2016 (2) TMI 1150 - Commission - Customs

Misdeclaration of imported goods - classification - poultry/fish/shrimp feed making machinery and other related equipment and accessories for feed manufacturing plant - Held that - even though the goods are wrongly described/declared in the Bills of Entry, this itself does not result in short payment of duty. It is also observed that allegation of misdeclaration of description of goods is not sustainable in three Bills of Entry (Sl. Nos. 3, 4 and 5) because the declared description Animal feed production equipment and machinery for preparing animal feeding stuff are covered under the description poultry/fish/shrimp feed making machinery . Whether the applicant was obliged to declare the intended use of the machineries-industrial use or otherwise? - Held that - as per HSN Explanatory Notes, if the goods are for industrial use, the classification is 8479, instead of 8436. The Bench finds that the applicant is a regular importer and is supposed to be aware of importance of HSN Explanatory Notes in the matter of classification. As such, there is a lapse on the part of the applicant to this extent and therefore the provisions of Section 111(m) and consequently Section 112(a) of the Customs Act are attracted. Short payment of interest and duty - Held that - the Bench holds that the applicant is liable to pay the duty demanded in the SCN along with the applicable interest. The Bench also observes that the applicant has co-operated in its proceedings - In terms of sub-section (8) of Section 127C this order of settlement shall be void if the Bench finds, at any time, that the subject settlement has been obtained by the applicant by fraud or misrepresentation of fact. Appeal disposed off.

Summary

Issues Involved:
1. Misclassification of imported goods.
2. Evasion of Customs duty.
3. Liability for penalty and prosecution.
4. Settlement of duty and interest.
5. Immunity from penalty and prosecution.

Detailed Analysis:

Misclassification of Imported Goods:
The applicant was accused of misclassifying poultry/fish/shrimp feed making machinery and related equipment as poultry keeping machinery or machinery for preparing animal feed. The SCN alleged that the correct classification should be under Chapter Heading 8479 and 9406, which attract CVD, unlike Chapter Heading 8436.

Evasion of Customs Duty:
The misclassification led to a short payment of Customs duty. The SCN detailed the differential duty payable for imports through Kolkata and Chennai ports, totaling Rs. 3,09,61,985 (later amended to Rs. 3,14,40,182). The applicant admitted to the duty liabilities and made voluntary payments towards their duty and interest liability.

Liability for Penalty and Prosecution:
The applicant sought immunity from penalty and prosecution, claiming that the misclassification was unintentional and a bona fide error. The Department, however, argued that the misclassification was intentional and sought appropriate fines and penalties.

Settlement of Duty and Interest:
The Settlement Commission considered the applicant's acceptance of the duty liability and interest. The applicant had made payments towards the duty and interest, with some discrepancies noted and corrected. The Commission found that the applicant was not debarred from approaching the Settlement Commission and that the misclassification, although a lapse, did not constitute wilful misstatement or suppression of facts.

Immunity from Penalty and Prosecution:
The Commission settled the Customs duty at Rs. 3,15,97,462 and interest at Rs. 32,31,127. A penalty of Rs. 2,00,000 was imposed, with immunity granted for any penalty in excess of this amount. Full immunity from prosecution under the Customs Act, 1962, was granted, subject to the payment of the settled dues.

Conclusion:
The Commission concluded that the applicant was liable to pay the settled Customs duty and interest, with a penalty of Rs. 2,00,000. Immunity from prosecution and additional penalties was granted, provided the applicant complied with the settlement terms. The order emphasized that the settlement would be void if obtained by fraud or misrepresentation.