Re-testing of imported samples is not a mandatory right when the expert test report is clear and consistent with other evidence, and mandatory penalties under Section 114A of the Customs Act, 1962 must be applied to the differential duty of every individual Bill of Entry confirmed by the adjudicating authority.

P.V. SUBBA RAO

These two appeals assail the order-in-original¹1. impugned order dated 21.04.2010 passed by the Commissioner of Customs, Inland Container Depot, Tughlakabad, New Delhi by Sarvatra International²2. the importer and the Revenue.

2. The importer imported fabrics described as 100% polyester knitted fabric in two Bills of Entry and classified them under Customs Tariff Item³3. CTI 6005 90 00 attracting customs duty @ 10% ad-valorem. Gathering intelligence, the officers of Special Intelligence and Investigation Branch⁴4. SIIB of the Commissionerate examined the goods and sent samples to the Textile Committee for testing. The test report categorically showed that they were polyester cut pile fabrics. Statement of the proprietor of the importer was recorded and he was shown the test report which he acknowledged. On his request, the goods were provisionally released on execution of a bond with a bank guarantee.

3. Thereafter, a show cause notice dated 27.07.2009⁵5. SCN was issued proposing to reclassify the goods, confiscate them, demand differential duty and impose penalties under section 112/114A of the Customs Act, 1962⁶6. the Act.

4. The Commissioner adjudicated this show cause notice and passed the following order :-

“(i) I order classification of “Polyester Cut Pile Fabric” under Chapter Sub Heading 6001 92 00 of the Customs Tariff Act, 1975 attracting Customs Duty @ 10% Adv. Or Rs. 100/- per kg. whichever is higher.

(ii) I order confiscation of 42,600 kgs. of “Polyester Cut Pile Fabric” totally valued at Rs. 52,03,499/- imported vide Bill of Entry Nos. 769991 dated 21.02.2009 and 13,870 kgs. of “Polyester Cut Pile Fabric” totally valued at Rs. 14,98,639/- imported vide Bill of Entry No. 776711 dated 24.03.2009 under section 111 (m) of the Customs Act, 1962. As the goods are not available, I impose a redemption fine of Rs. 1,50,000.00 (Rupees One Lakh Fifty Thousand only).

(iii) I confirm demand of Customs duty of Rs. 47,89,393/- pertaining to the Bill of Entry No. 769991 dated 21.02.2009 and customs duty of Rs. 15,59,363/- pertaining to the Bill of Entry No. 776711 dated 24.03.2009 under proviso to section 28 of the Customs Act, 1962. Since the duty has been already paid it is appropriated against the demand confirmed.

(iv) I impose a penalty of Rs. 47,89,393/- (Rupees Forty Seven Lakhs Eighty Nine Thousand Three Hundred only) under section 114A of the Customs Act, 1962.

(v) I refrain from imposing any penalty under section 112 of the Act for the reasons discussed above”.

5. Revenue’s appeal is on the limited ground that while the Commissioner confirmed the demand of duty under section 28 in respect of both Bills of Entry, he imposed mandatory penalty of only Rs. 47,89,393/- under section 114A of the Act which pertains to the Bill of Entry dated 21.02.2009 and did not impose penalty equivalent to the differential duty of Rs. 15,59,363/- pertaining to the Bill of Entry dated 24.03.2009.

6. The importer’s appeal assails the entire order confirming the demand of duty and imposing penalties.

Submissions on behalf of the importer

7. Learned counsel for the importer made the following submissions :-

(i) The issue involved in the present appeal is regarding classification of the fabric in question and therefore the same was to be decided on the basis of the Test Report and since the appellant did not accept the Test Report, repeated requests were made to get the sample tested on certain parameters. The Adjudicating Authority neither allowed nor