2025 (1) TMI 1157 - AT - Customs

Classification of imported high conductivity copper bus bars - to be classified under Customs Tariff Item (CTI) 7407 21 20 or under CTI 7407 10 30 - denial of the Free Trade Agreement (FTA) benefit under N/N. 46/2011-Customs - HELD THAT - The B/Es filed by the appellants did not show the copper content in the imported article which was detected by the department at the time of examination of the goods. Insofar as confiscation of improperly imported goods are concerned Section 111 ibid in clause (m) has dealt with the situation of furnishing the correct particulars in the entry made in the B/E. In the present case since the appellants had incorrectly mentioned the tariff classification and also claimed the FTA benefit provided under notification dated 01.06.2011 which otherwise was not available to the goods under CTI 7407 10 30 the imported goods are liable for confiscation and accordingly the appellants are also exposed to the penal consequences provided under the statute i.e. for payment of redemption fine and penalty. The Orders passed by the Co ordinate Bench of this Tribunal as relied upon by the learned Advocate for the appellants in SATRON VERSUS COMMISSIONER OF CUSTOMS (IMPORTS) 2018 (11) TMI 1700 - CESTAT MUMBAI and SAHIL INTERNATIONAL VERSUS COMMISSIONER OF CUSTOMS (IMPORT) NHAVA SHEVA 2019 (5) TMI 1730 - CESTAT MUMBAI are distinguishable from the facts of the present case inasmuch as change in classification of goods by the department and acceptance of the said changed classification by the importer was not the subject matter of dispute before the Co-ordinate Benches. Further in the case in hand the appellants have not specifically pleaded that they were not liable to pay the differential duty attributable to the change in classification of goods which is evident from the fact that the said amount was paid by them suo motto before adjudication of the matter and the amount was also duly appropriated in the adjudication proceedings. Considering the fact that the appellants had filed the B/Es by describing the imported goods as per the invoice and other certificate(s) obtained from the originating country the quantum of redemption fine and penalty imposed on the appellants can be reduced in the interest of justice. Therefore imposition of redemption fine of Rs.2, 00, 000/- under Section 125 ibid and penalty of Rs.50, 000/- under Section 112(a) ibid in the original order dated 26.08.2013 and upheld in the impugned order dated 16.06.2014 is modified and the quantum is reduced to the extent of Rs.50, 000/- and Rs.10, 000/- respectively. Conclusion - Since the composition of the imported article is relevant for consideration of the appropriate tariff classification the change in classification of the goods made by the department is proper and justified. The reclassification and denial of FTA benefits were upheld. Confiscation and penalties were justified but reduced in quantum to reflect the appellants circumstances. Appeal allowed in part.

ISSUES PRESENTED and CONSIDERED

The core legal questions considered in this judgment are:

Whether the classification of the imported 'high conductivity copper bus bars' under Customs Tariff Item (CTI) 7407 21 20 by the appellants was correct or if the reclassification to CTI 7407 10 30 by the customs authorities was justified.
Whether the denial of the Free Trade Agreement (FTA) benefit under Notification No.46/2011-Customs was appropriate.
Whether the confiscation of goods and imposition of redemption fine and penalty under Sections 111(m), 125, and 112(a) of the Customs Act, 1962, were warranted.
Whether the quantum of redemption fine and penalty imposed was appropriate.

ISSUE-WISE DETAILED ANALYSIS

Classification of Imported Goods

Legal Framework and Precedents: The classification of goods under the Customs Tariff is governed by the Customs Act and relevant notifications. The appellants relied on the certificate of origin and Mill Test certificate to classify the goods under CTI 7407 21 20.
Court's Interpretation and Reasoning: The Court found that the classification should be based on the actual composition of the goods. The department's analysis showed a copper content of 99.99%, supporting classification under CTI 7407 10 30.
Key Evidence and Findings: The analysis certificate submitted by the appellants confirmed the copper content, which was crucial in determining the correct classification.
Application of Law to Facts: The Court agreed with the department's reclassification based on the high copper content, which was not compatible with the appellants' claimed classification.
Treatment of Competing Arguments: The appellants argued no misdeclaration, citing certificates from the originating country. However, the Court found the actual composition at the time of import decisive.
Conclusions: The reclassification by the customs authorities was justified, and the appellants' original classification was incorrect.

Denial of FTA Benefit

Legal Framework and Precedents: Notification No.46/2011-Customs provides FTA benefits for specific classifications. The benefit was claimed under CTI 7407 21 20.
Court's Interpretation and Reasoning: Since the goods were reclassified to CTI 7407 10 30, the FTA benefit was not applicable.
Key Evidence and Findings: The copper content and reclassification supported the denial of the FTA benefit.
Application of Law to Facts: The benefit was correctly denied as the goods did not fall under the eligible classification.
Treatment of Competing Arguments: The appellants' reliance on the original classification was not sufficient to claim the benefit.
Conclusions: The denial of the FTA benefit was appropriate given the reclassification.

Confiscation and Imposition of Redemption Fine and Penalty

Legal Framework and Precedents: Sections 111(m), 125, and 112(a) of the Customs Act address confiscation and penalties for misdeclaration and improper importation.
Court's Interpretation and Reasoning: The incorrect classification and claim of FTA benefits justified confiscation and penalties.
Key Evidence and Findings: The appellants' acceptance of the reclassification and payment of differential duty indicated acknowledgment of the misclassification.
Application of Law to Facts: The goods were liable for confiscation due to incorrect classification, and penalties were warranted under the relevant sections.
Treatment of Competing Arguments: The appellants' argument of no malafide intent was considered, but the statutory provisions were deemed applicable.
Conclusions: Confiscation and penalties were justified, but the quantum was subject to review.

Quantum of Redemption Fine and Penalty

Legal Framework and Precedents: The quantum of fines and penalties is subject to judicial discretion based on the circumstances.
Court's Interpretation and Reasoning: Given the appellants' reliance on documentation from the originating country, a reduction in fines and penalties was warranted.
Key Evidence and Findings: The appellants' cooperation and payment of duties influenced the decision to reduce penalties.
Application of Law to Facts: The original fines and penalties were reduced to Rs.50,000/- and Rs.10,000/-, respectively.
Treatment of Competing Arguments: The Court balanced the need for penal measures with the appellants' mitigating circumstances.
Conclusions: The penalties were reduced in the interest of justice.

SIGNIFICANT HOLDINGS

Verbatim Quotes of Crucial Legal Reasoning: "Since the composition of the imported article is relevant for consideration of the appropriate tariff classification, we are of the view that change in classification of the goods made by the department is proper and justified."
Core Principles Established: The actual composition of imported goods is decisive in tariff classification. Misclassification and improper claims for benefits can result in confiscation and penalties, though mitigating factors may influence the quantum.
Final Determinations on Each Issue: The reclassification and denial of FTA benefits were upheld. Confiscation and penalties were justified but reduced in quantum to reflect the appellants' circumstances.