2017 (2) TMI 94 - AT - Central Excise

Confiscation of goods with imposition of penalty - whether the goods can be confiscated without issuance of SCN? - Held that - It is apparent that it is not open to Customs to confiscate any goods without issue of SCN - In the instant case, admittedly no SCN were issued. Under these circumstances, the confiscation of the goods cannot be upheld. Consequently, the penalty under Section 112 also cannot be upheld - appeal allowed - decided in favor of appellant.

Summary

Issues: Classification of imported goods, Confiscation of goods, Show-cause notice requirement

Classification of imported goods:
The appellant imported Cobalt based Alloy Powder and sought classification under ITC heading 81052010, while Revenue classified it under 81052030. The goods were initially allowed to be cleared under an ITC bond, and later, a license was issued by DGFT for regularization of imported goods. However, Revenue ordered confiscation of the goods and imposed penalties. The Tribunal reviewed the classification issue and the subsequent actions taken by the appellant and the Revenue.

Confiscation of goods:
The appellant argued that Section 124 of the Customs Act mandates the issuance of a show-cause notice before confiscation of goods. The appellant contended that since no show-cause notice was issued, confiscation cannot be done as per the Act. The Tribunal examined the legal provisions of Section 124 and emphasized that confiscation of goods without a show-cause notice is impermissible. The Tribunal found that no show-cause notices were issued in this case, leading to the conclusion that the confiscation of goods and penalties imposed could not be upheld.

Show-cause notice requirement:
The Tribunal delved into the requirements of Section 124 of the Customs Act, which necessitates the issuance of a show-cause notice before confiscating goods or imposing penalties. The Tribunal highlighted the specific provisions of Section 124, emphasizing the importance of providing the owner of goods with a written notice, an opportunity to make a representation, and a chance to be heard. The Tribunal concluded that in the absence of show-cause notices, the confiscation of goods and penalties imposed could not be sustained. As a result, the appeals were allowed, and the confiscation and penalties were set aside.

In summary, the judgment by the Appellate Tribunal CESTAT MUMBAI revolved around the classification of imported goods, the requirement of a show-cause notice before confiscation, and the subsequent actions taken by the Revenue. The Tribunal emphasized the legal provisions under the Customs Act, particularly Section 124, which mandates the issuance of show-cause notices. Since no such notices were issued in this case, the Tribunal ruled in favor of the appellant, setting aside the confiscation of goods and penalties imposed by the Revenue.