2016 (12) TMI 137 - AT - Customs

Mis-declaration of imported machine as Dairy Machine - exemption under serial No. 11 of Notification No. 6/2006- CE dt. 01.03.2006 - classification of imported machine - The investigation conducted by the department reveals that whereas out of the 5 consignments the first, fourth and fifth consignments were cleared by declaring the goods under the respective HS Codes and suppliers invoices. In case of 2nd and 3rd consignments cleared under Bill of Entry No. 763776 dt. 03.05.2007 and BE No. 801219 dt. 18.06.2007, the goods were shown as Dairy machines and were cleared by availing exemption from CVD in terms of Notfn. No. 6/2006 - CE dt. 01.03.2006. Held that - It was during investigation that the officers found that the original Specification of Production equipment Sheets (SPE Sheets) received from the supplier containing HS codes were altered by the importer so as to show the same as Dairy machines - In view of the fact that the goods were correctly classifiable in the SPE Sheets as per their respective description and individual function but were changed by the Appellant s employee in consultation with the Management, we are of the view that the goods does not merit classification as parts of dairy Machinery. For the reasons stated above and looking to the fact that the issue involves of intended mis-declaration, mis-classification and suppression of facts we do not find any infirmity in the order passed by adjudicating authority and uphold the same in as much as the same is related to Appellant M/s Yakult Danone (India) Pvt. Ltd. As regard penalty imposed upon Shri Kiyoshi Tatsui Oike, Managing Director is concerned we find that he was concerned with overall working and not particularly involved in any contumacious conduct. The correspondence for changes of HS codes and alteration of SPE sheets was an act between its parent company M/s Yakult Honsha Ltd, Japan and Mr. Tomoshi Suzuki on the advice of Consultant M/s SBBFL. We thus find that no active involvement of Shri Oike is appearing in record that he orchestrated the alleged acts of violation of Custom laws and intended to cause revenue loss. We therefore do not find it fit to impose penalty and set aside the penalty imposed upon him - As regard penalty upon Shri Anil Choudhary is concerned, we find that he was merely an employee who acted on the directions of the company and had no personal involvement. We therefore do not find it fit to impose penalty upon him. The penalty upon Shri Anil Choudhary is therefore set aside. Appeal dismissed - decided against appellant-assessee.

Summary

Issues Involved:
1. Classification of imported machinery.
2. Alleged mis-declaration and manipulation of HS codes.
3. Eligibility for exemption under Notification No. 6/2006-CE.
4. Imposition of penalties on the company and individuals.
5. Confiscation of imported goods.

Detailed Analysis:

1. Classification of Imported Machinery:
The primary issue was whether the imported machinery by M/s Yakult Danone India (P) Ltd. should be classified under HS code 8434 as 'Dairy Machines' or under different individual headings as per their specific functions. The investigation revealed that the machinery imported in the 2nd and 3rd consignments were mis-declared as 'Dairy Machines' to avail exemption under Notification No. 6/2006-CE. The machinery included tanks, sterilizers, filling machines, and other equipment, which were found to be classifiable under various headings such as 84798200, 842230, 8477, and not under 8434.

2. Alleged Mis-declaration and Manipulation of HS Codes:
The investigation found that the original 'Specification of Production Equipment' (SPE) sheets provided by the supplier, M/s Yakult Honsha Co. Ltd., Japan, listed HS codes that were altered by the appellant to reflect HS code 8434, thereby mis-declaring the machinery as 'Dairy Machines'. This alteration was done by the appellant’s employees, including Mr. Anil Choudhary, under the direction of the company's management and consultants.

3. Eligibility for Exemption under Notification No. 6/2006-CE:
The appellant argued that the machinery was correctly classified under HS code 8434 and thus eligible for exemption. They relied on various certificates and expert opinions to support their claim. However, the tribunal found that the machinery did not meet the criteria for classification under 8434 as per the HSN Explanatory Notes and relevant chapter notes. The machinery was intended for various functions like mixing, sterilizing, filling, and packing, which did not qualify as 'Dairy Machines' under the said notification.

4. Imposition of Penalties on the Company and Individuals:
The adjudicating authority imposed penalties on M/s Yakult Danone India (P) Ltd., its Managing Director, Mr. Kiyoshi Tatsui Oike, and ex-employee Mr. Anil Choudhary. The tribunal upheld the penalty on the company, finding that the mis-declaration and manipulation were intentional and aimed at evading duty. However, the penalties on Mr. Oike and Mr. Choudhary were set aside. The tribunal found that Mr. Oike was not directly involved in the manipulation and that Mr. Choudhary acted under the company's directions without personal gain.

5. Confiscation of Imported Goods:
The imported goods were ordered to be confiscated with an option for redemption upon payment of a fine. The tribunal upheld this decision, noting the intentional mis-declaration and manipulation of documents to evade customs duty.

Conclusion:
The tribunal dismissed the appeal of M/s Yakult Danone India (P) Ltd., confirming the classification of the imported machinery under their respective HS codes and upholding the demand for duty and penalties. The appeals of Mr. Kiyoshi Tatsui Oike and Mr. Anil Choudhary were allowed, setting aside the penalties imposed on them due to lack of direct involvement and personal gain. The judgment emphasized the importance of accurate classification and declaration of imported goods to prevent evasion of duties.