1993 (4) TMI 159 - AT - Customs

Summary

Issues Involved:
1. Classification of imported wood under Customs Tariff Act.
2. Applicability of Notification No. 107/89-Cus., dated 1-3-1989.
3. Allegation of misdeclaration under Section 111(m) of the Customs Act, 1962.
4. Justification of fine and penalty imposed.

Detailed Analysis:

1. Classification of Imported Wood under Customs Tariff Act
The primary issue is whether the imported wood should be classified under sub-heading 4403.99 as "wood in rough, whether or not stripped of bark or sap wood, or roughly squared" or under sub-heading 4407.99 as "wood sawn or chipped lengthwise, sliced or peeled whether or not planed, sanded or finger-jointed of thickness exceeding 6 mm."

The importers declared the goods as "wood in rough half squared with bark (Balau Group)" under sub-heading 4403.90 and claimed benefits under Customs Notification No. 62/85 and Notification No. 107/89. However, upon examination, the Assistant Collector and Appraiser found the cargo to be a mixture of "wood roughly squared" and "sawn wood" like beams. The Addl. Collector's inspection and the report from Shri P. Somasekhara Reddy, IFS, District Forest Officer, classified the wood as "sawn wood" due to its smooth surface and sawdust sticking to it, indicating it was fully processed.

Conversely, Shri P.K. Verghese, Regional Manager, Madhya Pradesh Export Corporation, opined that the timber was "roughly squared" and not fit for ready use, requiring further sawing for commercial purposes. The Tribunal noted that the presence of sap wood and heart wood indicated the wood was "roughly squared," supporting the importers' classification under sub-heading 4403.99.

2. Applicability of Notification No. 107/89-Cus., dated 1-3-1989
The Notification No. 107/89-Cus. grants exemption to auxiliary duty for items falling under Chapter 44, specifically "wood in rough" and "wood roughly squared and half squared but not further manufactured." The Tribunal found that the imported wood, having the presence of sap wood and heart wood, and being roughly squared, fits the description under sub-heading 4403.99. Thus, the importers were entitled to the exemption provided by Notification No. 107/89-Cus.

3. Allegation of Misdeclaration under Section 111(m) of the Customs Act, 1962
The Addl. Collector charged the importers with misdeclaration under Section 111(m) of the Customs Act, 1962, due to the discrepancy in the declared and actual description of the goods. However, the Tribunal observed that the inspection report and expert opinions, particularly from Shri Verghese and the initial examination by the Assistant Collector and Appraiser, supported the importers' declaration. The Tribunal concluded that the importers had not misdeclared the goods.

4. Justification of Fine and Penalty Imposed
Given the Tribunal's finding that the imported wood was correctly classified under sub-heading 4403.99 and the importers were entitled to the exemption under Notification No. 107/89-Cus., the fine and penalty imposed under Section 111(m) and Section 112(a) of the Customs Act, 1962, were unjustified. Consequently, the Tribunal set aside the fine and penalty amounts.

Conclusion:
The Tribunal allowed the appeals, holding that the imported wood was correctly classifiable under sub-heading 4403.99, entitling the importers to the benefit of Notification No. 107/89-Cus. The allegations of misdeclaration were dismissed, and the imposed fines and penalties were set aside. The cross-appeals by the Revenue were rejected.