguments and findings presented before the Appellate Tribunal CESTAT Mumbai.

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