Custom, Excise & Service Tax Tribunal
S.Rajiv & Co vs Commissioner Of Customs (Csi Airport) on 4 December, 2013
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL,WEST ZONAL BENCH AT MUMBAI COURT No. II APPEAL No.C/88093/13 (Arising out of Order-in-Original No.COMMR/PMS/ADJN/04/2013-2014 dated 17/05/2013 passed by Commissioner of Customs, CSI Airport, Mumbai) For approval and signature: Honble Mr. P.R. Chandrasekharan, Member (Technical) Honble Mr. Anil Choudhary, Member (Judicial) 1. Whether Press Reporters may be allowed to see :No 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 :Yes CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not? 3. Whether Their Lordships wish to see the fair copy :Seen of the Order? 4. Whether Order is to be circulated to the Departmental :Yes authorities? ========================================
S.Rajiv & Co. Appellant Vs. Commissioner of Customs (CSI Airport) Respondent Mumbai Appearance: Shri.J.C.Patel, Advocate, for appellant Shri.M.S.Reddy, Dy. Comm. (AR), for respondent CORAM: Honble Mr. P.R.Chandrasekharan, Member (Technical) Honble Mr.Anil Choudhary, Member (Judicial) Date of Hearing : 04/12/2013 Date of Decision : 04/12/2013 ORDER NO Per: P.R.Chandrasekharan
1. The appeal is directed against Order-in-Original No.COMMR/PMS/ADJN/04/2013-2014 dated 17/05/2013 passed by Commissioner of Customs, CSI Airport, Mumbai.
2. The appellant, M/s.S.Rajiv & Co. filed a Bill of Entry No.001215 dated 09/10/2012 for the clearances of 123.940 cts of rough diamonds with an assessable value of Rs.76,08,030/-. The goods were subjected to examination and the Gemological Institute of India after testing the samples vide their report dated 23/11/2012 replied that the goods cannot be described as rough diamonds and they are semi processed diamonds. Shri Naresh Mehta, Trade Panel Member, who also examined the goods, vide his report dated 08/11/2012 certified that it is half process for cut and polishing diamonds. 1/3 work has been done. Rest of work finish with losing 20% weight of the stone. On the basis of this report, the appellant offered to pay the appropriate duty and paid duty of Rs.1,56,725/- on 23/02/2013 and cleared the goods. The appellant also waived the requirement of show-cause notice. Thereafter on 30/04/2013 a personal hearing was granted and the impugned order has been passed. Vide the impugned order the adjudicating authority has held that the goods are liable for confiscation under Section 111 (m) of the Customs Act, 1962. However, as the goods have been cleared on payment of duty, he has imposed a redemption fine of Rs.10 lakhs on the importer under Section 125 (i) of the said Customs Act. He was further imposed a penalty of Rs.1.00 lakh on the appellant under Section 112 (a) of the said Act. Aggrieved of the same, the appellant is before us.
3. The Ld. Counsel for the appellant submits that the goods imported by the appellant merits classification under CETH 7102.31 as diamonds, unworked or simply sawn, cleaved or bruted. As per the HSN explanatory note, the sub-heading covers diamonds in their natural state, diamonds simply sawn, cleaved or bruted or which have only a small number of polished facets and tumbled diamonds of which the surface has been rendered glossy and shiny by chemical treatment. The department has assessed the goods to duty by classifying the same under heading No.7102.39 which covers polished diamonds having multiple flat polished surfaces or facets, which do not require to be further worked before being used in jewellery. As per the experts opinion received by the department, it is clear that the diamonds are only a semi processed and needs further processing to become cut and polished diamonds. The appellant has also produced a Kimberly Process Certificate certifying that the goods under importation are rough diamonds. The CBE&C vide Circular No.35/2009-Cus dated 29/12/2009 has also clarified that semi-cut diamonds should be subjected to the requirement of production of certificate under the Kimberly Process Certification Scheme (KPCS) and also polishing a single or a few small facets will not transform rough diamonds into polished diamonds. On the basis of this clarification, it can be seen that the goods under importation are not polished diamonds meriting classification under heading No.7102.39 as assessed by the Revenue. In any case, the appellant has discharged the duty liability and cleared the goods under importation on payment of duty and therefore, there is no loss of revenue caused to the exchequer. In spite of having discharged the duty liability the adjudicating authority has held that the goods are liable to confiscation under Section 111 (m), even though the goods have been cleared and are not available for confiscation. Further the adjudicating authority has imposed redemption fine under Section125 and penalty under section 112 (a) and these are clearly not sustainable in law. He placed reliance on the decision of the Honble Apex Court in the case of Northern Plastic Ltd. Vs. Collector of Customs & Central Excise reported in 1998 (101) ELT 549 (SC) wherein it was held that laying claim to some exemption, whether admissible or not, is a matter of belief of assessee and does not amount to mis-declaration and consequently confiscation under Section 111 (m) of the Customs Act is not warranted in such cases. The Honble High Court of Bombay in the case of CC Vs Gaurav Enterprises 2006 (193) ELT 532 held that declaration with regard to untenable claim for exemption of duty is not a misdeclaration. This Tribunal also followed the said decision in the case of C.Natvarlal & Co. vide Order No.A/05/13/CSTB/C-I dated 20/12/2012. In the light of these decisions, he prays for setting aside the liability to confiscation , redemption fine and the penalty.
4. The Ld. Deputy Commissioner (AR) appearing for the Revenue reiterates the findings of the adjudicating authority.
5. We have carefully considered the rival submissions.
5.1 From the experts opinion obtained with regard to the impugned goods, it is seen that the goods under importation are only semi-processed diamonds. Further, as per the HSN explanatory notes and the Board Circular dated 29/12/2009, they fall under the category of rough diamonds and not as cut and polished diamonds. The Kimberley Process Certificate produced by the importer appellant also certifies the product to be a rough diamond. In these circumstances, it cannot be said that the appellant made any misdeclaration with regard to the description of the goods under importation. Therefore, the confiscation of the goods under Section 111 (m) is without any basis. Further, the appellant has cleared the goods already on payment of duty and the goods are not available for any redemption. Therefore, imposition of redemption fine under Section 125 of the Customs Act, is clearly unsustainable in law. Merely, because the appellant had initially made a claim for exemption from duty based on the documents available, it cannot be said that the appellant had misdeclared the goods. The ratio of the decision of the Honble Apex Court in the case of Northern Plastic Ltd. and of the Honble Bombay High Courts decision in the case of Gaurav Enterprises would squarely apply to the facts of the case. Therefore, there is no warrant for confiscation or imposition of any penalty.
5.2 In view of the above, we allow the appeal by setting aside the impugned order.
(Operative part of the order pronounced in Court) (Anil Choudhary) Member (Judicial) (P.R. Chandrasekharan) Member (Technical) pj 1 6