2001 (1) TMI 829 - AT - Customs

EXIM Policy - Rags and unmutilated rags/uncut worn clothing - Raw material - Confiscation and penalty - Misdeclaration

Summary

Issues:
1. Classification of imported goods under Customs Tariff Heading 63.10 or 6309.
2. Requirement of specific import license for the importation.
3. Confiscation of goods under Sec. 111(d) and Sec. 111(m) of the Customs Act, 1962.
4. Validity of misdeclaration of goods as premutilated rags.

Classification of Imported Goods:
The appellants, an EOU, imported goods described as "old original synthetic hosiery rags" but were found to be serviceable garments. The Department argued for classification under CTH 6309 instead of 63.10. The Commissioner confiscated the goods, increased their value, and imposed penalties. The Tribunal analyzed the Exim Policy, Handbook of Procedures, and correspondence with authorities. It concluded that the appellants were permitted to import raw materials, including rags and serviceable garments, without significant distinction. The Tribunal found no basis for the confiscation under Section 111(d).

Requirement of Specific Import License:
The Tribunal examined the requirement of a specific import license for the goods. It considered the Exim Policy, Handbook of Procedures, and correspondence with authorities. The Tribunal noted that the importers were entitled to import raw materials, including worn clothing, without a license. The letter of permission from the authorities acted as a license for procurement of raw materials. Thus, the Tribunal found no violation in importing the goods without a specific import license.

Confiscation of Goods under Sec. 111(d) and Sec. 111(m):
Regarding the confiscation under Section 111(d) and Section 111(m) of the Customs Act, the Tribunal observed that the Commissioner had certified the goods as "worn clothing" instead of rags. The importers established that worn clothing was not a prohibited item but a restricted one. The Tribunal held that the orders of confiscation under Section 111(d) did not stand as the goods were not classified as rags. However, for confiscation under Section 111(m) due to misdeclaration, the Tribunal acknowledged the misdeclaration but found no significant gain from it. Therefore, it concluded that misdeclaration did not warrant confiscation or penalties.

Validity of Misdeclaration of Goods:
The Tribunal addressed the misdeclaration of goods as premutilated rags when they were serviceable garments. While the misdeclaration was acknowledged, the Tribunal considered the lack of significant gain from it. It noted that the importers were entitled to import worn garments, and thus, the misdeclaration did not justify confiscation or penalties. The Tribunal ruled in favor of the appellants, allowing them to import serviceable garments as raw materials without duty payment.

In conclusion, the Tribunal allowed the appeal, finding in favor of the appellants and providing consequential relief according to law.