M/s. S.M.

International, imported goods self-declared as "Lotion Pump

for Hand Sanitizer" and "Mist Spray for Hand Sanitizer". During a post-
clearance audit, it was found that the importer had misclassified the goods
and paid a lower duty rate. The goods should have been classified under CTH
96161010 with a BCD of 20%, SWS of 10% and IGST of 18% rather than
under CTH 84242000 and 84248990, where the BCD was 7.5% and the SWS
and IGST were the same. The misclassification resulted in a short payment of
duty of Rs.11,71,128/-. An audit letter was issued to the importer asking for
payment of the differential duty and interest, but no reply was received. The
company is in violation of Section 28 of the Customs Act, 1962.
Show Cause Notice was issued to M/s. S.M. INTERNATIONAL, an
importer, asking to show cause to the Additional Commissioner of Customs
(Group-5) as to why:
The classification of the impugned goods, described as "LOTION PUMP
FOR HAND SANITISER" and "Mist Spray for hand Sanitizer," should not be
rejected and reclassified under 96161010, for which BCD@20%, SWS@10%
and IGST@18% is payable.
The short levied duty of Rs. 11,71,128/- should not be demanded.
The interest on the short levied duty should not be demanded.
The goods valued at Rs. 72,18,046/- should not be held liable for
confiscation.
Penalty should not be imposed for rendering the goods liable for
confiscation.

The importer was given 30 days to reply and was offered a personal hearing
on 14.12.2022, but failed to appear. The adjudication was done in their
absence. The main issue was the correct classification of the impugned
imported goods, and the relevant heading was 8424 in the HS Code, used to
classify mechanical appliances for projecting, dispersing, or spraying liquids
or powders. The classification was based on the description and notes in the
HS Code, and after considering the available records, the adjudication was
done in their absence.

Accordingly AA rejected the assigned classification of goods imported

under Bills of Entry as per Annexure-I, which were declared as "Lotion Pump
for Hand Sanitizer" under CTH 84248990 and "Mist Spray for Hand Sanitizer"
under CTH 84242000 and reclassified them under CTH 96161010. AA
acknowledged the underpaid duty of Rs 11,71,128 and demanded interest as
per Section 28AA of the Customs Act, 1962. AA seized the goods with an
assessable value of Rs 72,18,046 under Section 111(m) of Customs Act, 1962
and offered redemption on payment of a redemption fine of Rs 7,00,000 as per
Section 125(1) of Customs Act, 1962. A penalty of Rs 3,00,000 was imposed
under Section 112(a) of Customs Act, 1962.