2024 (4) TMI 1101 - AT - Customs

Validity Of Order in original passed by the Commissioner - Demand - Penalty - Import of Internal Remote Electrical Tilt Switches (iRET) - benefit of Exemption notification no. 50/2017-Cus - Whether the amperage of the iRETs imported by the appellant were of 5 Amps as declared in the Bills of Entry or were of less than 5 Amps as now asserted by the appellant relying on the aforesaid documents - HELD THAT - The Commissioner has also wrongly declined to accept the test report of a government laboratory of another Ministry which certifies the amperage of the iRETs of the two models which were imported. The Commissioner has also declined to accept the clarificatory letter from the overseas supplier that due to a typographical error was not typed in all the invoices although the letter also clarifies that the actual amperage was 1.3 amperes. The logic of the Commissioner in declining to accept the letter of the supplier is that the supplier can only supply goods which are in its inventory and invoices are issued accordingly and he cannot now claim to have supplied iRETs of a different amperage. In our considered view the Commissioner has gravely erred in not accepting the clarification from the supplier when it is consistent with the technical specifications in the product brochure and also consistent with a test report from a Government laboratory. If the supplier contended that a typographical error was committed in preparing the invoices and this assertion is supported by the product brochures it was incorrect for the Commissioner to have rejected the clarification. As the product brochures the test reports and the letter from the supplier all confirm that the iRETs which were imported were of less than 5 amperes it is not necessary for us to examine the other evidence adduced by the appellant. Clearly there was a typographical error in the Bills of Entry and the invoices which has resulted in the audit objection the SCN and the impugned order. There is a discrepancy between what is stated to have been imported in the documents and the Bill of Entry and what is actually imported duty can be charged on what is actually imported and not on what is said to have been imported. For instance if 80 MT of goods are said to have been imported in the Bill of Entry and actually 100 MT of goods are imported duty has to be charged on 100 MT and not on 80 MT. Similarly if silver is declared to have been imported and actually gold is imported duty has to be charged on gold and not on silver. In this case if the Bill of Entry invoice packing list etc. mention 5 amperes but there is no dispute that the goods were of particular models and the product literature as well as the test reports show that they are of less than 5 amperes it is not open to the department to charge duty treating the goods as of 5 amperes merely because the Bill of Entry and other documents say so due to a typographical error. Thus the appeal is allowed and the impugned order is set aside with consequential relief to the appellant.

Summary

Issues involved:
The issues involved in the judgment are the incorrect application of exemption notification leading to a demand under section 28(1) of the Customs Act, 1962, and the imposition of a penalty under section 112(b) (ii) of the Act.

Issue 1: Incorrect application of exemption notification:
The appellant, M/s. Huber + Sunher Electronics Pvt. Ltd., imported iRETs of two models and self-assessed duty based on Exemption notification no. 50/2017-Cus dated 30.6.2017. However, discrepancies were found in the declaration of amperage in the documents and the exemption criteria. The Principal Commissioner confirmed a demand of Rs. 96,74,804 and imposed a penalty of Rs. 9,0,000 under the relevant sections of the Customs Act, 1962.

Details for Issue 1:
During the period in question, the appellant imported iRETs of two models, Runshine RS-IRCU50D-1 and Runshine RS-IRCU50D-2, claiming exemption under notification 50/2017-Cus. However, post-clearance audit revealed that the declared amperage of '5 amperes' did not align with the exemption criteria for switches of less than 5 amperes as per the notification.

A consultative letter and a subsequent Show Cause Notice were issued to address the discrepancy, leading to the impugned order by the Principal Commissioner confirming the duty demand and penalty imposition. The appellant contended that the iRETs were actually less than 5 amperes, citing errors in the documentation by the supplier and inadvertent mistakes in the Bills of Entry.

Issue 2: Discrepancy in amperage declaration:
The main question revolved around whether the imported iRETs were of 5 Amps as declared in the Bills of Entry or less than 5 Amps as asserted by the appellant based on supporting documents and evidence presented during the proceedings.

Details for Issue 2:
The appellant provided various documents to support their claim, including test reports, product brochures, a letter from the supplier, an affidavit, and customer requirement documents. The appellant argued that despite the amperage error in the initial documentation, subsequent imports rectified this mistake, accurately reflecting the amperage of the iRETs.

The Revenue's representative contended that the amperage declaration in the Bills of Entry should prevail, disregarding the supporting evidence provided by the appellant. The dispute centered on the interpretation of the exemption notification criteria and the factual amperage of the imported goods.

Conclusion:
The Appellate Tribunal, after considering the evidence presented, found in favor of the appellant. The Tribunal emphasized that duty should be charged based on the actual imported goods, not on discrepancies in documentation. Consequently, the impugned order was set aside, providing relief to M/s. Huber + Sunher Electronics Pvt. Ltd.