Vardhman Sales Agency vs Commissioner of Customs, New Delhi>2000(07)LCX0218

2000(07)LCX0218

IN THE CEGAT, NORTHERN BENCH, NEW DELHI

Shri P.G. Chacko, Member (J)

VARDHMAN SALES AGENCY

Versus

COMMISSIONER OF CUSTOMS, NEW DELHI

Final Order No. A/1477/2000-NB, dated 14-7-2000 in Appeal No. C/159/2000-NB

Cases Quoted

Allen Bradley India Ltd. v. Collector — 1991(08)LCX0012 Eq 1992 (058) ELT 0268 (Tribunal) — Referred.......... [Para 3]

Siris Aqua Limited v. Commissioner — 1999(09)LCX0186 Eq 2000 (115) ELT 0186 (Tribunal) — Referred........ [Para 3]

Stylo Footwear v. Collector — 1995(05)LCX0112 Eq 1995 (080) ELT 0157 (Tribunal) — Referred.......................... [Para 3]

Wooltex Associates v. Commissioner — 1997(01)LCX0205 Eq 1998 (099) ELT 0245 (Tribunal) — Referred......... [Para 3]

Advocated By : Shri A.C. Jain, Advocate, for the Appellant.

Dr. Ravindra Babu, JDR, for the Respondent.

[Order]. - The short facts of this case are as follows :

The appellants filed Bill of Entry dated 3-11-1999 for clearance of 34.51 MTs. of imported goods declared as ‘Aluminium Tense Scrap’ and classified under sub-heading 7602.00 of the Customs Tariff. The appellants, by so classifying the goods, also claimed the benefits of certain Notifications. The appraising officer of the Department, who examined the goods in the presence of the appellants’ C.H.A., found that the goods were “Aluminium Scrap” which had been remelted into shapes of bowls for convenience in shipping. The Deputy Commissioner of Customs, who re-examined the goods, later on, pursuant to directions of the Commissioner (Adjudicating Authority) at the adjudication stage, also found that the goods were melted/sweated aluminium scrap cast in the shapes of bowls apparently for the sake of convenience in shipping. In his report of re-examination, the Deputy Commissioner further observed that the goods appeared to be aluminium scrap of “Throb” ISRI grade. On the basis of the examination report, the Department propose to confiscate the goods on the ground of alleged mis-declaration in Bill of Entry. The Department considered the goods as more appropriately classifiable under Tariff Sub-heading 7601.20. This view was taken on the basis of ISRI grade of the goods having been mentioned as “Tense” in the Bill of Entry whereas Department considered “Throb” to be the correct ISRI grade applicable to the goods. Since Tariff Heading 7601.20 attracted higher rate of duty, the Customs Officers suspected that the appellants misdeclared the goods as aluminium scrap “Tense” instead of “Throb” for evading duty to the extent of Rs. 1,79,155/-. They, therefore, proposed to penalise the appellants. The party waived show-cause notice in view of the mounting demurrages on account of the goods lying at the port and they wanted the matter to be adjudicated on the basis of the documentary materials including the correspondence between them and the foreign supplier, furnished to the adjudicating authority and after personal hearing. Accordingly, the appellants were heard and the order impugned in this appeal was passed by the Commissioner of Customs.

2. I have carefully examined the impugned order and connected records of the case. I have also heard learned Advocate, Shri A.C. Jain for the appellants and Dr. Rabindra Babu, learned JDR for the respondent.

3. Learned Advocate has taken my attention to the various documents, which had been placed before the adjudicating authority. These documents include copies of the invoice, packing list, insurance policy, Bill of Lading and the Bill of Entry. He has pointed out that, in all these documents the goods were described as ‘Aluminium Tense Scrap’ and submitted that the description on the Bill of Entry was made on the basis of the description given by the foreign supplier in the other documents aforesaid. There is no misdeclaration of the goods, according to learned Counsel. In order to show that the grade of the aluminium scrap happened to be wrongly mentioned as “Tense”instead of “Throb” in the various documents at the end of the supplier, the appellants had furnished to the adjudicating authority the correspondence between them and the supplier. Copies of these letters have been placed on record in the present appeal as well. These letters show that, as soon as a dispute arose between the appellants and the Department on the description of the goods, the former took up the matter promptly with the foreign supplier. The foreign supplier clarified that the consignment meant for supply to some other customer happened to be shipped to the appellants by mistake. They, however, observed that the goods supplied to the appellants and those supplied to the other customers had little difference for purposes of end-use inasmuch as both the goods were essentially scrap. The correspondence between the appellants and the foreign supplier of the goods has been referred to by the learned Advocate to establish the bona fides of the plea of mistake of supplier, taken by the appellants before the adjudicating authority. Learned Advocate has also referred to the tariff entries and have submitted that Tariff sub-heading 7602.00 by its express term applies to aluminium scrap and, therefore, there is no question of the import goods attracting any other entry in chapter 76 of the Customs Tariff. He has further argued that the adjudicating authority has not stated any reason in its order as to why the goods required to be classified under sub-heading 7601.20. According to that authority, aluminium scrap of ISRI grade ‘Throb’ must be classified under the said sub-heading, but the description under the said sub-Heading of the Tariff does not contain anything to indicate what the adjudicating authority proposed. Learned Counsel has further pointed out that the Commissioner has given a specific finding that the imported goods were aluminium scrap and, after having reached such a finding it was not open to him to classify the goods under any sub-heading outside 7602.00. The further finding of the adjudicating authority that the appellant’s misdeclaration of the goods was based on his finding as regards classification. Since the finding of classification is per se wrong, consequently, the finding of misdeclaration of goods cannot be sustained, submits learned Counsel. Consequently no order of the confiscation of the goods could have been passed and for that matter, no redemption fine or penalty could have been lawfully imposed on the appellants. In support of his submissions, learned Advocate has relied on certain decisions of the Tribunal listed below: -

