Indian Kanoon - Search engine for Indian Law

Custom, Excise & Service Tax Tribunal

Stovekraft Pvt Ltd vs Commissioner Of Customs, Bangalore on 15 July, 2025

                                                              C/20221/2018




     CUSTOMS, EXCISE & SERVICE TAX APPELLATE
                    TRIBUNAL
                   BANGALORE

                   REGIONAL BENCH - COURT NO. 1

                Customs Appeal No.20221 of 2018

     (Arising out of Order-in-Appeal No.978-979/2017 dated 28.11.2017
        passed by the Commissioner of Customs (Appeals), Bangalore)


M/s. Stovekraft Pvt. Ltd.,
81/1, Medamaranahalli Village,                            Appellant(s)
Harohalli, Kanakapura Road,
Ramanagar Dist.
Bangalore-562 112.

                                   VERSUS
Commissioner of Customs,
Bangalore City Commissionerate,
C.R.Building,                                          Respondent(s)

Queens Road, Bangalore-560 001.

APPEARANCE:

Mr. B. Venugopal, Advocate for the Appellant Mr. K.A. Jathin, Deputy Commissioner (AR) for the Respondent CORAM: HON'BLE DR. D.M. MISRA, MEMBER (JUDICIAL) HON'BLE MR. PULLELA NAGESWARA RAO, MEMBER (TECHNICAL) Final Order No. 21001 /2025 DATE OF HEARING: 14.02.2025 DATE OF DECISION: 15.07.2025 PER : D.M. MISRA This is an appeal filed against Order-in-Appeal No.978- 979/2017 dated 28.11.2017 passed by the Commissioner of Customs (Appeals), Bangalore.

2. Briefly stated the facts of the case are that the appellants had imported stainless steel(SS) water bottles classifying the same under CTH 73239990 during the relevant period from January 2010 to November 2013. During the course of Page 1 of 8 C/20221/2018 investigation, samples drawn were sent for analysis to Central Manufacturing Technology Institute, Bangalore (CMTI) and the test report revealed that the supplied items were flask with double wall made out of high Manganese stainless steel and both the flasks act as thermos flask with good heat retentivity as the space between the two walls is evacuated. Thus alleging that the said products are vacuum flasks and not simple SS water bottles, investigation was initiated. On completion of investigation by recording statements of various persons and scrutinising their records, show-cause notice was issued on 18.12.2014 proposing as to why the SS water bottles imported should not be classified under CTH 96170011 / 96170012 as SS vacuum flask and chargeable to appropriate rate of CVD on the basis of RSP; the differential duty of Rs.40,07,495/- proposed to be recovered under Section 28(4) of the Customs Act, 1962 along with interest and penalty; also goods seized were proposed to be confiscated. On adjudication, the demand was confirmed with interest; also, goods were held to be liable for confiscation and an option was given to redeem the same on payment of fine of Rs.5 lakhs; penalty under various provisions were imposed on the appellant. Aggrieved by the said order, they filed an appeal before the learned Commissioner(Appeals) who has modified the Order-in-Original by reducing the penalty under Section 114A of the Customs Act, 1962 to Rs.40,07,495/- and also set aside penalties under Sections 112(a) and 114AA of the Customs Act, 1962. Hence, the present appeal.

3.1. At the outset, the learned advocate for the appellant has submitted that during the period from January 2010 to November 2013, they have imported 1,62,170 numbers of "Stainless Steel Water Bottles" of various seizes, valued at Rs.2,13,24,532/- under 10 Bills of Entry through ICD, Bangalore declaring its classification under CTH 73239990 of the Customs Tariff Act, 1985. The appellant after issuance of the show-cause Page 2 of 8 C/20221/2018 notice with an intention to settle the case and to avoid protracted litigation, filed an application under Section 127B of the Customs Act, 1962 before the Hon'ble Settlement Commissioner. However, the said application was rejected by the Settlement Commission vide Order dated 25.09.2015. Later, the show-cause notice issued was adjudicated by the Department. He has submitted that in the present appeal before the Tribunal, the issue needs to be decided is whether there is misdeclaration of classification of the imported goods viz. SS water bottles with an intention to evade customs duty. He has fairly submitted that the classification confirmed by the Department in the adjudication proceedings as CTH 96170011 or CTH 96170012 depending on the capacity of the imported water bottles is not disputed by the appellant in the present appeal. However, his submission is relating to invocation of extended period of limitation alleging misdeclaration of the imported goods with intent to evade payment of duty. He has submitted that the charge of misdeclaration and consequently invocation of extended period is erroneous in the facts and circumstances of the case.

