2016 (5) TMI 1112 - AT - Customs

Imposition of redemption fine and penalty - Misdeclaration of goods - Import of Heavy Melting Scrap and Re-Rollable Scrap - out of 699.34 MT declared as Heavy Melting Scrap, 81.030 MT was found to be Re-Rollable scrap instead of Heavy Melting Scrap - Differential duty paid before issuance of show cause notice - Held that - in the international market, the goods are sold as Used Iron Material or Scrap without any distinction as HMS or Re-Rollable Scrap and therefore there could be small proportion of re-rollable scrap in HMS. The duty is on transaction value. There is no license violation also. The assessee has filed the Bill of Entry in accordance with the documents and subjected the goods to Customs examination before assessment. Under such circumstances, there is force in the argument of the Appellant that the Bill of Entry should have been assessed on the basis of examination of the goods by Customs Officers and at best, differential duty only be demanded from the assessee. Confiscation of the goods, Redemption fine and penalty are not warranted and would amount to too harsh a measure. Therefore, confiscation, Redemption fine and penalty ordered in the adjudication order cannot be sustained. - Decided in favour of appellant

Summary

Issues:
1. Discrepancy in import declaration leading to differential duty demand.
2. Confiscation of goods, imposition of fine, and penalty under Customs Act.
3. Assessment based on examination of goods and international market practices.

Analysis:
1. The case involved a discrepancy in the import declaration by M/s. Lucky Steel Industries regarding the type of scrap imported, leading to a demand for a differential duty of &8377; 40,573. While 74.81 MT of Re-Rollable scrap was correctly declared, 81.03 MT of the declared Heavy Melting Scrap was found to be Re-Rollable scrap. The goods were examined, and the duty was demanded accordingly, along with confiscation and a penalty under the Customs Act.

2. The Tribunal considered the arguments presented by both sides and examined the documentation accompanying the goods, including the Commercial Invoice and Pre-shipment Inspection Certificate. It was noted that both types of scrap fell under the same Customs Tariff Heading with similar values per metric ton. The Tribunal found that the assessment should have been based on the examination of goods by Customs Officers, and the differential duty was the appropriate demand. The confiscation of goods, redemption fine, and penalty were deemed too harsh in this case and were set aside.

3. The Tribunal acknowledged that in the international market, goods are often sold without a clear distinction between Heavy Melting Scrap and Re-Rollable scrap. Considering this practice, along with no license violation and proper submission of documents by the assessee, the Tribunal concluded that the assessment should have focused on the actual examination results. Therefore, the Tribunal allowed the appeal, modifying the order to exclude the confiscation, redemption fine, and penalty, as they were deemed excessive in the circumstances of the case.