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Cus – Serviceable ‘CRGO strips’ would not be covered within description of ‘heavy melting scrap’ and finding of mis-declaration is, therefore, beyond scope of challenge: CESTAT

2019-TIOL-2356-CESTAT-MUM

IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
WEST ZONAL BENCH, MUMBAI

Appeal No. C/12/2011

Arising out of Order-in-Appeal No: 296 (GR.IV)/2010 (JNCH)/IMP-276, Dated: 15.10.2010 of
Commissioner of Customs (Appeals), Jawaharlal Nehru Custom House, Nhava Sheva, Mumbai – II

Date of Hearing: 01.01.2019
Date of decision: 01.01.2019

DADRA NAGAR STEEL PVT LTD

Vs

COMMISSIONER OF CUSTOMS (IMPORTS)
NHAVA SHEVA

Appellant Rep by: None
Respondent Rep by: Shri C Singh, AC & Shri Bhushan Kamble, AC (ARs)

CORAM: C J Mathew, Member (T)
Ajay Sharma, Member (J)

Cus – Commissioner of Customs (Appeals), Jawaharlal Nehru Custom House, Nhava Sheva has confirmed the confiscation of goods imported against bill of entry for mis-declaration of serviceable CRGO strips as ‘heavy melting scrap’ – however, goods have been allowed to be redeemed on payment of redemption fine of Rs 4,25,000 while enhancing the value to US $ 1400 per metric ton from the declared value of US $ 280 per metric ton and imposing penalty of Rs 1,75,000 under section 112 (a) of Customs Act, 1962 – appeal to CESTAT – appellant has claimed of imposition of excessive redemption fine as well as penalty in the context of differential duty being a mere Rs.3,35,335/- – It is a further claim of the appellant that the goods were imported solely for melting and that the serviceability of the imported goods, even if admitted, does not detract from the intended utilization – According to appellant, the denial of their request for mutilation was inappropriate and the enhanced valuation was totally misplaced for being non-compliant with the valuation rules.

Held: No evidence is forthcoming in the appeal to counter the finding that the imported goods were serviceable – Serviceable ‘CRGO strips’ would not be covered within the description of ‘heavy melting scrap’ and the finding of mis-declaration is, therefore, beyond the scope of challenge – However, in determining the value of the goods consequent upon rejection of the declared value owing to the finding of misdeclaration, the proper officer has failed to offer justification, acceptable under Customs Valuation (Determination of Value of Imported Goods) Rules, 2007, for adoption of that proposed by the appraising officers – In the absence of exposition of the judgement, in adherence to which the revised value was arrived at, the enhancement upheld in the impugned order fails the test of law – With such failure, the scope for invoking section 111(m) of Customs Act, 1962 is questionable as the value declared ceases to be ‘material particular’ for justifying confiscation – In the circumstances, the confiscation of imported goods, the enhancement of value and the imposition of penalty are without sanction of law – impugned order is set aside and the appeal allowed: CESTAT [para 5, 6]

Appeal allowed

Case laws cited:

Noble Agency v. Commissioner of Customs, Mumbai [2002 (142) ELT 84 (Tri-Mumbai)]… Para 3

FINAL ORDER NO. A/85094/2019

Per: C J Mathew:

Though none appeared for the appellant, this appeal of M/s Dadra Nagar Steel P Ltd against order-in-appeal no. 296(GR IV)/2010 (JNCH)/IMP-276 dated 15th October 2010 of Commissioner of Customs (Appeals), Jawaharlal Nehru Custom House, Nhava Sheva that has confirmed the confiscation of goods imported against bill of entry no. 932100/08.06.2009 for mis-declaration of serviceable CRGO strips as ‘heavy melting scrap’, is taken up for disposal on merit.

2. The cargo of 25.595 metric tons valued at Rs 17,16,400 was confiscated under section 111(m) of Customs Act, 1962 but allowed to be redeemed on payment of fine of Rs 4,25,000 while enhancing the value to US $ 1400 per metric ton from the declared value of US $ 280 per metric ton and imposing penalty of Rs 1,75,000 under section 112 (a) of Customs Act, 1962. Appeal against the order of the original authority did not sustain and hence the present proceedings before us.

3. We have heard Learned Authorised Representative who relies on the decision of the Tribunal in Noble Agency v. Commissioner of Customs, Mumbai [2002 (142) ELT 84 (Tri-Mumbai)].

4. On perusal of the appeal, it is seen that the claim of excessive redemption fine as well as the penalty are made in the context of the differential duty being a mere Rs 3,35,335. It is a further claim of the appellant that the goods were imported solely for melting and that the serviceability of the imported goods, even if admitted, does not detract from the intended utilization. According to appellant, the denial of their request for mutilation was inappropriate and the enhanced valuation was totally misplaced for being non-compliant with the rules notified under section 14 of Customs Act, 1962.

5. No evidence is forthcoming in the appeal to counter the finding that the imported goods were serviceable. Serviceable ‘CRGO strips’ would not be covered within the description of ‘heavy melting scrap’ and the finding of mis-declaration is, therefore, beyond the scope of challenge. However, in determining the value of the goods consequent upon rejection of the declared value owing to the finding of misdeclaration, the proper officer has failed to offer justification, acceptable under Customs Valuation (Determination of Value of Imported Goods) Rules, 2007, for adoption of that proposed by the appraising officers. In the absence of exposition of the judgement, in adherence to which the revised value was arrived at, the enhancement upheld in the impugned order fails the test of law. With such failure, the scope for invoking section 111(m) of Customs Act, 1962 is questionable as the value declared ceases to be ‘material particular’ for justifying confiscation.

6. In the circumstances, the confiscation of imported goods, the enhancement of value and the imposition of penalty are without sanction of law. Accordingly, the impugned order is set aside and the appeal allowed.

(Pronounced in Court)

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