1999 (11) TMI 163 - AT - Customs

Summary

Issues Involved:
1. Classification of imported goods as 'second choice' or 'prime quality.'
2. Validity of confessional statements and their retraction.
3. Applicability of previous Tribunal judgments.
4. Determination of secondary material based on specifications.
5. Limitation period for issuing show cause notice.

Detailed Analysis:

1. Classification of Imported Goods:
The appellants imported Stainless Steel Sheets/Plates and declared them as 'second choice' in the bill of entry. The goods were initially cleared on payment of duty but were later seized under the suspicion of being of prime quality. Various tests were conducted, including those by M/s. SAIL and M/s. SGS, with conflicting results. The SGS report certified the goods as second quality based on visual examination and other tests, while SAIL's tests indicated prime quality. The Tribunal observed that the evidence from these tests was balanced but leaned towards the SGS report, which covered more parameters.

2. Validity of Confessional Statements:
The importer's statements included admissions of under-declaring the quality to sustain undervaluation, which were later retracted. The Commissioner relied on these confessional statements, citing the Supreme Court judgment in K.I. Pavunny v. Assistant Collector, which allows conviction based on voluntary confessions. The Tribunal examined the retraction and found the Commissioner's reliance on the initial confessions without adequate scrutiny of the retraction to be insufficient.

3. Applicability of Previous Tribunal Judgments:
The appellant's counsel referred to a previous Tribunal judgment (Order No. C-II/2670-71/WZB/1998) dealing with a similar case where goods were alleged to be of prime quality. The Tribunal in that case held that mere non-conformity with chemical tests was not enough to classify goods as prime quality; structural or dimensional defects must also be present. The Tribunal found this precedent applicable, supporting the appellant's claim that the goods were secondary quality.

4. Determination of Secondary Material:
The appellant argued that any deviation from the prime quality specifications would classify the material as secondary. The Tribunal agreed, noting that the contract described the goods as 'second choice' and the thickness variations supported this classification. The Tribunal concluded that the goods' description as second choice was accurate and not motivated by any intention to deceive.

5. Limitation Period for Issuing Show Cause Notice:
The appellant argued that the show cause notice issued on 11-9-1997 was beyond the permissible period of limitation. The Tribunal found merit in this argument, noting that the documents were filed with the customs at the time of appraising in October 1996, and no suppression of facts was evident.

Conclusion:
On both merits and the point of limitation, the Tribunal found in favor of the appellants. The appeal was allowed, and consequential relief was granted as per law. The Tribunal emphasized that the goods were correctly classified as second choice and that the show cause notice was time-barred.