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Penshibao Wang Pvt. Ltd. And Rajwant Singh, M.D. Versus Commissioner of Customs (Seaport-Import) , Chennai

2016 (3) TMI 295 - CESTAT CHENNAI

Extended period of limitation - Classification of goods - Plant Bio Fertilizer or Pesticides - Goods imported and declared as Bio-Fertilizer alleged as misdeclaration and suppression of facts to evade customs duty. - Held that:- the composition of the imported goods is a mixture containing matrine (oxymatrine) 0.36%, Nitrogen 2369.9 5g/g, Phosphorous 1389.3 5g/g and Potassium 18491 5g/g, Magnesium 858 5g/g , Manganese 10.2 5g/g and also contains Iron, Zinc, Copper, Calcium, Silicon and other min .....

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it for "Pesticides" purpose. Therefore, in the absence of any evidence contrary to the declared goods cleared in the past by the appellants, it cannot be said that the appellants have suppressed the facts or misdeclared the goods merely based on the report of live consignment and on the basis of the CRCL report of Customs the goods were rightly classified as “Plant Bio-Fertilizer”. - Confiscation and Imposition of Redemption fine in respect of live consignment - Sections 111 (d), (m) and (o) .....

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on from the Central Insecticide Board (CIB) for the import of Pesticides, therefore, the goods are liable to be confiscated under Section 111 (d) of Customs Act, 1962. Also as the goods are not re-exported and they have abandoned the goods and the goods are still with Customs custody , the goods are allowed for re-export on imposition of Redemption fine of ₹ 5 Lakh. - Confiscation and Confirmation of Differential duty - In respect of past 16 consignment - Held that:- by following the .....

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fferential duty under Section 28 of the Customs Act. - Imposition of penalty - Under Section 112(a) of the Customs Act, 1962 for live consignment and under Section 114/114A ibid for the past consignment - Held that: the penalty to be imposed on the importer and its Managing Partner under Section 112(a) ibid and not to be imposed under Section 114/114A ibid. - Decided partly in favour of appellant - Appeal No. C/250/2011 & C/251/2011 - Final Order No.40937-40398/2016 - Dated:- 4-3-2016 - SHRI .....

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Bill of Entry No.331475 dt.12.10.2009 declaring it as "Plant Bio Fertilizer" (liquid) and classified it as "Plant Fertilizers" under CTH 31010099 claiming "Nil" CVD. Based on intelligence that the imported goods contained Pesticide 'Oxymatrine', the goods were detained, samples were drawn and tested. The test report dt. 27.11.2009 revealed the content of Oxymatrine of 0.41% and it was certified that declared content of 0.36% to be treated as "Pesticides .....

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stoms Act and also proposed for penalty under Section 112(a)/114A/14AA both on the appellant as well as on Shri Rajwant Singh, Managing Director of the appellant-company. The adjudicating authority after following the principles of natural justice in the impugned order rejected the classification of the imported goods under CTH 31010099 and reclassified the goods under CTH 38089910 and ordered for confiscation of 16,000 Kgs of seized goods covered under live Bill of Entry No.331475 dt. 12.10.200 .....

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under Section 28 (AB) of the Customs Act. He also imposed equivalent penalty both on the appellant as well as on the co-noticee under Section 114A/114AA of the Customs Act. Hence the present appeals filed by appellants. 4. Heard both sides. Ld. Advocate appearing for both the appellants drew our attention to page 59 of paper book showing list of total imports made by the appellants covering 17 Bills of Entry including live bill of entry No.331475 dt.12.10.09 for the period 10.9.2007 to 12.10.20 .....

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have been indicated and it clearly showed the content of the item Matrine (Oxymatrine) as 0.36% (Min.). These certificates were duly submitted along with each Bill of Entry filed and was assessed by the Customs. Samples were drawn by the customs and sent for test to Customs Laboratory. He referred to test report dt. 31.3.2005 enclosed at page 160 of the paper book issued by Chemical Examiner, CRCL in respect of Bill of Entry No.702556 dt. 21.10.2004 and it confirmed that product under reference .....

