Custom, Excise & Service Tax Tribunal
M/S. Uma Mercantile Pvt. Ltd vs Commissioner Of Customs, Chennai on 23 January, 2008
IN THE CUSTOMS, EXCISE & SERVICE TAX
APPELLATE TRIBUNAL
SOUTH ZONAL BENCH AT CHENNAI
Appeal Nos. C/4 & 5/2001
(Arising out of Orders-in-Original No.46/2000-CAU dated 29.8.2000 and No. 45/2000-CAU dated 11.9.2000 passed by the Commissioner of Customs, Chennai)
For approval and signature:
Honble Mr. P. G. Chacko, Member (Judicial)
Honble Mr. P. Karthikeyan, Member (Technical)
1. Whether Press Reporters may be allowed to see the Order for Publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?
2. Whether it should be released under Rule 27 of the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?
3. Whether the Members wish to see the fair copy of the Order?
4. Whether Order is to be circulated to the Departmental authorities?
M/s. Uma Mercantile Pvt. Ltd. Appellants
Vs.
Commissioner of Customs, Chennai Respondent
Appearance Shri S. Murugappan, Advocate for the Appellants Shri J.P. Gregory, Jt. CDR, for the Respondent CORAM Honble Mr. P. G. Chacko, Member (J) Honble Mr. P. Karthikeyan, Member (T) Date of Hearing: 23.01.2008 Date of Decision: 23.01.2008 Final Order No. ____________ Per P. Karthikeyan The captioned appeals have been filed by M/s. Uma Mercantile Pvt. Ltd., Chennai against the impugned orders passed by the Commissioner of Customs, Chennai. In the impugned orders, it was found that the appellants had filed Bills of Entry No. 22432 dated 23.8.1999 and 22433 dated 23.8.1999 respectively for clearance of consignments declared as Light Melting Scrap. On examination of the cargo, it was found that the consignment comprised of galvanized sheets, tin sheets, coils, diesel engine parts etc. in addition to light melting scrap. In both the cases, the undeclared material other than scrap formed the substantial part of the consignment. Show Cause Notices were issued alleging misdeclaration of description and value of the imported goods as well as import of the secondhand material (other than scrap) in contravention of the prohibition contained in the Foreign Trade Policy. The proposals were contested by the appellants. It was submitted that the materials alleged to be other than light melting scrap were also treated as scrap in the country of origin. Similar material was being sold even in Chennai as scrap. The goods found to be used engines also deserved to be classified as scrap as they were not capable of being used as engines even after repairs. They were also scrap. Alternatively, the importer offered to mutilate the materials found to be other than scrap. In adjudication of the notices, the Commissioner did not accept the explanation of the importer describing galvanized sheets, tin sheets, metal strips, diesel engine parts etc. as light melting scrap. The Commissioner found that galvanized sheets, tin sheets, metal strips, coils and parts of engines were in the nature of articles which could be put to re-use after servicing/reconditioning. Such goods could not be classified as scrap. He found that the said goods did not satisfy the description of scrap. As regards engine parts, he relied on the opinion of an Automobile Engineer. He rejected the contention of the importer that it had only ordered for light melting scrap as the party could not produce the purchase order. Relying on accepted value of contemporaneous imports of the goods misdeclared as scrap, the Commissioner determined the assessable value of each item and arrived at the differential duty due. The Commissioner disposed both the Show Cause Notices demanding differential duty of Rs.5,25,704/- in respect of Bill of Entry No. 22432 and Rs.7,70,334/- in respect of Bill of Entry No. 22433. The misdeclared goods were confiscated invoking Section 111 (d), (i), (l), (m) & (o) of the Customs Act, 1962 (the Act) in both the cases. The goods found to be light melting scarp were confiscated under Section 119 of the Act on the ground that they had been used to conceal goods found liable for confiscation. The Commissioner ordered redemption of the consignment on payment of Rs.2.50 lakhs and Rs.4.00 lakhs respectively. The 7 containers used for transporting the consignment covered by the first Bill of Entry and 5 containers involved in the second consignment were confiscated under Section 118(a) of the Act treating the containers as packaging material for the goods found liable for confiscation. These containers were alleged to be redeemed on payment of fine of Rs.25,000/- in the first case and Rs.20,000/- in the second case. The Commissioner also imposed penalties of Rs.25,000/- and Rs.40,000/- respectively on M/s. Uma Mercantile Pvt. Ltd. under Section 112(a) of the Act for rendering the goods confiscated liable for confiscation.
2. In the appeal before the Tribunal and during hearing, the appellants have taken the same grounds as advanced before the adjudicating authority. Additionally it is argued that containers are not packing materials as held by the Honble Calcutta High Court in IMSA Shipping Agency Pvt. Ltd. Vs. Commissioner of Customs reported in 2002 (145) ELT 55 (Cal.). Therefore, the confiscation of containers invoking Section 118(a) of the Act treating them as package was not sustainable. The goods misdeclared as light melting scrap was confiscated under Section 111 (i), (l) and (o) in addition to Section 111(d) and Section 111 (m) of the Act. The findings of the Commissioner as regards the liability of these goods to confiscation were confined to prohibition to import secondhand goods and misdeclaration of description and value. Therefore, in both the cases the Commissioner had wrongly invoked Section 111(i), (l) and (o) of the Act to confiscate these goods. Considering the differential duty involved, excessive redemption fines were ordered. Moreover, the Commissioner had taken into account the liability of the goods to confiscation under Section 111 (i), (l) and (i) also in ordering these high amounts of redemption fine. The learned counsel prayed for leniency as regards both fine and penalty. The learned Jt. CDR reiterates the findings of the Commissioner.
3. We have carefully considered the facts of the case and the rival submissions. We find that there is no valid challenge to the Commissioners finding of misdeclaration of description of galvanized sheets, tin sheets, metal strips, diesel engine parts etc. We also find that the Commissioner has determined the assessable value of these goods by relying on accepted transaction value of similar goods. Once the allegation of misdeclaration was established the importer could not argue for accepting the transaction value as assessable value. The Commissioner had refused mutilation of these goods into scrap as the request of the importer in this regard was made after the offence of misdeclaration was detected. Therefore, the Commissioner rightly rejected the request of the importer to mutilate the misdeclared goods into scrap. In view of the ratio of the judgement of the Honble Calcutta High Court in the IMSA Shipping Agency case (supra), we hold that the confiscation of containers under Section 118 (a) of the Act is not sustainable. Considering the low value of the goods that were found liable for confiscation and also that the Commissioner had decided the fine and penalty taking wrongly into account the liability of the galvanized sheets, tin sheets, engine parts etc. also under Section 111 (i), (l) and (o), we consider that the fine and penalty imposed in both the cases are excessive. Therefore, we reduce the fine and penalty from Rs.2,50,000/- to Rs.1,00,000/- (Rupees one lakh only) and from Rs.25,000/- to Rs.10,000/- (Rupees ten thousand only) in respect of Bill of Entry No. 22432 and from Rs.4,00,000/- to Rs.1,50,000/- (Rupees one lakh fifty thousand only) and from Rs.20,000/- to Rs.15,000/- (Rupees fifteen thousand only). The impugned order is otherwise sustained. The appeals are disposed of on the above terms.
(Dictated and pronounced in open court)
(P. KARTHIKEYAN) (P.G. CHACKO)
Member (T) Member (J)
Rex
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