Order date: 23 September 2022

Facts

• The appellant, M/s. Linear Technologies Ltd imported CFL tubes upon declaring a Retail Sale Price goods were assessed by the customs officers and cleared.
• Thereafter, on receiving intelligence, officers of Directorate of Revenue Intelligence searched the warehouse of the importer and found loose labels which indicated much higher prices than those declared in the Customs documents and also found price lists indicating higher prices in the Warehouse, which were subject to Additional Duty of Customs based on the Retail Sale Price as notified under Section 3A of the Central Excise Act.
• Show Cause Notice was issued by the Additional Director General of DRI proposing to reject the declared RSP and reassess the Additional Duty of Customs on the imported goods as the RSP in the loose labels found in the warehouse and recover differential duty and also to confiscate the goods under section 111 (d) & (m) of the Customs Act and impose penalties.

Issue

• Whether the rejection of the declared RSP and redetermination of the additional duty of customs based on the RSP found in the loose labels and price lists recovered from the warehouse of the importer is in order?

Order

• The Tribunal observed as per section 125(2), if the goods are redeemed by the owner or the person from whom they are seized, such person shall, in addition to the redemption fine, pay duty on the goods. Evidently, if they are not redeemed, payment of duty in addition to fine shall not apply. If the goods are not redeemed, on confiscation, the goods vest with the Central Government as per section 126 of the Act, as the appellant submits that the seized goods were confiscated and an option to redeem the goods has been given to the importer. However, the importer has not redeemed the goods.
• The charge of duty of customs is on the goods imported into India as per Section 12 and NOT on the person who imported the goods. When the title to the goods moves from the importer, the liability to pay duty moves along with it.
• If the importer relinquishes his title to the goods before clearance under section 28(2), he has no liability to pay duty. If the importer does not clear the goods and for that reason the goods are sold by the custodian under section 48, the duty is to be recovered from the sale proceeds as per section 150 and not from the importer. This has also been made clear by the Board in the Customs Manual.
• The Tribunal relied on the decision of Supreme Court in Fortis Hospital Limited vs. Commissioner of Customs, Import 2015 (318)ELT 551 (SC) wherein it was held that provision of section 125(2) of the act would not apply in case where option to pay fine in lieu of confiscation is not exercised by the importer.
• There is no sufficient evidence to support the RSP was mis-declared before the Customs and that the loose labels found in the warehouse and sold in the market or offered for sale in the market at the higher prices or that the price list was sent to the buyers or dealers. Consequently, the rejection of RSP, redetermination of duty, confiscation of the goods and imposition of penalties cannot be sustained.
• The impugned order is set aside and appeal is allowed.