Custom, Excise & Service Tax Tribunal
M/S. Madhu Sudan Metals vs Commissioner Of Customs (Import) Nhava ... on 23 March, 2011
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL WEST ZONAL BENCH AT MUMBAI COURT No. I APPEAL No. C/568-569/2005-Mum. (Arising out of Order-in-Original No. 59 & 58/2005 dated 12.05.2005 passed by Commissioner of Customs (Imports), Nhava Sheva) For approval and signature: Honble Mr. P.G. Chacko, Member (Judicial) Honble Mr. Sahab Singh, Member (Technical) ======================================================
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?
====================================================== M/s. Madhu Sudan Metals M/s. Madhav Steel Appellant Vs. Commissioner of Customs (Import) Nhava Sheva Respondent Appearance:
Shri Brijesh Pathak, Advocate for appellant Shri B.P. Pareira, Authorised Representative (DR), for respondent CORAM:
Honble Mr. P.G. Chacko, Member (Judicial) Honble Mr. Sahab Singh, Member (Technical) Date of Hearing: 23/03/2011 Date of Decision: 23/03/2011 ORDER NO Per: P.G. Chacko These appeals were filed by two importers, who filed their bills of entry in November 2004 for clearance of the goods which were imported by them and declared as Stainless Steel Melting Scrap Grade 304. The unit price declared by both the importers was US$ 1500 per ton (CIF) based on invoices issued by the supplier. Both the imports were from Mexico. As para 2.32 of the Foreign Trade Policy in force at the time required a Pre-shipment Inspection Certificate to be produced from the supplier to the effect that the consignment imported from a country affected by rebellion/war did not contain any type of arms, ammunition, mines, shells, cartridges, radioactive contaminated or any other explosive material in any form, the consignments were examined on first check basis, whereupon it was found that each consignment contained considerable quantities of secondary/defective stainless steel sheets and secondary/defective stainless steel strips in addition to stainless steel melting scrap. A subsequent re-examination of the goods disclosed the proportion in which the said three constituents were present. Accordingly, the consignment imported by M/s. Mudhu Sudan Metals was found to contain 28.73 MTs of stainless steel sheets 304 grade, 35.68 MTs of secondary/defective stainless steel sheets 304 grade, 1.87 MTs of secondary/defective stainless steel sheet 400 series grade and 27.40 MTs of stainless steel melting scrap 304 grade in the form of strips (not serviceable). The Customs authorities also found higher contemporary import prices for these constituents in the consignment, which were 2400 US$ per MT, 2100 US$ per MT, 1500 US$ per MT and 1500 US$ per MT respectively. In the case of import by M/s. Madhav Steel, the re-examination of the goods yielded the following results:[1] 38.21 MTs of stainless steel strips 304 grade (not serviceable); [2] 39.97 MTs of secondary/defective stainless steel sheets 304 grade; [3] 2.10 MTs of secondary/defective stainless steel sheet 400 series grade; [4] 12.78 MTs of stainless steel melting scrap 304 grade in the form of strips (not serviceable); [5] contemporary import prices 1500, 2100, 1500 and 1500 US$ per MT respectively.
2. On the basis of the above results of examination of the goods, the Customs authorities found misdeclaration of description and value of the goods by both the importers and accordingly the goods were seized under Section 110 of the Customs Act. Investigations continued by way of recording of statements under Section 108 of the Customs Act. One Shri R.J. Virwadia, partner of both the firms, stated that he had made inquiries with the overseas supplier and received information to the effect that the goods were supplied as stainless steel melting scrap 304 grade only. He also stated that he never intended to import stainless steel sheets in the guise of stainless steel melting scrap. Subsequently, on 29.3.2005, the importers accepted the composition of the consignments as brought out in the examination reports.
3. From the above, it appeared to the department that the importers had misdeclared the description and value of the goods and also violated the provisions of the Foreign Trade Policy/2004-2009 by not producing Pre-shipment Inspection Certificate. Therefore, show-cause notices were issued to both the importers. In the replies filed by the appellants, it was submitted that the imported materials were ultimately used for the purpose of melting only. They claimed that no part of the consignments could be treated as secondary/defective. As regards the requirement of Pre-shipment Inspection Certificate, it was submitted that it was only a procedural requirement and that the non-production of the document was at best a technical lapse which could be condoned in the interest of justice. In adjudication of the dispute, the Commissioner of Customs (Import) passed separate orders in respect of the two importers/appellants (a) confiscating the goods under Section 111(d) and (m) of the Customs Act with the option for redeeming the goods on payment of fine and (b) imposing penalties. In respect of M/s. Madhu Sudan Metals and M/s. Madhav Steel, the learned Commissioner imposed redemption fines of Rs. 8,00,000/-(Rupees eight lakhs only) and Rs. 7,00,000/- (Rupees seven lakhs only) respectively and penalties of Rs. 50,000/- (Rupees fifty thousand only) each. The option to redeem the goods was to be exercised within 30 days. The appropriate duty was also required to be paid at the time of redemption of the goods.
