2015 (1) TMI 1030 - AT - Customs

Import of designs and drawings for manufacturing of ship - department was of the view that the drawings and designs cannot be classified under Chapter 49 inasmuch as there is a CD accompanying the drawings and designs and hence the goods should be assessed under CETH 85238090 as recorded media. - Confiscation of goods - Imposition of redemption fine - Section 125 of the Customs Act 1962 - Held that - From the records available and the evidence led by the appellant it is clear that they have placed orders for import of hard copy of the drawings and designs of ships. They have never placed any order for import of any CD. They have also produced a letter from foreign supplier saying that the CD was sent by mistake and they should be allowed for re-export. Section 23 of the Customs Act provides for relinquishment of the title to the imported goods by the importer before an order for clearance for home consumption is made by the Customs authority. Therefore this request of the appellant should have been considered by the adjudicating authority. Nevertheless inasmuch as the goods are lying with the department on confiscation the interests of Revenue are completely secured. The question of ordering any pre-deposit under Section 129E of the Customs Act 1962 would arise only when the goods are not available and the Revenue is at risk as held by the Hon ble Apex Court in the case of Bhavya Apparels Pvt. Ltd. 2007 (9) TMI 274 - SUPREME COURT OF INDIA . Thus the appellant has made out a strong case for waiver of pre-deposit and accordingly we grant unconditional waiver from pre-deposit of the dues adjudged against the appellant and stay recovery thereof during the pendency of the appeal - Stay granted.

Summary

Issues:
- Duty demand confirmation
- Penalty imposition
- Confiscation of goods
- Classification of goods under Customs Tariff
- Customs duty exemption under Notification No. 12/2012-Cus
- Relinquishment of title to imported goods
- Pre-deposit waiver under Section 129E of the Customs Act, 1962

Duty Demand Confirmation:
The appellant, a ship manufacturer, imported designs and drawings from a foreign supplier. The dispute arose when it was discovered that the consignment included a CD along with the drawings and designs. The department contended that the goods should be classified under CETH 85238090 as recorded media, leading to a duty demand confirmation of approximately &8377; 9.92 crores. The appellant argued that they had only ordered hard copies of drawings and designs, not a CD, and provided evidence that the CD was sent by mistake. The Tribunal, after considering the submissions, found in favor of the appellant, noting that they had not ordered the CD and had the right to relinquish the title to the goods before clearance for home consumption. Consequently, the Tribunal granted a waiver from pre-deposit of the dues adjudged against the appellant and stayed the recovery during the appeal's pendency.

Penalty Imposition:
In addition to the duty demand, a penalty of &8377; 1.00 crore was imposed on the appellant importer. The appellant argued that there was no mis-declaration on their part, as they had ordered only drawings and designs in hard copy, not a CD. The Tribunal, considering the circumstances and legal provisions, granted a waiver from pre-deposit of the penalties imposed and stayed the recovery during the appeal process.

Confiscation of Goods:
Along with the duty demand and penalty, the goods were also confiscated with an option to redeem them on payment of a redemption fine of &8377; 3.50 crores under Section 125 of the Customs Act, 1962. The appellant's request for re-export of the goods, particularly the CD sent by mistake, was not initially accepted by the adjudicating authority. However, the Tribunal, acknowledging the appellant's arguments and the circumstances, granted a waiver from pre-deposit of the redemption fine and stayed the recovery during the appeal's pendency.

Classification of Goods under Customs Tariff:
The dispute centered around the classification of the imported goods under the Customs Tariff. The appellant contended that they had ordered only drawings and designs, not a CD, and should be exempt from customs duty under Notification No. 12/2012-Cus. The Tribunal, after reviewing the evidence and legal provisions, agreed with the appellant's arguments and granted relief in terms of waiver from pre-deposit and stay on recovery.

Relinquishment of Title to Imported Goods:
The appellant asserted their right under Section 23 of the Customs Act to relinquish the title to the imported goods before clearance for home consumption. They argued that since they had not ordered the CD and it was sent by mistake, they should be allowed to re-export it. The Tribunal upheld the appellant's right to relinquish the title and directed the consideration of the re-export request, ensuring the interests of revenue were secured.

Pre-deposit Waiver under Section 129E of the Customs Act, 1962:
The Tribunal, in line with legal precedents and considering the substantial duty involved, granted the appellant an unconditional waiver from pre-deposit of the dues, penalties, and redemption fine adjudged against them. The waiver was accompanied by a stay on recovery during the appeal process, emphasizing the appellant's strong case and the pending request for re-export of the CD.

This detailed analysis of the judgment provides a comprehensive overview of the issues involved and the Tribunal's decisions on each aspect, ensuring a thorough understanding of the legal proceedings and outcomes.