In the recent ruling,the Bangalore bench of Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) upheld the reclassification of Brush Cutters misdeclared as Power Operated Reapers by the assessee, confirming a duty demand of Rs. 53,37,203 and reducing the redemption fine to Rs. 3,00,000.
Fortune Agro Impex,the appellant-assessee,filed Bill of Entry No. 3751556 on 08.11.2013 for the clearance of 185 sets of Power Operated Reapers. Upon investigation, it was discovered that the appellant had misdeclared and misclassified the goods as ‘Power Operated Reapers’ under Chapter Heading 8433 5900, when they were actually ‘Brush Cutters,’ which should have been classified under Chapter Heading 8467 8990. The customs officers found that the packages and supplier’s website clearly identified the goods as Brush Cutters.
The Commissioner reclassified the goods and demanded a differential duty of Rs. 53,37,203 with interest under Section 28(4) of the Customs Act, 1962. The goods were confiscated and allowed to be redeemed with a fine of Rs. 6,00,000.
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Equivalent penalties were imposed under Sections 114A and 114AA, totaling Rs. 35,00,000, along with additional penalties of Rs. 6,00,000 under Section 112 and Rs. 4,00,000 under Section 114AA on Shri Sreepada, Partner of the appellant-company. Appeals were filed against the duty, confiscation, and penalties.
None appeared for the appellant despite the case being adjourned as a last chance. The appellant opposed the extended period for the duty demand, stating that from 31.12.2011 to 08.10.2013, they had filed proper documents, and the bills of entry were assessed accordingly. They denied any suppression or misdeclaration, arguing there was no evidence of knowingly misclassifying the goods, and contested the duty demand beyond the normal period.
The Tribunal heard both sides and reviewed the records. Referring to earlier decisions in M/s. Rathnagiri Impex Pvt. Ltd. and Hikoki Power Tools India Pvt. Ltd., it upheld the classification of Brush Cutters under Chapter Heading 8467 8990, resolving the issue of misdeclaration by the appellant.
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The Revenue argued that the investigation revealed the catalogues, user manuals, and the supplier’s website clearly described the goods as Brush Cutters. Despite knowing this, the appellant misdeclared them as Power Operated Reapers to claim duty benefits for agricultural equipment. The user manual identified the product as a Brush Cutter, and Shri Sreepada, the appellant’s partner, admitted instructing the supplier to label the goods as Power Reapers for subsidy purposes.
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