I. Allen Bradley India Ltd. v. Collector of Customs [1991(08)LCX0012 Eq 1992 (058) ELT 0268 (Tribunal)]

II. Wooltex Associates v. Commissioner of Customs, Mumbai [1997(01)LCX0205 Eq 1998 (099) ELT 0245 (Tribunal)]

III. Siris Aqua Limited v. Commissioner of Central Excise [2000 (115) ELT 186]

IV. Stylo Footwear v. Collector of Customs, Coimbatore [1995 (080) ELT 157]

4. Learned Advocate has relied on the above decisions and has prayed for setting aside the impugned order.

5. Learned JDR has defended the impugned order by putting forward mainly two submissions. Firstly, he submits that the party paid duty on the imported goods under Tariff Sub-heading 7601.20 and, therefore, cannot, at this stage turn round and plead that the goods were correctly classified under 7602.00. Secondly, his argument is that the appellants have not duly challenged the classification decided by the Commissioner of Customs. Apart from this, the learned JDR has also raised a jurisdictional objection. According to him, the present appeal involves a classification dispute simpliciter and, therefore, the case ought not have been entertained by this Bench. Learned JDR has prayed for rejecting the appeal.

6 I have carefully considered the rival submissions and also the case law cited by learned Advocate. The impugned order is an order of confiscation of goods with option to redeem the same on payment of a redemption fine of Rs. 98,000/- and also an order of imposition of penalty of Rs. 20,000/- on the appellants. It is not an order of classification of the goods, though the aspect of classification looms large in the discussion of the subject by the adjudicating authority. I, therefore, do not find any merit in the jurisdictional objection raised by learned JDR.

7. The simple issue, which has arisen before me, is whether the appellants misdeclared the goods. The fact that the goods were described in the Bill of Entry by the appellants on the basis of the description of goods in the documents which accompanied the consignment is not in dispute. The only description for purposes of payment of duty is whether the goods are aluminium scrap or not. The party described the goods as ''aluminium scrap' and the Customs Authorities confirmed this on examination and re-examination of the goods. This has been rightly accepted by the adjudicating authority in his.order as well. Whether the aluminium scrap is of ISRI grade 'Tense' or 'Throb' is immaterial inasmuch as any grade does not find mention in any of the Tariff entries under reference. The relevance of ISRI grade has not been brought out before me by learned JDR. The fact that the appellants paid duty under Tariff Sub-heading 7601.20 cannot in my view make any dent in the question whether the party misdeclared the goods or not. The documents including the correspondence between the appellants and the foreign supplier, placed before the adjudicating authority, ought to have brought home to that authority the fact that the declaration of the goods in the Bill of Entry was based on the documents, which accompanied the shipment, and on nothing else. There was no material before the adjudicating authority to suspect the bona fides of the declaration of the goods as given in the Bill of Entry. In such facts and circumstances, there is no warrant for a finding of misdeclaration, let alone with intent to evade payment of duty. The very fact that the duty was paid on the goods as per sub-heading 7601.20 at the higher rate shows that there was no intention to evade payment of duty. I, therefore, hold the view that the goods were not liable to confiscation. Consequently, imposition of redemption fine and penalty also was unwarranted. I have duly considered the case law cited and have found that the decisions cited are, by and large, applicable to the instant case in favour of the appellants. No better authority has been cited in favour of the Department. I, therefore, cannot sustain the order passed by the Commissioner of Customs. The appeal is, therefore, allowed [with consequential reliefs, if any] by setting aside the impugned order.

______

Equivalent 2000 (121) ELT 320 (Tribunal)