1998 (8) TMI 340 - AT - Customs

Summary

Issues:
1. Misdeclaration of goods and value leading to duty evasion.
2. Confiscation of goods, imposition of penalties, and demand for differential duty.
3. Application of Sections 28 and 125 of the Customs Act.

Analysis:
1. The case involved the importation of software in diskette form along with accompanying manuals. The appellants declared 60% value towards diskettes and 40% value towards the manual, following the established practice of the Customs House. However, a show cause notice was issued later alleging misdeclaration, leading to duty evasion. The Customs classified software under one heading and manuals under another. The Adjudicating Authority confiscated the goods, imposed fines, and demanded differential duty.

2. The appellants argued that the Customs House practice allowed for splitting the value of diskettes and manuals, and since the full value was available to the Revenue, there was no justification for the confiscation and penalties. The Adjudicating Authority's decision to confiscate goods and demand differential duty was challenged. The JDR reiterated the findings, emphasizing the liability to confiscation under Section 111 and the application of Section 125 for duty recovery post-confiscation. The Tribunal noted that the split-up practice existed since 1989, but the Department conducted investigations leading to a different conclusion. The Tribunal concluded that there was no wilful misdeclaration by the appellants, and the total value was available for assessment, rendering the confiscation and differential duty demand unjust. The Tribunal set aside the confiscation, differential duty demand, and penalties, stating that Section 125 did not apply in this scenario.

3. The Tribunal analyzed the application of Sections 28 and 125 of the Customs Act. It held that Section 28, dealing with short levy recovery within the limitation period, should have been applied for duty recovery. Section 125, applicable when short levy date is unknown and confiscated goods are not proven duty paid, was deemed inapplicable. The Tribunal allowed the appeals, providing consequential relief to the appellants by setting aside the confiscation, differential duty demand, and penalties.