It is settled law that misclassification of goods and
misdeclaration of goods are distinct in nature and scope. Misdeclaration of goods
attract penal provision under
section 111(m) of Customs Act ,1962.But misclassification of goods is a subject of interpretation and
does not attract penal provision under Section 111(m).
Relying on following case laws for above
submission.
i)
The Honourbale High Court of Karnataka held, in case of COMMISSIONER OF CUSTOMS, BANGALORE Versus A. MAHESH RAJ - 2006 (195) E.L.T. 261 that
In case of misclassification, it may be bona fide case of wrong
classification as the importer or the person clearing the goods may not be
fully conversant with the Schedule to the Act.
The relevant portion of
Para 20 of above cited case law has been reproduced below as:
“. The scope of the provisions cannot be unduly
enlarged if the intendment of the Legislature to provide for settlement in cases
of short levy or non-levy on account of misclassification or misdeclaration
also, as there is a vast and considerable distinction between cases of
misclassification of goods and misdeclaration of goods. A misclassification of
goods will only result in duty liability being at a different rate in terms of
entry under which it is classified, whereas misdeclaration can be a situation
of suppression, distortion and misrepresentation. In a situation of
misclassification, only goods are disclosed or declared but goods are not
properly classified for the purposes of determination of rate of duty, whereas
in a case of misdeclaration, goods might not have been declared correctly at
all, in the sense description is not of the actual goods also quantity may
varying and mischief being deliberate and designed to avoid payment of customs
duty. In case of misclassification, it may be bona fide case of wrong classification as the importer or the
person clearing the goods may not be fully conversant with the Schedule to the
Act. In the case where there was no deliberate or intended desire on the part of the importer to
evade or avoid payment of any customs duty, in tact, to provide immunity and
protection of such class of people ,Chapter XIVA has been ushered in
……….”.
Ii) Misdeclaration
can be of description but not of classification – Bajaj Health &
Nutrition Pvt Ltd V. Commissioner
,2004(166) ELT 189 (Tri)
Iii) Mens rea not attributable – if importer have
claimed wrong classification according to his limited Understanding of the Customs Law- Jay Kay Exports &
Industries V. Commissioner -2004(163) E.L.T. 359 (Tri-Kolkata)
Iv ) Demand
on account of wrong classification –confiscation not resortable when
description of goods given correctly- Hindustan National Glass &Indus
limited V.Commissioner , Calcutta-2002(145) E.L.T.162(Tri-Kol)
v) The
Honourable High Court of Bombay ,in case of Commissioner Of Central Excise
Mumbai-V Vs Guru Plastics Work, 2010
(261) E.L.T. 60 (Bom.),uphold the view of learned Tribunal
that in the issue of classification
,imposition of penalty was not called for. The Para 2 and 3 of this order is reproduced
here:
”2. From the facts
and record, we find that the learned Tribunal had recorded the finding that the
issue of classification in the case was an issue and in these circumstances,
the imposition of penalty was not called for. The matter was thereafter remitted
back to the Commissioner to re-determine the valuation as per the formulae in
the case of M/s. Ujagar Prints v. Union of India - 1989 (39) E.L.T. 493 (S.C.).
3. It is this order
which was the subject matter of the appeal before us. The law insofar as Section
11AC has been settled in the judgment of the Supreme Court in Dharamendra
Textiles, 2008 (231) E.L.T. 3 (S.C.) and explained in Rajasthan Spinning &
Weaving Mills Ltd., 2009 (238) E.L.T. 3 (S.C.) has laid down that Revenue has
to prove the predicates of Section 11AC, one of which is that the non-payment
of duty was with an intent to evade payment of duty. In the instant case, there
is a clear finding of fact that there was a vexed issue of classification.”
