2009 (7) TMI 584 - AT - Customs

Demand and penalty- Notification No. 58/98-Cus., dated 1-8-98- (a) whether the Commissioner is legally correct in holding that the appellant wilfully misdeclared the goods imported under bills of entry No. 167 dated 22-9-98, 248 dated 22-10-98 and 269 dated 30-10-98 as secondary zinc ingots and have undervalued the same and also whether the weight of the consignment has been misdeclared as 108.047 MTs as against the actual weight of 157 MT determined by the Commissioner in the impugned order; (b) whether the Commissioner is legally correct in determining the value of the three consignments at Rs.70,34,034/- (Rupees Seventy Lakh Thirty-Four Thousand and Thirty-Four) and on this basis confirming the differential duty demand amounting to Rs.25,77,967/- (Rupees Twenty-Five Lakh Seventy-Seven Thousand Nine Hundred Sixty-Seven) which includes the Additional Customs Duty demand amounting to Rs.1,96,151/- (Rupees One Lakh Ninety-Six Thousand One Hundred Fifty-One); and (c) Whether the Commissioner is correct in imposing penalty of Rs.25,77,967/- (Rupees Twenty-Five Lakh Seventy-Seven Thousand Nine Hundred Sixty-Seven) on Shri Sudhanshu Mittal under Section 112A of Customs Act; The duty demand of Rs.25,77,967/- (Rupees Twenty-Five Lakh Seventy-Seven Thousand Nine Hundred Sixty-Seven) comprises of two parts - Rs.23,81,816/- (Rupees Twenty-Three Lakh Eighty-One Thousand Eight Hundred Sixteen) is the demand of Customs Duty on account of misdeclaration of quality, quantity and value and the duty demand of Rs.1,91,151/- (Rupees One Lakh Ninety-One Thousand One Hundred Fifty-One) is towards Special Additional Duty (SAD) under Section 3A of Customs Tariff Act, which according to the Department was payable as the appellants were not eligible for SAD exemption under Notification No. 58/98-Cus., dated 1-8-98. Held that- As regards the eligibility for exemption from SAD, under Notification No. 56/98-Cus. We find that the importer did not have any sales tax registration and he did not give any evidence, whatsoever, that the goods have been sold from a place where sales tax was chargeable. Shri Sudhanshu Mittal was not even able to tell the full name and address of the person to whom the goods had been sold. In view of these circumstances, the benefit of exemption under Notification No. 56/98-Cus., dated 11-8-98 which is available only when the goods imported are sold as such from a place where sales tax is chargeable, would not be available and the same was rightly denied to the importers, we do not find any infirmity in the impugned order. The appeals are dismissed.

Issues Involved:
1. Misdeclaration of goods (quality and quantity)
2. Enhancement of assessable value
3. Recovery of differential duty
4. Imposition of penalty
5. Eligibility for Special Additional Duty (SAD) exemption

Detailed Analysis:

1. Misdeclaration of Goods (Quality and Quantity):
The Commissioner upheld the allegation that the appellant misdeclared the quality and quantity of the imported goods. The goods declared as "secondary zinc ingots" were found to be prime quality zinc ingots with 99.995% purity. The declared weight was 108.047 MT, but the actual weight was 157 MT. The appellant argued that the goods were cleared after due examination by customs officers, and no incriminating evidence was found during the investigation. However, the Commissioner relied on the fact that similar consignments from the same supplier were found to be misdeclared in other cases, and the importer could not provide concrete evidence to support their claims.

2. Enhancement of Assessable Value:
The Commissioner determined the value of the goods at Rs.70,34,034/- based on the London Metal Exchange (LME) price for prime quality zinc ingots, as opposed to the declared value of Rs.31,58,641/-. The appellant contended that the Commissioner's findings were based on presumptions and lacked concrete evidence. However, the Tribunal found that the evidence, including the international norm of zinc ingot bundles weighing one MT each, supported the Commissioner's valuation.

3. Recovery of Differential Duty:
The differential duty demand of Rs.25,77,967/- was confirmed, including Rs.1,96,151/- towards Special Additional Duty (SAD) under Section 3A of the Customs Tariff Act. The appellant argued that the goods were eligible for SAD exemption under Notification No. 56/98-Cus., but the Commissioner found that the appellant did not have sales tax registration and failed to provide evidence that the goods were sold from a place where sales tax was chargeable.

4. Imposition of Penalty:
A penalty of Rs.25,77,967/- was imposed on Shri Sudhanshu Mittal, the proprietor of M/s. Chirag, under Section 112(a) of the Customs Act. The appellant argued that the penalty was based on suspicion and lacked concrete evidence. However, the Tribunal upheld the penalty, finding that the misdeclaration of goods' quality, quantity, and value was established by the preponderance of probability.

5. Eligibility for SAD Exemption:
The Commissioner denied the SAD exemption under Notification No. 56/98-Cus., as the appellant did not have sales tax registration and could not provide evidence of sales tax applicability. The Tribunal agreed with this finding, stating that the exemption was rightly denied due to the lack of necessary documentation and evidence.

Conclusion:
The Tribunal dismissed the appeals, upholding the Commissioner's order that confirmed the misdeclaration of goods, enhancement of assessable value, recovery of differential duty, imposition of penalty, and denial of SAD exemption. The Tribunal found that the evidence and circumstances supported the Commissioner's findings, and the appellant's arguments were based on presumptions and lacked concrete evidence.

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