2022 (8) TMI 616 - AT - Customs

Classification of goods - unflavoured supari (betel nut product) - to be classified under CTH 21069030 or under CTH 08028000? - benefit of concessional rate of duty under Sl. No. (i) of Notification No. 96/2008 - HELD THAT - It has to be stated that the appellant is not contesting the classification or the valuation of the goods. It is also to be stated that even prior to passing of the impugned order, the appellant had requested for permission to re-export the goods. The adjudicating authority has allowed such request. However, redemption fine of Rs.15 lakhs has been imposed. The enhanced valuation of the goods has happened for the difference in the classification adopted by the appellant. The appellant has adopted the classification under Chapter 21 on the view that the goods are in the nature of betel nut products. Taking note of the fact that the goods are not cleared for home consumption and the appellant has also incurred huge detention-cum- demurrage charges, we are of the view that the redemption fine and the penalty imposed by the adjudicating authority is on the higher side, we hold that reducing the redemption fine to Rs.4,00,000/- and penalty to Rs.5,00,000/- would meet the ends of justice - the impugned order is modified to the extent of reducing the redemption fine to Rs.4,00,000/- (for the purpose of re-export only) and also reducing the penalty imposed under sec. 112(a)(i) to Rs.5,00,000/- without disturbing other directions in the order. The appeal is partly allowed.

Summary

Issues: Classification of goods, Valuation of goods, Imposition of redemption fine and penalty

Classification of Goods:
The appellant declared goods as 'unflavoured supari' but upon verification, it was found that the goods were actually areca nuts-split, classified under CTH 08028000, not under Chapter 21 as declared. The appellant contended that the goods were split areca nuts and should qualify for concessional duty under Notification No. 96/2008. The adjudicating authority rejected the appellant's classification, reclassified the goods under CTH 08028090, and imposed penalties. The Tribunal noted the violation of notification conditions but reduced the redemption fine and penalty considering the goods were not cleared for home consumption.

Valuation of Goods:
The declared value of the goods was also disputed by the adjudicating authority, reassessed at Rs.4,31,34,619/-, leading to confiscation with an option for redemption on payment of a fine. The appellant requested permission for re-export even before the order was passed. The Tribunal acknowledged the appellant's request for re-export and reduced the redemption fine and penalty imposed, considering the detention-cum-demurrage charges incurred by the appellant.

Imposition of Redemption Fine and Penalty:
The appellant argued against the imposition of a redemption fine, citing Section 125 of the Customs Act, 1962, and referred to various legal precedents to support the argument. The department supported the impugned order, citing a Supreme Court decision regarding the import of goods in violation of notifications. The Tribunal, while acknowledging the violation, reduced the redemption fine to Rs.4,00,000/- and the penalty to Rs.5,00,000/-, deeming the original amounts excessive and adjusting them to meet the ends of justice.

This detailed analysis covers the issues of classification of goods, valuation of goods, and the imposition of redemption fine and penalty, providing a comprehensive overview of the legal judgment delivered by the Appellate Tribunal CESTAT CHENNAI.