2013 (8) TMI 507 - AT - Customs

Benefit of Notification No.25/99 - Duty liability for shortage of the quantity imported by availing the benefit of Notification No. 25/99(Cus) read with Customs (Import of Goods on Concessional Rate of Duty for Manufacture of Excisable Goods) Rules - Held that - The findings recorded by the adjudicating authority for confirming the demand were correct upheld - the assesse was not able to prove the case - As per the said Customs Rules, it was mandated that the appellant should and maintain the stock registers of the goods imported at concessional rate of duty for the use in his factory In the absence of any such evidence that the said short found quantity was in fact used by the appellant in his factory premises for the purpose of manufacture Decided against assesse. Penalty u/s 112(a) Held that - Managing Partner needed to be penalized for his activity - penalty imposed by the adjudicating authority u/s 112(a) was reduced to half - As the penalty was not proportionate to the demand of the duty which had been confirmed - the person who was looking after the day-to-day affairs of the company should have been more diligent to check and counter check the stock position in his factory premises - Due to the non-effective supervision there was a shortage which were imported under concessional rate of duty decided partly in favor of assesse. Valuation - Transaction value, rejection on suspicion that same underdeclared - Misdeclaration of goods following the judgement of Crystal Dot Scan Pvt. Ltd. v. CC&CE, Hyderabad-II 2010 (7) TMI 708 - CESTAT, BANGALORE - Held that - if value declared is rejected, Revenue should establish with details of contemporaneous imports of such or similar goods, that the price declared is not correct transaction value and the value has to be determined under CVR - Commissioner did not reject the transaction value for valid reasons in the absence of contemporaneous imports of comparable CTP machines at higher prices. - the revision of price, demand of differential duty and interest, confiscation of the impugned machine on the ground that the importer had mis-declared its value and consequent penalties were not sustainable Decided against revenue.

Issues Involved:
1. Duty liability for the shortage of 7469 kgs. of Copper Clad Laminates (CCL).
2. Imposition of penalty on the Managing Partner of RRE under Section 112(a) of the Customs Act, 1962.
3. Allegation of mis-declaration of imported goods as 'C' grade/rejects.
4. Department's appeal against the dropping of demands related to mis-declaration.

Issue-wise Detailed Analysis:

1. Duty Liability for Shortage of 7469 kgs. of CCL:
The Tribunal upheld the adjudicating authority's decision confirming the demand for duty on the shortage of 7469 kgs. of CCL. The appellant failed to provide evidence that the shortfall was used in the factory premises for manufacturing purposes. As per the Customs (Import of Goods on Concessional Rate of Duty for Manufacture of Excisable Goods) Rules, 1996, the appellant was required to maintain stock registers for the goods imported at a concessional rate of duty. The absence of such records led to the conclusion that the demand for duty was correct and needed to be upheld.

2. Imposition of Penalty on the Managing Partner of RRE:
The Tribunal found that the Managing Partner of RRE, who was responsible for the day-to-day affairs of the company, failed to effectively supervise the stock position in the factory premises, resulting in the shortage of 7469 kgs. of CCL. The penalty of Rs. 50,000/- imposed under Section 112(a) of the Customs Act, 1962, was upheld. However, considering the facts and circumstances of the case, the penalty was reduced to Rs. 25,000/-.

3. Allegation of Mis-declaration of Imported Goods as 'C' Grade/Rejects:
The adjudicating authority had dropped the proceedings for the demand of differential duty on the charge of mis-declaration. The test report from M/s. Bakelite Hylam Ltd. indicated that while the goods appeared sub-standard visually, they conformed to international standards (NEMA, MIL) based on tested properties. The Tribunal concurred with the adjudicating authority's findings that there was no conclusive evidence to prove that the goods were mis-declared as 'C' grade. The statements of various buyers and past misconduct were not sufficient to sustain the charges in the present case.

4. Department's Appeal Against the Dropping of Demands Related to Mis-declaration:
The Department argued that the adjudicating authority erred in dropping the demands and misinterpreted the report from M/s. Bakelite Hylam Ltd. The Tribunal referred to a similar case (Crystal Dot Scan Pvt. Ltd. v. CC&CE, Hyderabad-II) where it was held that the Revenue should establish details of contemporaneous imports to reject the transaction value. In the absence of such evidence and considering the test report indicating sub-standard quality on visual inspection, the Tribunal found no merit in the Department's appeal. The adjudicating authority's decision to drop the proceedings for mis-declaration was upheld.

Conclusion:
The Tribunal upheld the demand for duty on the shortage of 7469 kgs. of CCL and imposed a reduced penalty on the Managing Partner of RRE. The allegation of mis-declaration was not proven, and the Department's appeal against the dropping of demands related to mis-declaration was rejected. All three appeals were disposed of accordingly.

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