1994 (5) TMI 65 - AT - Customs

Summary

Issues Involved:
1. Classification of imported goods (Polypropylene Dyed Chips and Sarma Polypropylene Chips).
2. Allegations of misdeclaration and suppression of facts by the importers.
3. Imposition of penalty under Section 112 of the Customs Act.
4. Jurisdiction to review final assessments under Section 47 of the Customs Act.

Detailed Analysis:

1. Classification of Imported Goods:

The primary issue revolves around the correct classification of Polypropylene Dyed Chips. The importers argued that these goods should be classified under Customs Tariff Heading 3902.10, which pertains to "Polymers of Propylene or of other Olefins in primary forms". They stressed that Polypropylene Chips, being a polymer of polypropylene in the form of chips, should fall under this heading. They further argued that the goods were permissible for import under the OGL in terms of the Import Policy Book and were earlier assessed under Heading 39.02 without objections.

However, the Revenue contended that the goods were actually pigment preparations (master batches) and should be classified under Chapter 32, specifically under sub-headings 3204.17 or 3206.49, depending on whether the pigments were organic or inorganic. The Collector of Customs supported this view, stating that the goods were essentially concentrated dispersions of colouring matter in plastic, thus falling under Chapter 32 based on the manufacturers' literature from M/s. Hoechst, Italy, and M/s. Sandoz, Switzerland.

The Tribunal upheld the Collector's findings, noting that the goods were indeed pigment preparations and not merely polypropylene chips. This conclusion was supported by the manufacturers' descriptions and the exclusion clauses under Chapter 39 of the HSN, which exclude concentrated dispersions of colouring matter in plastics from Chapter 39.

2. Allegations of Misdeclaration and Suppression of Facts:

The Revenue alleged that the importers misdeclared the goods as Polypropylene Dyed Chips to benefit from a lower duty rate. The Collector found evidence of suppression of facts, including incriminating documents and inter-office correspondence where the goods were referred to as "Master Batches". The importers had also instructed foreign suppliers to avoid correct descriptions in proforma invoices.

The Tribunal agreed with the Collector's findings, noting that the importers had deliberately misdeclared the goods and suppressed relevant information. This justified the invocation of the extended period for demand under Section 28(1) of the Customs Act.

3. Imposition of Penalty under Section 112 of the Customs Act:

The Revenue appealed against the Collector's decision not to impose any penalty on the importers. The Tribunal found that the importers' actions warranted a penalty, given the deliberate misdeclaration and suppression of facts. Consequently, a penalty of Rs. 5 lakhs was imposed on the importers under Section 112(a) of the Customs Act.

4. Jurisdiction to Review Final Assessments under Section 47 of the Customs Act:

The importers argued that the Collector had no jurisdiction to review final assessments made under Section 47 of the Customs Act, except through the procedure under Section 129D(2). The Tribunal, however, held that in cases of fraud or deliberate suppression, the finality of an order under Section 47 could be disturbed. The evidence of misdeclaration and suppression justified the issuance of the show cause notice and subsequent review of the assessments.

Conclusion:

The Tribunal dismissed the importers' appeal, confirming the classification of the goods under Chapter 32 and upholding the demand for differential duty. The Tribunal also allowed the Revenue's appeal, imposing a penalty of Rs. 5 lakhs on the importers for their deliberate misdeclaration and suppression of facts. Both appeals were disposed of accordingly.