2015 (1) TMI 207 - AT - Customs

Confiscation of goods - Imposition of penalty - Misdeclaration of goods - Held that - In this case import took place at Chennai port and the customs authorities at Chennai had cleared the goods holding that the description of the goods has not been misdeclared. Therefore in the light of the decision in Costa Foods v. CC - 1988 (7) TMI 296 - CEGAT, NEW DELHI , which has been upheld by the Supreme Court in Ram Narain Bishwanath - 1996 (12) TMI 76 - SUPREME COURT OF INDIA . The proceedings in Mumbai Custom House is not sustainable as same is beyond jurisdiction. Further, I find that the show cause notice has been issued by invoking the extended period of limitation without alleging fraud, collusion, misstatement, suppression of fact or contravention of provisions of Act/Rules with an intent to evade duty, hence the show cause notice is barred by limitation. In these circumstances, impugned proceedings were not warranted against the appellants. Accordingly, impugned order imposing penalty qua appellants is set aside - Decided in favour of assessee.

Summary

Issues:
Imported goods confiscation and penalties imposition in lieu of confiscation.

Analysis:
The case involved appeals against an order where imported goods were confiscated, and penalties were imposed on the appellants. The goods in question were velvet cloth found in the premises of one appellant, who claimed to have imported them from another appellant. The latter confirmed importing lining material under an advance license at Chennai port, lawfully selling it to the first appellant. The goods were examined and cleared by customs authorities at Chennai without misdeclaration allegations. However, proceedings at Mumbai Custom House were initiated for misdeclaration. Penalties were imposed on both appellants after adjudication, leading to the current appeal.

Analysis:
During the hearing, only representation was made on behalf of one appellant, while the other party did not appear. The counsel for the appellants argued that the goods were correctly declared and cleared at Chennai port, and any proceedings at Mumbai Custom House were unwarranted. They contended that the goods, initially declared as lining material, were found to be flocked fabric, which did not constitute misdeclaration. Moreover, the show cause notice was issued beyond the limitation period without specific allegations, making it invalid. The appellants sought relief from the imposed penalties based on these arguments.

Analysis:
After considering the submissions, the judge found that the import was cleared at Chennai port without misdeclaration. Citing legal precedents, the judge concluded that the proceedings at Mumbai Custom House were beyond jurisdiction. Additionally, the show cause notice was deemed invalid due to being issued beyond the limitation period without specific allegations of fraud or contravention. Consequently, the judge set aside the impugned order imposing penalties on the appellants, allowing the appeals with any consequential relief.