Customs, Excise and Gold Tribunal - Tamil Nadu
Alstom Transport Ltd. vs Cc on 16 April, 2007
Equivalent citations: 2007(119)ECC318, 2007ECR318(TRI.-CHENNAI)
ORDER P. Karthikeyan, Member (T)
1. This appeal filed by M/s. Alstom Transport Ltd., Coimbatore, (ATL, for short) challenges the order in original No. 15/2000 dated 09.03.2000 passed by the Commissioner of Customs (Airport), Chennai. The facts of the case are that ATL had imported a consignment of capacitors from a supplier based in London and had cleared the same under Bill of Entry No. 199442 dated 24.02.2000. The appellants had described the consignment as 230 pieces of capacitors and classified them under CTH 8532.29. A total duty of Rs. 6,11,577/- was assessed on the consignment, which the importers had paid on 02.03.2000. Following intelligence received detailed examination of the goods was conducted. Investigation revealed that the impugned goods were more appropriately classifiable under CTH 8532.10 as 'power capacitors' assessable to a higher aggregate amount of duty. Investigation had also revealed that the assessee had cleared another consignment of power capacitors earlier under Bill of Entry No. 192047 dated 22/01/2000. On re-classification under CTH 8532.10, the goods were found liable to extra duty of Rs. 1,71,373/-.
2. In the order adjudicating the Show Cause Notice issued the Commissioner observed that ATL had cleared a consignment of similar goods about a month prior to the subject import and had correctly declared their description and classification. The Commissioner inferred that the appellants had misdeclared the description and classification of the impugned goods. He held the goods liable for confiscation under Section 111(m) of the Customs Act, 1962. Accordingly, he passed the impugned order demanding differential duty of Rs. 1,71,373/- on re-assessment of the impugned goods under CSH 8532.10 and confiscated the impugned goods under Section 111 (m) of the Customs Act with an option for redeeming the goods on payment of a fine of Rs. 3.5 lakhs. He also imposed a penalty of Rs. 1,71,373/- on M/s. Alstom Transport Ltd., under Section 114A of the Act and Rs. 10,000/- on the CHA M/s. Lee & Muirhead Ltd. Chennai.
3. In the appeal before us, the appellants have claimed that they had acted bonafidely when they had described the imported goods as capacitors under CTH 8532.29 in the Bill of Entry for their clearance. The wrong declaration had occurred owing to the omission on the part of the clerk of the CHA who did not know the difference between capacitors and power capacitors. The CHA, in his statement dated 3.3.2000 before the appraiser SIIB, had stated that their manager Shri. Srinivasan had furnished the classification and rate of duty on the impugned goods without receiving instructions from the importer. The documents had been received by the manager of the CHA and the Bill of Entry had been filled up by a clerk of the CHA. They submitted that unduly harsh penalty had been imposed on the appellants; a high amount of redemption fine of Rs. 3.5 lakhs had been imposed arbitrarily without ascertaining the profit margin of the impugned goods. The appellants cited several case laws in support of their plea that the redemption fine had to be fixed judicially after necessary market enquiry and exercising due discretion. It was also submitted that the adjudicating authority had overlooked the facts that the omission had occurred owing to the mistake on the part of the clearing clerk. The penalty equal to the differential duty was hence disproportionate to the gravity of the offence. Several case laws were cited in support to the claim that penalty should be determined after due consideration of the relevant facts and nature of the case. Among others, they also cited the judgment of the Apex Court in the case of State of Madhya Pradesh v. Bharat Heavy Electricals and in the case of Akbar Badruddin Jiwani v. CC . These judgments mandated that a decision on imposition of penalty had to take into the account the circumstances such as mens rea and bonafide of the assessee alleged of having wrongly classified the goods. The appellants prayed for setting aside the impugned order.
