Custom, Excise & Service Tax Tribunal
Commissioner Of Customs (Imports) vs Alpharma (Belgium) Bvba on 11 June, 2015
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL SOUTH ZONAL BENCH
CHENNAI
Appeal No.C/41347/2014 & C/CO/40252/2015
[Arising out of Order-in-Appeal No.430/2014 dt. 11.3.2014 passed by the Commissioner of Customs (Appeals), Chennai]
Commissioner of Customs (Imports),
Chennai Appellant
Versus
Alpharma (Belgium) BVBA Respondent
Appearance:
Shri B. Balamurugan, AC (AR) For the Appellant Shri Abhishek Rastogi, Consultant Ms. Rashmi Deshpande, Advocate For the Respondent CORAM : Honble Shri R. Periasami, Technical Member Honble Shri P.K. Choudhary, Judicial Member Date of Hearing/Decision : 11.6.2015 FINAL ORDER No.41726/2015 Per R. Periasami
Revenue filed appeal against the OIA dt. 11.3.2014 passed by Commissioner of Customs (Appeals) Chennai.
2. The brief facts of the case are that M/s.Alpharma (Belgium) BVBA, New Delhi imported the goods under Bill of Entry No.749676 dt. 14.1.2011 declaring the goods as Chlortetracycline 15% (Medicaments) - Animal Feed Supplements classifying under Chapter Heading 30042041 and claiming the benefit of CVD under Exemption Notification No.3/2005-c.Ex (Sl.No.29) dt. 24.2.2005. Based on the intelligence received from DRI that importer misdeclared the description of the goods and clearing the goods as medicaments in stead of animal feed supplements and evading appropriate customs duty, the goods were seized and released provisionally on execution of PD bond and bank guarantee for 20% of the value of the goods. The intelligence also found that respondents have cleared 10 consignments of identical goods in the past and declared as Medicaments. Consequently, a SCN was issued for reclassification of the goods and also for confiscation of the goods under section 111 (m) and also proposing for penalty. Since the respondents did not appear before the adjudicating authority, the adjudicating authority in his OIO dt. 31.3.2012 rejected the classification of the goods claimed by the respondents under 30042041 and ordered for reclassification under 23099090 of the Customs Tariff Act, 1975 as Animal Feed Supplement and also ordered for finalization of provisional assessment in respect of all the Bills of Entry and also demanded differential duty of Rs.7,35,349/- in respect of past clearance and confirmed the demand of Rs.2,21,281/- in respect of live bill of entry . He also ordered for confiscation of the goods under section 111 (m) and imposed redemption fine of Rs.50 lakhs in lieu of confiscation and imposed penalty of Rs.5 lakhs and appropriated amount of Rs.10,50,557/- paid by respondent towards adjudication liabilities and also ordered for enforcement of bank guarantee. Against this order, respondent preferred appeal before Commissioner (Appeals) and the Commissioner (Appeals) in the impugned order dt. 11.3.2014 partly allowed the appeal. He upheld the reclassification ordered by the adjudicating authority and set aside the confiscation and penalty. Hence Revenue filed the present appeal against the OIA of setting aside of confiscation and penalty. The respondents have also filed their cross objection against the Revenues appeal.
3. Heard both sides. Ld. A.R for Revenue reiterated the grounds of appeal and submits that the imported item is Chlortetracycline 15% and claimed classification as medicaments. He submits that when the respondent failed to appear for personal hearing before the adjudicating authority and failed to put forth their grounds against confiscation and penalty. The original authority has rightly confiscated the goods and imposed RF and penalty besides re-classifying the goods. He submits that Commissioner (Appeals) having upheld re-classification and misdeclaration but setting aside the confiscation, fine and penalty is not justified. Respondents have intentionally misdeclared the goods as Medicaments under Chapter 30 and availed exemption notification 3/2005 for CVD and the misclassification is with intention to evade customs duty. Therefore, he submits, the adjudicating authority has rightly confiscated the goods and imposed RF & penalty. He submits that invoice did not mention the goods as medicaments whereas the respondents have deliberately described the goods as medicaments. He pleaded for restoring the confiscation, fine and penalty ordered by the adjudicating authority.
4. Ld. Counsel appearing for the respondent reiterated the cross objection and in the cross objection they have disputed the classification and submits that the product is rightly classifiable under chapter 30. He relied page 9 of cross objection and submits that the product "ChlorMax" is described as per their website w.w.w.alpharma.com to be "a broad spectrum antibacterial feed additive and submits that Heading 2309 includes products of a kind used for animal feeding not elsewhere specified or included. Since their product containing "Chlortetracycline of 15%" is rightly classifiable under Chapter 30. He relied Chapter Note (1) of Chapter 23 and also relied HSN note (3) note (c) and note (g) and submits that as per HSN it excludes medicaments. Regarding confiscation, the Commissioner (Appeals) has rightly dropped the confiscation, fine and penalty. He submits that when the goods are not available for confiscation, redemption fine is not imposable. He submits that the adjudicating authority imposed redemption of Rs.50 lakhs covering the past consignments valued at Rs.2,09,17,181/-, by taking 25% of the value of all Bills of Entries and also pleaded that penalty imposed is on the higher side. Therefore, Commissioner (Appeals) has rightly set aside fine and penalty.