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r the analysis report accompanied, it was clearly shown Oxymatrine content of 0.36%. 5. He further submits that regarding goods covered under live Bill of Entry No.331475 dt.12.10.2009 where the samples were drawn again in Nov 2009 and sent for testing to private lab and got tested. As per the test report dt. 27.11.2009 (available at page 159 of PB) issued by M/s. Inspectorate Griffith India Pvt.Ltd. the sample was found to contain Oxymatrine content of 0.41%. In addition to that, sample also co .....

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contesting the demand confirmed for the past clearance and the live Bill of Entry dt.12.10.09. He drew our attention to Note (6) of Chapter 31 wherein it is explained that for the purpose of Heading 31.05, the term other fertilisers applies only to products of a kind used as fertilizers and containing, as an essential constituent, at least one of the fertilising elements, nitrogen, phosphorous or potassium. For the past 16 consignments the demand is hit by limitation as the proviso to Section .....

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s. Merely based on the opinion given by private lab on the live goods it cannot be construed that appellants have misdeclared the goods. He also submits a copy of Wikipedia, the free Encyclopaedia on the Plant "Sophora Flavescens" and submits that it is commonly used as plant extract for treatment of viral hepatitis, enteritis, cancer, viral myocarditis, gastrointestinal haemorrhage and skin diseases. When they have correctly declared the description as per the invoice, test analysis c .....

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ere used as "Bio-Fertilizer" they have not been sold or used as pesticides , they are exempted from licensing and other regulations of Insecticides Act and there is no violation of the said Act. He pleaded that duty demanded for the past consignments is clearly hit by limitation and he relied on the following case laws :- (i) Northern Plastic Ltd. Vs CC & CCE -1998(101)ELT549 (SC) (ii) Sab Nife Power Systems Ltd. Vs CC Chennai-2000 (124) ELT 1080 (Tri.) (iii) Commissioner Vs Sab Ni .....

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mits that department relying on e-mail dt. 6.11.2009 for alleged misdeclaration is not correct as the e-mail which they have sent on 6.11.09 is only to inform the supplier about the test results of the live B/E and appraising the supplier of the department s stand for classifying the goods as pesticides under Chapter 38. He also submits that appellants are not liable for penalty under Section 114A and 114AA penalty for the past consignments. Notwithstanding, he admits that if at all penalty is i .....

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th foreign supplier for setting up of a joint venture and floated this company. She drew our attention to page 7 of OIO at para 15 to 17 on the modus operandi and the concept of import of goods clandestinely which is a pesticide but declared in the Bill of Entry as Bio-Fertilizer. The goods are pesticide covered under Insecticides Act which required a specific licence for import and manufacture. She also drew our attention to website details which was listed at para 15 of OIO wherein the company .....

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erred to para 13 of OIO where the statement of CHA clearly admitted that he signed the documents and also filed declaration to the Customs on behalf of importer. She also relied Rajwant Singh's statement at para-16. She also submits that Section 38 of Insecticides Act is not applicable to the appellant as they have clearly misdeclared the goods as Bio-Fertilizers. Therefore, penalty imposed under Section 114A and 114AA is sustainable. She also relied e-mail correspondence dt.11.9.2006 and 6. .....

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r' imported vide live Bill of Entry No.331475/12-10-09 (valued at ₹ 67,47,325/-) and 1,34,800 Kgs. of the imported goods imported vide 16 past Bills of Entry (totally valued at ₹ 6,67,98,818/-) are liable to confiscation under Sections 111 (d), (m) and (o) of the Customs Act, 1962 read with Section 3 (3) of the Foreign Trade (Development and Regulation) Act 1992 and Section 17 of the Insecticides Act, 1968 (3) Whether duty amounting to ₹ 70,96,885/- is liable to be recovere .....

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shows that the appellant imported 16000 Kgs. of goods declared as Bio-Fertilizer under said Bill of Entry and the samples were drawn and sent for testing to private laboratory. As per test report the goods were found to contain Oxymatrine 0.41 % and in addition, it also contained Nitrogen and Phosphorous and other minerals and conformed the certificate of composition list of the supplier. The appellant classified the goods under Chapter Heading 31010099 of the CTH whereas the Revenue reclassifi .....

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of Entry. On perusal of the Test Report, dt. 27.11.2000 enclosed at page 159, issued by a private laboratory i.e. M/s.Inspectorate Griffith India Pvt. Ltd., Chennai, we find that the results of the test indicates various compounds, Nitrogen, Phosphorous, Silicon etc., and Oxymatrine (detd. as Alkaloid content) at 0.41%. The foot note of the report also states that the result of parameters tested above complies with the given composition list of the exporter (supplier). Further it states that acc .....

