2014 (3) TMI 284 - AT - Customs

Redemption fine and penalty - import of cuts of rough diamonds / semi-processed diamonds - On the basis of report, the appellant offered to pay the appropriate duty and paid duty of ₹ 1,56,725/- on 23/02/2013 and cleared the goods waiving the requirement of show-cause notice - Held that - the confiscation of the goods under Section 111(m) is without any basis. - the appellant has cleared the goods already on payment of duty and the goods are not available for any redemption. Therefore, imposition of redemption fine under Section 125 of the Customs Act, is clearly unsustainable in law. Merely, because the appellant had initially made a claim for exemption from duty based on the documents available, it cannot be said that the appellant had misdeclared the goods. - there is no warrant for confiscation or imposition of any penalty. - Decided in favor of assessee.

Summary

Issues:
Classification of imported goods under Customs Act, 1962; Confiscation of goods under Section 111(m); Imposition of redemption fine under Section 125; Penalty under Section 112(a).

Classification of Imported Goods:
The appellant imported goods classified by the department under heading No. 7102.39, while the appellant argued for classification under CETH 7102.31. Expert opinions and the Kimberley Process certificate supported the goods being semi-processed diamonds, not polished diamonds as assessed by the Revenue. The appellant cleared the goods on payment of duty, causing no revenue loss. The tribunal found no misdeclaration by the appellant regarding the goods' description, setting aside the confiscation under Section 111(m.

Confiscation and Redemption Fine:
The tribunal deemed the imposition of redemption fine under Section 125 as unsustainable in law since the goods were already cleared on payment of duty and not available for redemption. The appellant's initial claim for duty exemption did not constitute misdeclaration, aligning with legal precedents like the Northern Plastic Ltd. case. The tribunal concluded that there was no basis for confiscation or penalty, ultimately allowing the appeal and setting aside the impugned order.

Penalty Imposition:
The tribunal emphasized that the appellant's actions did not warrant confiscation or penalty, as the goods were correctly cleared on payment of duty, and the appellant's claim for duty exemption did not amount to misdeclaration. Citing legal decisions, including the Gaurav Enterprises case, the tribunal found no justification for the penalty imposed under Section 112(a), leading to the appeal's success and the impugned order being set aside.