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2020 (9) TMI 478 - AT - CustomsClassification of export goods - ropes of various types made of PP and Polyester - MEIS Scheme - HELD THAT - It is an admitted fact on record that in compliance of Section 50 ibid, the appellant had submitted all the requisite particulars/information for assessment and ascertainment of the duty liability, if any, in respect of the Shipping Bills, which were accepted by the proper officer of Customs and the appellant was permitted by an order under Section 51 ibid for clearance of the subject goods for exportation. In so far, an order of assessment is concerned, Section 129D ibid provides for passing of certain orders by the competent authority(s). Sub-sections (2) and (3) of Section 129D of Customs Act - HELD THAT - no appeals were filed by the Department against the assessment orders passed on the Shipping Bills before the Commissioner (Appeals) under Section 128 of the Act. Hence, the issue of classification and other facets concerning exportation of subject goods covered under the already assessed Shipping Bills was attained finality and any issues arising out of finalisation of such Shipping Bills cannot be questioned or agitated by the Department subsequently by initiating show cause proceedings against the exporter, the appellant herein. In this case, the Department has initiated show cause proceedings and confirmed the adjudged duty demand under Section 28AAA of the Act on the appellant. The provisions contained therein for recovery of duties are applicable only in the eventuality, where an instrument issued to a person has been obtained by him by means of 'collusion'; or 'willful misstatement'; or 'suppression of facts'. We find that the learned Commissioner has dealt with such statutory provisions and their application to the facts of the present case at paragraph 10 in the impugned order. He has not particularly referred to any communication addressed by the office of Development Commissioner functioning under the DGFT to hold that the appellant got the MEIS scrip issued by the said authority by means of collusion, willful misstatement or suppression of facts. Further, there is no material evidence available on record to prove that the competent licensing authority under the Foreign Trade Policy had initiated any proceedings against the appellant alleging acquisition of the scrips in a fraudulent manner. The allegation with regard to MEIS benefits wrongly availed by the appellant does not have an independent nexus to the Customs Act, 1962 inasmuch as such scheme designed for the Merchant Exporter are dealt with under the Foreign Trade Policy (2015-2020) and Foreign Trade (Development Regulation) Act, 1992. The adjudicating authority has lost sight of the fact that the appellant's company is an artificial or non-human entity, cannot function or operate without involvement of the natural person i.e. the directors or the authorized persons. Therefore, we are of the considered view that the charges of guilt of 'collusion', 'wilful misstatement' or 'suppression of facts' cannot be levelled against the appellant, justifying invocation of the provisions of Section 28AAA of the Act - The impugned order in paragraph 12(ii) has confiscated the goods covered under Shipping Bill Nos. 7289261 and 7289281 both dated 12.07.2017 and imposed redemption fine on the appellant by relying upon the test report dated 02.11.2017 furnished by the DYCC/JNCH. The said report confirms that the Rope in question comprised of Polypropylene as the primary/major ingredient. It is evident that the integral part and parcel of the principles of natural justice has been violated in this case inasmuch as reasons are the soul of any judicial order and good and proper reasoning make its body strong, which admittedly is absent in the present case. Accordingly, the matter should be remanded to the original authority for grant of opportunity to the appellant for cross examining the chemical examiner and thereafter to address the issue in a just and fair manner. The impugned order is set aside, in so far as it has changed the classification of exported goods from CTH 56079090 to CTH 56074900, resulting in confirmation of duty demand along with interest and imposition of penalty on the appellant - As regards confiscation of goods and imposition of redemption fine, the impugned order is set aside and appeal is allowed by way of remand to the original authority for grant of permission to the appellant for cross examining the chemical examiner and thereafter to adjudicate the matter based on the outcome of such examination report. Appeal disposed off.
Issues Involved:
1. Correct classification of exported ropes. 2. Entitlement to MEIS benefits. 3. Legality of duty demand under Section 28AAA of the Customs Act, 1962. 4. Confiscation of goods and imposition of redemption fine. 5. Imposition of penalties on the appellant company and its directors/CEO. 6. Adherence to principles of natural justice. Issue-wise Detailed Analysis: 1. Correct Classification of Exported Ropes: The primary issue was the classification of ropes made of Polypropylene (PP) and PP Polyester. The appellant classified them under RITC 56079090, attracting a 5% MEIS benefit. However, the Department argued they should be classified under RITC 56074900, attracting a 2% MEIS benefit. The adjudicating authority confirmed the Department's classification, leading to a reduced MEIS benefit. 2. Entitlement to MEIS Benefits: The Department alleged that the appellant misclassified the goods to avail a higher MEIS benefit. The adjudicating authority held that no MEIS benefit was available until August 2016, and from September 2016, only a 2% benefit was available. It was directed that the competent authority in the DGFT office be informed to restrict the MEIS benefit to 2%. 3. Legality of Duty Demand under Section 28AAA of the Customs Act, 1962: The appellant argued that the Shipping Bills were assessed, and 'Let Export Order' was issued by the proper officer based on submitted documents. Since all material particulars were available, charges of 'collusion', 'willful misstatement', or 'suppression of facts' cannot justify the duty demand under Section 28AAA. The Tribunal agreed, noting that no evidence of fraudulent activity was provided, and the MEIS scheme falls under the jurisdiction of the DGFT, not Customs. 4. Confiscation of Goods and Imposition of Redemption Fine: The adjudicating authority ordered the confiscation of goods covered under two shipping bills, with an option to redeem them on payment of a fine. The appellant contested the test report used for this decision and requested cross-examination of the Chemical Examiner. The Tribunal found that the adjudicating authority did not properly consider the appellant's submissions or the Assistant Commissioner's communication. The matter was remanded for re-assessment after allowing cross-examination. 5. Imposition of Penalties on the Appellant Company and its Directors/CEO: Penalties were proposed against the company's CEO and Director. However, the adjudicating authority dropped these proposals due to insufficient evidence. The Tribunal noted that since the company acts through its directors and officers, and they were exonerated, the company should not be penalized under Section 28AAA. 6. Adherence to Principles of Natural Justice: The Tribunal observed that the principles of natural justice were violated, as the adjudicating authority did not provide proper reasoning or consider the appellant's request for cross-examination. The Tribunal emphasized that reasons are the soul of any judicial order and remanded the matter for a fair re-assessment. Conclusion: The Tribunal set aside the impugned order regarding the reclassification of goods and the consequent duty demand and penalties. It remanded the matter concerning the confiscation of goods and redemption fine for re-assessment, ensuring adherence to natural justice principles. The appeal was disposed of with directions for a fair re-evaluation.
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