1997 (9) TMI 199 - AT - Customs

Summary

Issues Involved:

1. Mis-declaration of goods to avail lower customs duty.
2. Validity of high seas sale and actual user condition.
3. Interpretation of ITC Policy 1988-91 regarding machine speed.
4. Confiscation and penalty under Sections 111(d) & 111(m) of the Customs Act, 1962.

Detailed Analysis:

1. Mis-declaration of Goods to Avail Lower Customs Duty:

The appellant imported a bundling and wrapping machine and sought to clear it under Customs Notification No. 125/86-Cus., which allowed specific goods, including food packaging machines, at a reduced duty rate of 35%. However, intelligence and subsequent searches revealed that the appellant mis-declared the goods to avail this lower duty rate. During adjudication, the appellant abandoned their claim to the lower duty rate under the said notification. The adjudicating authority concluded that the machine was not a high-speed automatic wrapper as claimed but a bundling and wrapping machine for toothpaste and other items, thus not eligible for the claimed notification benefits.

2. Validity of High Seas Sale and Actual User Condition:

The adjudicating authority found that the high seas sale was not in order because the buyer, M/s. Praja Enterprise, was not an actual user as required by the policy. However, the appellant argued that Public Notice No. 47-ITC (PN)/88-91 allowed additional licenses to be freely transferable without the 'Actual User' condition. This amendment was brought to the adjudicating authority's notice but was ignored. The Tribunal found the appellant's submission correct, indicating that the actual user condition was no longer applicable at the time of importation.

3. Interpretation of ITC Policy 1988-91 Regarding Machine Speed:

The key issue was whether the missing hyphen in the relevant entry of ITC Policy 1988-91 was a typographical error. The adjudicating authority believed it was, arguing that without the hyphen, the entry's meaning would be redundant. However, the Tribunal disagreed, stating that the entry could be read meaningfully without the hyphen, as it excluded certain machines (e.g., for safety razor blades, cigarettes, and confectionery) from the category of high-speed automatic wrappers. The Tribunal concluded that the criterion of "maximum operating speeds above 120/minute" was not applicable, and the machine, being automatic and performing additional bundling functions, did not violate the import policy.

4. Confiscation and Penalty Under Sections 111(d) & 111(m) of the Customs Act, 1962:

The goods were initially confiscated under Sections 111(d) & 111(m) with an option for the appellant to redeem them upon paying a fine and penalty. The Tribunal upheld the confiscation under Section 111(m) due to the misdeclaration aimed at evading duty. The appellant's argument that toothpaste could be considered a food article was rejected, as toothpaste is not commonly regarded as such. Consequently, the Tribunal upheld the penal liability but reduced the redemption fine to Rs. 2.50 lakhs and the penalty to Rs. 1 lakh, considering the overall facts and circumstances.

Conclusion:

The appeal was disposed of with partial relief to the appellant by reducing the fine and penalty. The Tribunal granted consequential relief as the higher amounts imposed by the adjudicating authority had already been deposited.