2021 (8) TMI 641 - AT - Customs

Classification of imported goods - hollow profiles and pipes weighing about 10 MT found in the consignment - whether the goods are actually pipes and profiles and to be classified as such or merely as part of scrap - demand of customs duty - levy of redemption fine and penalty - HELD THAT - The only documents on the basis of which a decision can be made in this regard are the examination reports and the letter given by the appellant to the Customs authorities both of which confirm that they were indeed hollow profiles and pipes and not scrap as declared. The appellant accepted that the mis-declaration, waived the Show Cause Notice by asking for a spot adjudication. If the appellant had contested the nature of the goods, a Show Cause Notice would have been issued and the remaining procedures followed. Once the appellant gave in writing that they have mis-declared the goods, they should be classified as profiles and pipes only and duty should be charged accordingly. It is worth noting that the goods were examined and on the request of the appellant, re-examined and after both these reports confirmed that the goods were hollow profiles and pipes, the appellant also accepted the mis-declaration in writing. If the pipes and profiles were indeed old, the appellant could have, instead of accepting a mis-declaration, requested for mutilation of these goods as per Section 24 so that they can no longer be used as pipes or profiles but need to be used as scrap only. However, the appellant made a request for spot adjudication accepting the mis-declaration and the order was passed accordingly. The appellant cannot now say that although they wanted a spot adjudication, the department should have still issued a Show Cause Notice. Therefore, the demand of duty in the adjudication order. The quantum of redemption fine and penalty reduced. Appeal allowed in part.

Summary

Issues:
Appeal against confirmed duty demand, redemption fine, and penalty imposition on imported goods under exemption claim.

Analysis:
The appellant imported Heavy Melting Scrap (HMS) but examination revealed additional hollow profiles and pipes, leading to a weight discrepancy. Re-examination confirmed the findings, and the appellant accepted mis-declaration, requesting spot adjudication. The appellant contested the classification and valuation, arguing for scrap classification due to the nature of the additional items. The appellant's contention was that the hollow profiles and pipes were not meant for direct use but for melting, hence should not be separately classified. However, the tribunal noted that examination reports and the appellant's admission supported the classification as hollow profiles and pipes. The tribunal upheld the duty demand due to the appellant's acceptance of mis-declaration and spot adjudication request, dismissing the argument for a show cause notice.

As an alternative submission, the appellant sought reduction in the redemption fine and penalty due to being a bonafide importer. The tribunal considered the duty amount and reduced the redemption fine and penalty significantly, acknowledging the appellant's genuine status as an importer. The appeal was disposed of with the duty demand upheld but with reduced redemption fine and penalty.

In conclusion, the tribunal upheld the duty demand based on the appellant's admission and spot adjudication request, rejecting the argument for a show cause notice. The reduction in redemption fine and penalty reflected the tribunal's consideration of the duty amount and the appellant's importer status.