5. After hearing both sides, we find that the short issue to be decided in this Revenues appeal is limited to confiscation and imposition of fine and penalty which was set aside by the Commissioner (Appeals). Reading the respondents raising the dispute of classification of goods in their cross objection, we find that respondents themselves in their appeal before Commissioner (Appeals) have accepted the reclassification of the goods ordered with OIO and also paid the differential duty which was clearly recorded at para-5 & 6 of the OIA. The LAA had upheld the order on classification of imported goods as Animal Feed Supplement under Chapter heading 23099090. On perusal of OIO, we find that in spite of several opportunities were given to the respondent to appear for personal hearing, the respondent to appear for hearing to defend their case and the having accepted the classification before Commissioner (Appeals) we do not find any merit in the respondents contention on classification of imported goods in their cross objection. We also find that the adjudicating authority and the appellate authority have discussed the classification issue at length and rightly held that the goods are Animal Feed Supplement and classifiable under Chapter 23 of CTA. Therefore, the cross objection on their issue is liable to be rejected.
6. As regards the Revenues contention that the respondent has misclassified/misdeclared the goods with intent to evade customs duty, we find that adjudicating authority in his OIO had dealt the issue of confiscation in detail at paras 17, 28, 29 and 30 of the order. It is seen from the statement dt. 27.1.2011 of Dr. Tapan Saha, Branch Manager wherein he has voluntarily admitted that nowhere in the invoice the goods were described as Medicaments but they have added and inserted the words medicaments while describing the description of the goods in the B/E and claimed classification under Chapter 30 to evade payment of appropriate duty of customs. It is evident that respondents claimed classification of goods as medicament under Chapter 30 with intention to avail exemption of CVD at NIL rate under Central Excise notification No.3/2005-C.Ex Sl.No.29). Therefore, intention of the respondent is established the contravention under Section 111 for confiscation is fully justified. The lower appellate authority having accepted the Revenues re-classification of the goods under chapter 23 as animal feed supplement and upheld the demand, the reasons for dropping confiscation fine and penalty is not justified and not backed with evidence and beyond the scope of law. Accordingly, We hold that the misdeclaration is clearly established with intent to evade customs duty, therefore, the goods are liable for confiscation under Section 111 (m) of Customs Act and the adjudicating authority has rightly ordered for confiscation of goods under Section 111 (m) of Customs Act. The impugned Order-in-Appeal is liable to be set aside to that extent and adjudicating authoritys order of confiscation is liable to be upheld.
7. As regards the L.A.A setting aside the redemption fine and penalty having upheld the confiscation of goods, the redemption fine and penalty is imposable. However, we find that adjudicating authority had imposed fine of Rs.50 lakhs under Section 125 of the Act. Whereas the value of the goods seized under B/E 749676 dt. 14.1.2011 is Rs.18,79,084.80 which is evident from the mahazar dt.1.4.2011 whereas the adjudicating authority ordered for confiscation on the live consignment and the past clearance of value of Rs.2,09,17,181/- covering all the 11 Bills of Entry and imposed RF of Rs. 50 lakhs. We find that past consignments were cleared on provisional assessments basis pending SVB issue. Once the goods are not available for confiscation, the question of imposition of redemption fine on the past clearances does not arise and RF is applicable only on the seized goods pertaining to live Bill of Entry. Therefore, taking into consideration of overall facts and circumstances of the case, and the seizure of goods in respect of live Bill of Entry, we reduce the redemption fine from Rs.50 lakhs to Rs.1,00,000/- (Rupees one lakh only). Correspondingly, we reduce the penalty imposed on the respondents under Section 112 (a) from Rs.5 lakhs to Rs.50,000/- (Rupees Fifty thousand only). Accordingly, we set aside the impugned order to the extent of setting aside confiscation, RF, and penalty and the adjudication order is modified to that extent by reducing the RF from Rs.50 lakhs to Rs.1,00,000/- and penalty from Rs.5 lakhs to Rs.50,000/-.
8. Thus the Revenues appeal is partly allowed in the above terms. Cross objection filed by respondent is disposed of.
(Operative part of the order pronounced
in open court on 11.6.2015)
(P.K. CHOUDHARY) (R. PERIASAMI)
JUDICIAL MEMBER TECHNICAL MEMBER
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