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he Central Insecticide Board (CIB) for the import of Pesticides, we hold that the confiscation of the goods ordered by the adjudicating authority under Section 111 (d) of Customs Act is liable to be upheld. (iv) We also find that the adjudicating authority considered the appellant s request and allowed for re-export of the goods on imposition of RF of ₹ 5 lakhs. We uphold the same. However, we find that the goods are not re-exported and they have abandoned the goods and the goods are still .....

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sand only) imposed on the importer and its Managing Partner, Shri Rajwant Singh. Impugned order to this extent is upheld. 10. We now proceed to discuss the demand confirmed on the past clearances under 16 Bills of Entries which is contested by the appellant both on merits and on limitation. On perusal of records, copy of Bill of Entry No.268877 dt. 23.7.2009 annexed at page 144 of the paper book and the corresponding invoice No.00241428 dt. 1.6.2009 and the composition list at page 142 & 143 .....

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der B/E No. 702556 dt. 21.10.2004 is reproduced as under :- BE No.702556/21.10.04 (Lab No.1454/MCH/1711.04) As per the technical literature enclosed the product Sophora Plant Extract (Biofertilizer) is a biologically derived liquid bio extract organic fertilizer for drip irrigation, soil drenching application on crops. It contains sophora flavescens and naturally available hydrolised protein complexes derived from natural source of plant and vegetable origin. This improves yields and quality of .....

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potassium and the Chemical Examiner categorically clarified that sample under reference may find use as a fertilizer . On perusal of the composition report, issued by the supplier along with the imported goods, we find that the composition of the imported goods is a mixture containing matrine (oxymatrine) 0.36%, Nitrogen 2369.9 5g/g, Phosphorous 1389.3 5g/g and Potassium 18491 5g/g, Magnesium 858 5g/g , Manganese 10.2 5g/g. It also contains Iron, Zinc, Copper, Calcium, Silicon and other mineral .....

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imported as "Bio-Fertilizer" were sold or marketed as "Pesticides". No farmer or cultivator will ever buy the product which is described as "Bio-Fertilizer" but use it for "Pesticides" purpose. Therefore, in the absence of any evidence contrary to the declared goods cleared in the past by the appellants, it cannot be said that the appellants have suppressed the facts or misdeclared the goods merely based on the report of live consignment. Therefore, we ar .....

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or the past consignments confirming the goods as Bio-Fertilizer is valid for the said imports and in the absence of any contrary report evidence against the CRCL report, the adjudicating authoritys finding that the past consignments were only Pesticides not Fertilizers is beyond acceptance and not in conformity with the law. 12. In this regard, we find from the technical literature of Wikipedia Encyclopaedia in respect of source material Plant Sophora Flavescens , the origin, medicinal properti .....

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nsignments, it confirms that in addition to Oxymatrine, the mixture do contain Nitrogen, Phosphorous and Potassium which are essential elements to be classified as 'Other Fertilizers'. The appellants have declared the goods as Bio-Fertilizer as per the invoice and composition/analysis report of the supplier which is confirmed by the CRCL test report. There is no misdeclaration or suppression of facts and the demand is hit by limitation. In this regard, we rely on the Hon ble Supreme Cour .....

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me Court Bench comprising Honble Mr. Justice Syed Shah Mohammed Quadri and Honble Mr. Justice S.N. Phukan on 14-9-2001 dismissed on merits as well as limitation the Civil Appeal Nos. - of 2001 (D. No. 16240) filed by Commissioner of Customs, Chennai against the CEGAT Order Nos. 3148-3157/99, dated 20-12-1999 and reported in [2000 (124) E.L.T. 1080 (Tribunal)] (Sab Nife Power Systems Ltd. v. Commissioner). While dismissing the appeals the Supreme Court passed the following order :- No sufficien .....

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panying certificate by the assessee. Availability of exemption with respect of the goods declared was a belief held in the mind of importer. Further the other part of the said certificate that the imported items were for supply for Defence purposes also was found to be correct on facts as batteries manufactured from the imported materials were supplied to M/s. HAL. There was no misdeclaration or suppression with intent to evade duty merely because the exemption claimed was found to be inadmissib .....

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