Tirupati Enterprises Vs Commissioner of Customs (CESTAT Ahmedabad)
Redemption fine u/s 125 and penalty u/s 114 was leviable on exported goods misdeclared as “Natural Abrasive Grain” instead of restricted “Natural Garnet”
Conclusion: Since assessee had misdeclared restricted goods as general abrasives to circumvent export restrictions under DGFT policy and therefore assessee was liable for redemption fine of Rs. 10,00,000 under Section 125 and the penalty of Rs. 42,00,000 under Section 114(i) of the Customs Act, 1962.
Held: Assessee had exported goods described as “Natural Abrasive Grain” under tariff heading 25132090 through five shipping bills filed in July and August 2019. Upon laboratory testing by the Central Revenue Control Laboratory (CRCL), the goods were confirmed to be “Natural Garnet (Almandine),” which fell under heading 25132030. As per DGFT Notification No. 26/2015-20 dated 21.08.2018, Natural Garnet was a restricted item that could only be exported through the government-designated agency, M/s Indian Rare Earths Limited. The customs department alleged misdeclaration and imposed a redemption fine of Rs. 10,00,000 and a penalty of Rs. 42,00,000. Adjudicating Authority and Commissioner (Appeals) upheld these charges. Assessee challenged the order before CESTAT, arguing that their product was inland garnet used as abrasive and not subject to the DGFT notification, which they claimed applied only to beach sand minerals. Revenue argued that the classification change from restricted to unrestricted heading after the DGFT notification showed deliberate misdeclaration. It was held that the CRCL report confirmed the goods were Natural Garnet and not general abrasives. It found that the DGFT notification applied to all forms of garnet, regardless of source. Tribunal also observed that assessee’s change in classification from 25132030 to 25132090 after the notification indicated an intent to circumvent the export restriction. It further held that reliance on internal communications not mentioned in the show cause notice did not alter the fact that the export violated DGFT policy. Tribunal upheld the reclassification under 25132030 and confirmed that the goods were rightly considered restricted under DGFT policy. It sustained the redemption fine of Rs. 10,00,000 and the penalty of Rs. 42,00,000.
