2009 (11) TMI 765 - AT - Customs

Summary

Issues:
1. Finalization of assessment based on misdeclaration of goods.
2. Benefit of Exemption Notification and order regarding redemption fine and penalty.
3. Compliance with provisional assessment conditions and breach of covenant.
4. Misdeclaration of goods and its implications on confiscation, redemption fine, and penalty.

Finalization of assessment based on misdeclaration of goods:
The appellant imported goods under an Advance Licence but declared them incorrectly as "flexopeel-pouches." A chemical test revealed the actual composition of the goods, leading to provisional assessment and a bond. The importer failed to produce an amended licence within the stipulated time, resulting in finalization of assessment, duty demand of Rs. 4,86,795, and proposed confiscation and penalty. Despite subsequent licence amendments, the authority refused retrospective effect, confirming the duty demand, confiscation, and penalties.

Benefit of Exemption Notification and order regarding redemption fine and penalty:
The legality of finalizing the assessment is questioned, as the goods were declared as per the DEEC licence, seeking duty-free clearance under an Exemption Notification. The importer requested amendment post the chemical report, aligning with the Deputy Chief Chemist's findings. The appeal raised concerns about the Exemption Notification applicability and the appropriate redemption fine and penalty.

Compliance with provisional assessment conditions and breach of covenant:
Under Section 18 of the Customs Act, provisional assessment is permitted for goods subject to tests. The importer failed to comply with the bond conditions by not amending the licence within the specified period or seeking an extension. The breach obligated payment of duty as per the bond terms, as the chemical report contradicted the declared goods, justifying the duty demand.

Misdeclaration of goods and its implications on confiscation, redemption fine, and penalty:
The misdeclaration of goods, evident from the chemical test, led to the importer's admission by seeking licence amendments. This misdeclaration warranted confiscation under Section 111(m) of the Act and penalties under Section 112. Despite goods' provisional release, Section 125 allowed imposing a fine in place of confiscation. The excessive redemption fine of Rs. 1,81,406 was reduced to Rs. 72,500, and the penalty was decreased to Rs. 5,000, considering the circumstances. The judgment modified the original order accordingly, addressing the issues raised in the appeal comprehensively.