KARACHI: The Customs Appellate Tribunal has struck down the redemption fine and penalty imposed on auto parts raw material importer noting that no evidence could be found to establish intentional mis-declaration on the part of importers.

According to the details of the case, M/s Supertech Autoparts Pvt Ltd imported a consignment declared to contain prime quality high carbon steel wire rod and sought clearance under PCT Heading 7213.9990 chargeable to customs duty 10 percent, which becomes zero percent under SRO 655(1)/2006 and GD was filed for home consumption.

On physical examination, it was found that the goods are of prime quality but description was not confirmed whether the goods are Alloy or Non-Alloy Steel as the Alloy Steel is classifiable under PCT heading 7227.9000 at 20 percent customs duty. Therefore, representative samples were sent to M/s A.Q. Khan Research Laboratory for confirmation of description of goods. Meanwhile, goods were released after obtaining pay order for differential amount of duty/taxes.

The Laboratory found goods as of Alloy Steel, which is classifiable under PCT heading 7227.9000 attracting 20 percent instead of PCT 7213.9990 attracting 10 percent customs duty, which becomes zero percent under SRO 655(1)/2006.

The Customs Adjudication established attempted mis-declaration and ordered confiscation of goods with an option of payment of redemption fine of 30 percent of value of goods in addition to duty and taxes chargeable thereon. A penalty of Rs50,000 was also imposed on the importer.

Dissatisfied with the order-in-original, the importer approached Customs Appellate Tribunal submitting that they not commercial importers who import the goods and sell locally, but they were OEM manufactures and import the raw material as per specific requirement of the local assemblers, viz M/s Atlas Honda Ltd, Pak Suzuki Ltd and other assemblers of the country.

Importer submitted the same item was previously imported several times and got tested but no discrepancy was found ever. That if the percentage of Boron in the steel increases from 0.0008, the goods are treated as Alloy steel and are classifiable under HS Code 7227.9000 and if the quantity of Boron in less than 0.0008, it is a Non Alloy classifiable under HS Code 7213.9990. It was submitted that the request for re-test of the goods was not accepted by the Adjudicating Officer.

M/s Supertech Autoparts have to import Non-alloy steel classifiable under HS Code 7213.9990 as per requirement of clients and for which a quota has been allocated by the Engineering Development Board and the goods are being imported and cleared under SRO 655(1)/2006 as per quota allocation by the EDB.

Khalid Mehmood Member Technical noted that importers are regularly importing the goods / raw material in question for use in their vending plant specific to the requirements of M/s Atlas Honda Ltd, M/s Pak. Suzuki Ltd and other assemblers of auto-mobiles in the country.

The Tribunal after detailed deliberation of the case noted that the importers were entitled to make the request of review through another lab test. The GD was also processed under 1st examination to confirm the declaration and to ascertain the exact composition of the goods/raw material.

In view of the circumstances, Tribunal was convinced that the charge for mis-declaration cannot be justifiably leveled against the importers who also take the benefit of strong history of the import of the identical raw material and clearance by customs under description and PCT heading, claimed by them. I

The Tribunal found no reasons to attribute any deliberate attempt of mis-declaration on the part of the importers and remitted the redemption fine and penalty.

Tribunal added the goods have already been released, putting them to re-test at this stage is not possible and the goods will therefore remain classifiable and assessable to customs duty under HS Code ascertained by the department.