3.2. Referring to the competing Tariff entries and the HSN notes under Chapter 7323, the learned advocate has submitted that the description of the imported product in the import invoices is mentioned as "Pigeon Brand Stainless Steel Water Bottle" which were marketed by the appellant as 'stainless steel water bottle' and not as 'vacuum flask'. Even in the marketing catalogues, the water bottle is not even published or highlighted as 'double walled vacuum insulated water bottle'. The bottle retains the temperature of the liquid but are marked as stainless steel water bottle only. It is his contention that since the HSN Explanatory notes under Chapter heading 7323 includes hot water bottles, they entertained a bona fide belief that since the impugned product is marketed and used only as water bottle, Page 3 of 8 C/20221/2018 the same is rightly classifiable under the said heading. In the previous occasions, the said goods were cleared as SS water bottles by the Customs authorities. He has submitted that besides the impugned product, they had also imported vacuum flask which were classified according to the tariff heading applicable to vacuum flask only. Therefore, the charge of SS vacuum flask was misdeclared is baseless as the utility and the purpose is same as for storing liquids retaining the temperature and not for storing any beverages. Further, he has referred to various judgments to submit that the classification on bona fide belief does not amount to misdeclaration.

i. Reliance Communication Infrastructure Ltd. Vs. CC(I) [2015(320) ELT 306 (Tri. Mum.); Upheld by Hon'ble Supreme Court [2017(349) ELT A222 (SC)] ii. Komal Trading Company Vs. CC(Import) Mum [2014(301) ELT 506 (Tri.)] iii. CC(Import) JNCH, Nhava Sheva Vs. Amrit Corp. Ltd.

[2016(333) ELT 340 (Tri. Mum.)] 3.3. Further, he has submitted that extended period of limitation cannot be invoked in cases where the goods were assessed by providing of the facts and relevant materials during the assessment process. He has further submitted that it is settled principle of law that for merely claiming a wrong classification, extended period of limitation cannot be invoked as held by the Hon'ble Apex Court in the case of Densons Pultretaknik Vs. CCE [2003(155) ELT 211 (SC)]. He has submitted that therefore, penalty under Section 114A of the Customs Act, 1962 is not legally sustainable. Further, he has submitted that the goods valued at Rs.14,53,911/- were confiscated under Section 111(d) and 111(m) of the Customs Act, 1962 from the premises of the appellant and from two distributors. The goods seized have to be returned to the owners since no notice has been issed within 6 months period. Further he has submitted that the goods confiscated were not Page 4 of 8 C/20221/2018 available for physical confiscation; hence as held by the Larger Bench of the Tribunal in the case of Shiv Kripa Ispat Pvt. Ltd. Vs. CCE&C, Nasik [2009(235) ELT 623 (Tri. LB)] directing the confiscation of the goods is bad in law.

4. Learned Authorised Representative(AR) for the Revenue has reiterated the findings of the learned Commissioner(Appeals). Advancing the argument on behalf of the Revenue, he has submitted that the extended period of limitation and imposition of penalty under Section 114A of the Customs Act, 1962 are warranted since from the test report of CMTI, Bangalore, it revealed that the imported goods are flask with double wall made out of high Manganese stainless steel and both the flasks act as thermos flask with good heat retentivity as the space between the two walls is evacuated and the primary function of the vacuum flask is prevention of transfer of heat from any liquid stored inside either by conduction or convection by the use of vacuum in between the two walls. These imported goods were misdeclared by the appellant without disclosing the said facts. Further he has submitted that the SS bottles were assessed by the Department on the basis of the declaration of the goods by the appellant in question as SS water bottles. The appellant had failed to disclose that these were double walled and the space between the walls was evacuated. These facts came to light only after test report on the samples drawn during the investigation for testing was communicated by CMTI, Bangalore. He has submitted that there is space between the walls of the goods imported and the same being a vacuum is not visible to the naked eye and the examining officers could not have been expected to detect or point out the same. The appellant has wilfully misdeclared the classification of the goods imported and thereby suppressed the relevant information in order to evade payment of appropriate duty. The demand of duty has rightly been confirmed invoking extended period of Page 5 of 8 C/20221/2018 limitation and penalty under Section 114A upheld by the learned Commissioner(Appeals) is justified. Also the goods imported which were seized and released provisionally are liable for confiscation and accordingly confiscated with an option to redeem the same.