4. These appeals arise pursuant to the Honble High Courts remand order dated 1.9.2010, which was passed in Customs Appeal Nos. 66 & 68/2006 filed by the department.
5. The learned Counsel has reiterated the grounds of the appeals. He, further, submits that there was no way for the appellants at the time of import to know that Mexico was affected by war or rebellion and therefore it cannot be said that they deliberately violated any provision of the Foreign Trade Policy by not producing inspection certificate from supplier.
6. The learned JDR submits that misdeclaration stands admitted. He submits that the fact that Mexico was a war/rebellion affected country at the material time was clearly alleged in the show-cause notices but not denied by the appellants. They ought to have produced Pre-shipment Inspection Certificate from the overseas exporter as required under para 2.32 of the Foreign Trade Policy/2004-2009. It was a mandatory requirement and the same was not fulfilled by the appellants. Consequently, according to the learned JDR, the goods imported by the appellants were liable to confiscation under Section 111(d) of the Customs Act. It is further submitted that a major part of each consignment was serviceable stainless steel sheets but the value declared by the importers was that of scrap. It is submitted that the contemporaneous import price per MT mentioned in the examination reports was not objected to by the importers. Therefore, according to learned JDR, misdeclaration of value of the goods is also an admitted fact, which would attract Section 111(m) of the Act. On this basis, it is contended that the confiscation of the goods by the Commissioner is liable to be upheld. Considering the value of the goods, the quanta of fine determined by the Commissioner against the appellants are also not liable to be modified. The penalty of Rs.50,000/- (Rupees fifty thousand only) imposed on each appellant is quite reasonable. Therefore, the impugned orders have to be upheld, according to the learned JDR.
7. After considering the submissions, we find that the question of pre-clearance mutilation of the goods does not survive. The goods were admittedly cleared by the appellants. Therefore, for the same reason, the apex courts judgment in Collector of Cus., Bombay Vs. Hardik Industrial Corporation 1998 (97) E.L.T. 25 (S.C.) cited by the learned JDR is not relevant.
8. We are primarily concerned with the decision of the Commissioner confiscating the goods (with redemption fine) and imposing penalties on the importers. As rightly submitted by the learned JDR, misdeclaration of description of the goods was admitted by the importers, who, in separate letters, accepted the results of re-examination of the goods. The re-examination reports had clearly brought out the fact that the consignments were composed mainly of serviceable stainless steel sheets, whereas what was declared in the bills of entry was stainless steel melting scrap. When the examination reports were accepted, the misdescription of the goods stood admitted. The examination reports had also brought out certain contemporaneous import prices per MT of the constituents of the consignments. When the reports were accepted, these contemporaneous import prices also stood accepted. In the case of stainless steel sheets 304 grade and secondary/defective stainless steel sheets 304 grade, the contemporaneous unit prices were much higher than what was declared in the bills of entry. Thus misdeclaration of value of the goods also stands established. Misdeclaration of description and value of the goods attracted Section 111(m) of the Act. The appellants cannot be heard to say that they were not aware of the policy provisions. Para 2.32 of the Foreign Trade Policy/2004-2009 clearly laid down that, in the case of import of metal scrap originating from a country affected by rebellion or war, a Pre-shipment Inspection Certificate from the exporter (supplier) should be furnished at the time of clearance of the goods to ensure that the consignment did not contain any type of arms, ammunition, mines, shells, cartridges, radioactive, contaminated or any other explosive material in any form. It is not in dispute that no such certificate was produced by the appellants at the time of clearance of the goods. The learned counsel has submitted that the examination of the goods did not disclose the presence of arms, ammunition, mines, shells or the like in the consignments and, therefore, the non-production of the above certificate would not be fatal. This argument is not acceptable. The above requirement of the policy was one to be met at the time of filing the bills of entry. The examination of the goods took place at a posterior stage. The requirement to be fulfilled at the time of filing the bill of entry should have been fulfilled at that time itself. The appellants cannot be allowed to bank on a subsequent event so as to wriggle out of the above mandatory requirement. Therefore, we do not find fault with the Commissioners decision to confiscate the goods in terms of Section 111(d) of the Act. The confiscation is therefore liable to be sustained on both the grounds.
9. Considering the admitted value of the goods imported by M/s. Mudhu Sudhan Metals (Rs.106 lakhs) and M/s. Madhav Steel (Rs. 75 lakhs), we are of the view that the quanta of redemption fine imposed on the appellants (Rs. 8 lakhs and Rs. 7 lakhs respectively) cannot be considered to be unreasonable. The appellants, by rendering the goods liable to confiscation, rendered themselves liable to penalty. The penalty imposed by the adjudicating authority on each appellant is only Rs. 50,000/-, from which it appears that the learned Commissioner was very fair to the appellants.
10. In the result, both the appeals get dismissed.
(Dictated in Court) (Sahab Singh) Member (Technical) (P.G. Chacko) Member (Judicial) Sm.
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