2019 (6) TMI 168 - AT - Customs

Mis-declaration of import goods - woven fabric - cross-examination of employees - suppression of facts or not - entire case of the respondent Department is based on collection of samples from the appellant s Warehouse on the basis of identification made by one employee Shri Rajbir Singh, who was not subjected to cross examination by the appellant despite it s request for such cross examination - HELD THAT - It is an admitted fact on record that goods were originally imported by another concern and the description of goods were mixed fabrics and it is at the instance of the appellant that goods were put to test for ascertainment of its description and classification, that was done before the goods were cleared for own consumption - No other relationship was established by the respondent Department to substantiate that the goods seized by the DRI was in fact related to the goods cleared to the appellant through the disputed Bill of Entry. Show cause notice reveals that DRI Officials made visual examination of goods and ascertained that they comprised of 7 different verities/types of fabrics. It is not understood as to why after such discovery, Customs Officials who drew the samples for first check examination were not examined and why reliance is placed on only examination if the appellant s staff to find out the error in the First Examination Report - It is a settled principle of law that even in such situation, when two different opinions can be formed from contradictory evidence, the opinion that is favourable to the offender is to be accepted. There is nothing available on record to substantiate that the samples drawn by DRI Officials were the representative samples of the consignment cleared in the disputed Bill of entry except the statement of that Shri Rajbir Singh whose veracity is not tested through cross-examination nor any opportunity was provided to the appellant to falsify such statement - Under the circumstances, no credence can be attributed to such a statement to penalise the appellant with additional burden of duty liability penalty etc. Appeal allowed - decided in favor of appellant.

Summary

Issues:
Confirmation of duty demand along with confiscation of goods under section 111 (e) & 111 (m) of Customs Act 1962 for alleged mis-declaration of woven fabric.

Analysis:
The appellant purchased mixed stock lot of fabrics from a supplier in Japan after the original importer failed to honor the import documents. The goods were cleared through customs after examination and testing, classified as knitted fabrics under chapter 60053100. Subsequently, DRI detained a portion of the fabrics, proposing reclassification based on a test report and demanding differential duty, confiscation, and penalties. The appellant contested the reclassification, arguing that the goods were correctly assessed and any discrepancies were minimal and negligible. The appellant also highlighted that the supplier had assured them of the fabric's nature, and they had requested the first check examination to confirm the classification. The appellant claimed no suppression of facts and had even deposited a sum to demonstrate good faith. The appellant argued against the reclassification under a different chapter, emphasizing the proper assessment done initially.

In response, the Department defended the reclassification based on subsequent test reports that confirmed mis-declaration of woven fabrics as knitted fabrics. The Department supported the Commissioner of Customs' order and urged the Tribunal not to interfere with the decision.

After hearing both parties and examining the case record, the Tribunal found that the Department's case relied heavily on samples collected from the appellant's warehouse, identified by an employee who was not cross-examined despite the appellant's request. The Tribunal noted discrepancies in the examination process and the lack of evidence linking the seized goods to the disputed Bill of Entry. The Tribunal emphasized the principle of favoring the offender in cases of contradictory evidence and concluded that the Department failed to substantiate its claims adequately. Therefore, the Tribunal allowed the appeal, setting aside the Commissioner of Customs' order and relieving the appellant of the duty demand, confiscation, and penalties imposed.

In conclusion, the Tribunal's decision favored the appellant, highlighting procedural flaws and insufficient evidence on the Department's part to justify the duty demand and confiscation of goods.