4. During hearing, the Ld. Counsel appearing for the appellants submitted that the importing trade by and large was conversant with the correct classification of the various merchandise imported. Many of the imported goods are known by names different in trade parlance than the entries in the tariff. The importers were not bound to enter the exact classification of the goods imported. The importers were only expected to declare the true description of the imported goods in the Bill of Entry. The correct classification and assessment of the goods imported was the duty of the departmental authorities once the importer had furnished all the relevant documents such as invoices and Bill of Lading. He reiterated the arguments in the appeal that the error in entering wrong classification had inadvertently occurred owing to the ignorance of a clerical staff of the CHA firm. It was on record that the CHA had not received the instructions to make the entries they had made in respect of the impugned goods, which were proved to be incorrect.
5. The Ld. Counsel further submitted a long list of parts and sub-assemblies under different names and their respective item code which they had imported in the past to show that most of the items could not be easily identified with the related tariff entries. He had also produced the purchase order relevant to the impugned import, which had described the goods ordered as capacitors CA60KN-001 and capacitors CA60KP-001, in proof of the fact that the goods were not familiar to the assessee as power capacitors. He also submitted an extract from Global Encyclopeadia, which, interalia, contained information on 'capacitors'. The section on capacitor does not mention power capacitors. The Ld. Counsel cited the decision of this Tribunal in CCE, Visakhapatnam v. Smithline Beecham Consumer Health Care Ltd. , wherein the Tribunal had made the following observation: "A classification declaration indicates the classification, which the assessee proposes to adopt. He may be in error. Revenue authorities are at liberty to consider the proposed classification and to order payment of duty according to the changed correct classification. In proposing an erroneous classification, the assessee commits no offence, justifying imposition of penalty". He also referred us to the decision of this Tribunal in a central excise case, Indabrator Ltd. v. CCE Mumbai , wherein the assessee's attempt to change the classification in dubious circumstances to obtain the benefit of law was held to be not itself punishable under the statute. (Sic) The ld Counsel also brought to our notice, another judgment in the case of Universal Chemical (India) v. Collector of CCE, Bombay , wherein the Apex Court had held that claiming classification of the goods under a particular tariff heading or claiming exemption under a particular notification was a matter of belief not amounting to misdeclaration in terms of Section 111(m) of the Customs Act.
6. Ld. SDR reiterated the reasoning adopted by the Commissioner in the impugned order and submitted that the order deserved to be sustained. She also cited the following case laws in support of the order:
1. DCL Polyesters Ltd. v. CC, Mumbai 2002 (150) ELT 1037 (Tri.-Mum.)
2. H.B. Fibres Ltd. v. CC, Amritsar In the first decision cited, the Tribunal had held that the aspect of bonafide conduct was only one of the factors that governed the quantum of redemption fine and bonafide conduct did not exonerate the importer entirely from imposition of fine. In the second decision cited, the Tribunal had decided that misdeclaration of description and value of goods having been conceded by the party, goods were liable to confiscation under Section 111(m) of the Customs Act.
7. We have carefully considered the facts of the case and the submissions. As per the statement of the staff of the Custom House Agent Shri Muralidaran, who handled the subject consignment, he had entered the description and classification of the impugned goods without obtaining any instructions from the importer. In CCE, Visakhapatnam v. Smith line Beecham Consumer Health Care Ltd. this Tribunal had held that proposing a classification in the Bill of Entry though erroneous was not an offence to penalize the importer. In the instant case records indicate that the description of the goods was entered as in the purchase order placed on the supplier. It was up to the assessing officer to correctly classify the goods when the assessee had described the goods as per his records and purchase order. We find that the conclusion of the Commissioner that the appellants had misdeclared the description of the goods imported as also the classification with an intention to evade payment of duty is not substantiated by any evidence. Therefore we find that the order of confiscation and the penalty was unwarranted and the impugned order is liable to be set aside. There is a plethora of judicial authorities cited before us which support our decision that the confiscation and penalty ordered in the impugned order for declaring wrong classification are not sustainable. On the facts of the case on hand, the ratio of the case laws cited by the Ld. SDR does not appear to be relevant. In the circumstances, we vacate the confiscation and the penalty imposed on the importer and hence allow the appeal filed by the ATL.
(Order pronounced in open Court on 16.4.07)