5. Heard both sides and perused the records.

6. The short issue involved in the present appeal for consideration whether (i) the imported goods viz. SS water bottle has been misdeclared and accordingly differential duty demanded invoking extended period is justified; (ii) penalty on the appellant u/s 114A has been rightly upheld and (iii) confiscation of the seized goods under Section 111(d) and 111(m) of the Customs Act, 1962 is justified.

7. Undisputedly the facts of the case are that the appellant had filed Bill of Entry from time to time declaring the imported goods as "Pigeon Brand Stainless Steel Water Bottle 350", "Pigeon Brand Stainless Steel Water Bottle 350" declaring its classification under CTH 73239990. In the same Bill of Entry, the appellant also imported "Pigeon Brand Stainless Steel Vacuum Flask" declaring its classification under CTH 96170011. The goods were cleared from time to time according to the declaration filed by the appellant. On the basis of intelligence, later the premises of the appellant were searched and documents were retrieved by the investigating team; also 3636 numbers of imported goods declared as SS water bottles of different capacities valued at Rs.9,52,231/- were seized on 19.06.2014 from the premises of the appellant. Similar goods at other premises belongs to the appellant were seized and samples drawn from the seized stock were sent for analysis to the CMTI, Bangalore. The Institute by its test report dated 08.07.2014 communicated that the items were "flask with Page 6 of 8 C/20221/2018 double wall made out of high Manganese stainless steel and both the flasks act as thermos flask with good heat retentivity as the space between the two wall is evacuated." From the said analytical report, it is clear that the description of the goods declared by the appellant in the respective Bill of Entry as stainless steel water bottle is incorrect, since it has got the characteristics of retention of heat. The appellant has pleaded that it was a bona fide understanding of the product since hot water bottles find a place in the HSN notes under Chapter heading 7323 of the Customs Tariff Act, 1962. The argument of the appellant is not convincing inasmuch as what they have declared is stainless steel water bottles and not stainless steel hot water bottles if they had harboured a view that hot water bottles are mentioned under the HSN Explanatory Notes under Chapter 7323, it should have described in the import documents, Bill of Entry accordingly. As rightly argued by the learned AR for the Revenue that SS water bottles on examination cannot be noticed about the existence of two walls and vacuum between walls to naked eye. Therefore, the goods were assessed on the basis of declaration made by the appellant at the time of presentation of Bill of Entry. Since the appellant also imported vacuum flask against the same Bill of Entry, their claim that the double wall water bottle containing vacuum in between the walls viz Pigeon Stainless Steel Water Bottle be considered as simple water bottle cannot be acceptable. The intention is not to declare the correct facts. Accordingly, there is misdeclaration on the part of the appellant in describing the product consistently in the Bills of Entry during the period 2010 to 2013. Therefore, there is no reason to interfere with the order of the learned Commissioner(Appeals) upholding the demand of duty with interest and penalty for extended period.

8. On the issue of imposition of fine, we find that the goods were seized, belonging to the appellant from different premises;

C/20221/2018 hence, liable for confiscation for misdeclaration. Consequently, the authorities below have rightly confiscated the goods and allowed the same to be redeemed on payment of Rs.5 lakhs. However, the fine of Rs.5 lakhs is excessive and accordingly reduced to Rs.2 lakhs (Rupees two lakhs only).

9. In the result, we do not see any infirmity in the order of the learned Commissioner(Appeals). Consequently, except for the reduction in fine amount, the impugned order is otherwise upheld. Appeal is disposed of accordingly.

(Order pronounced in Open Court on 15.07.2025) (D.M. MISRA) MEMBER (JUDICIAL) (PULLELA NAGESWARA RAO) MEMBER (TECHNICAL) Raja...