2013 (9) TMI 461 - AT - Customs

Nature of assessment duty demand penalty u/s 114A- Held that - In the case the assessment was provisional and full duty was paid before clearance of goods - there was no demand u/s 28 for duty short-levied - When there was no such demand no penalty can be imposed u/s 114A assesses contended that the goods could not have been confiscated because the assessment was provisional - This argument was legally not tenable u/s 111(m) any goods which do not correspond in respect of value or in any other particular with the entry made under the Act was liable to confiscation. Misdeclaration of goods - Confiscation of goods Redemption fine - A deliberate action to declare the goods as an endoscopic system with an intention to claim the exemption was evident even though there was no such description in the invoice or literature of the manufacturer The additional description was purposely added - misdeclaration made would make the goods liable to confiscation considering the nature of the equipment to be one used in medical care and also the nature of misdeclaration involved and the letter issued by a public authority like the Chief Medical Officer DGHS redemption fine was reduced Decided partly in favor of assesses

Summary

Issues Involved:
1. Classification of the imported medical equipment.
2. Eligibility for concessional rate of duty under Notification 21/2002-Cus.
3. Legality of seizure and confiscation of goods.
4. Imposition of penalties under Sections 112 and 114A of the Customs Act.

Issue-wise Detailed Analysis:

1. Classification of the Imported Medical Equipment:
The main appellant imported a medical equipment described as "Da Vinci Surgical System (Endoscope System)" and claimed classification under Customs Tariff Item 9018 90 11. The equipment was claimed to be a fiber optic endoscope to avail concessional duty rates. However, the Customs Department argued that the equipment was a surgical robotic system with endoscopy as an aid, not qualifying as a fiber optic endoscope. The tribunal noted that the manufacturer's literature described the equipment as a robotic surgical system using an endoscope for visualization, not as a fiber optic endoscope. Hence, the equipment could not be classified under the claimed tariff item.

2. Eligibility for Concessional Rate of Duty:
The appellants claimed concessional duty under Notification 21/2002-Cus for fiber optic endoscopes. They relied on expert opinions suggesting the equipment was an advanced version of a fiber optic endoscope. However, the tribunal gave more weight to opinions from authorities like Dr. Venugopal, Director of AIIMS, and Dr. G.L.N. Malleswara Rao, who stated that the equipment was a robotic surgical system, not a fiber optic endoscope. The tribunal concluded that the equipment did not qualify for the exemption under the notification.

3. Legality of Seizure and Confiscation of Goods:
The appellants argued that since the assessment was provisional, the goods could not be seized, and no demand for duty could be issued under Section 28 of the Customs Act. The tribunal found this argument legally untenable, stating that under Section 111(m) of the Customs Act, goods misdeclared in value or description are liable for confiscation. The deliberate misdeclaration to claim exemption justified the confiscation. However, considering the nature of the equipment and the involvement of a public authority's letter, the tribunal reduced the redemption fine to Rs. 25 lakhs.

4. Imposition of Penalties:
The tribunal addressed penalties imposed under Sections 112 and 114A of the Customs Act. It found that no demand under Section 28(8) was made, making the penalty under Section 114A on Care Foundation legally unsustainable. However, the tribunal upheld the confiscation and reduced the penalty to Rs. 2.5 lakhs for Shri Arun K. Tiwari, considering the lack of personal gain. The penalty on M/s. J. Mitra & Bros was upheld, as they played a significant role in the misdeclaration by preparing misleading documents.

Conclusion:
The tribunal partially allowed the appeals by Care Foundation and Shri Arun K. Tiwari, reducing penalties and fines, while dismissing the appeal by M/s. J. Mitra & Bros, maintaining the penalty imposed on them. The decision emphasized the importance of accurate classification and the consequences of misdeclaration in customs declarations.