1996 (1) TMI 371 - AT - Customs

Adjudication - Natural justice - EXIM - Licence - Disposal goods - Confiscation - Released goods - Revision - Order of release of goods for home consumption

Issues Involved:
1. Whether the imported goods were 'Disposal Goods'.
2. Legality of the confiscation of goods already released under Section 47 of the Customs Act.
3. Violation of principles of natural justice in adjudication.

Issue-wise Detailed Analysis:

1. Whether the imported goods were 'Disposal Goods':

The core issue revolved around whether the imported Polypropylene Packing Film was classified as 'Disposal Goods'. The Department alleged that the appellants misdeclared the goods as Polypropylene Film instead of Bioxially Oriented Polypropylene Film (BOPP), which was of higher value. The Department's investigation suggested that the goods were surplus, stock lots, returned by customers, or production overruns, leading to the conclusion that they were 'Disposal Goods'.

The appellants contended that the goods were new, and merely because they were of different sizes and specifications, they could not be termed as 'Disposal Goods'. They referenced several legal precedents, including the case of Abdul Husein Mohammedally Master v. Union of India, which emphasized that new goods cannot be classified as 'Disposal Goods' solely based on their varied sizes.

The adjudicating authority's reasoning was scrutinized, particularly their reliance on a letter dated 2-3-1990 and the appellants' previous replies. It was found that these documents were not mentioned in the Show Cause Notices, violating the principles of natural justice. The Tribunal noted that the mere fact that the goods were of different sizes and specifications was insufficient to classify them as 'Disposal Goods'. Additional evidence, such as comparable prices or the condition of the goods, was necessary to substantiate this classification.

2. Legality of the confiscation of goods already released under Section 47 of the Customs Act:

The appellants argued that once goods are cleared by Customs under Section 47, they cannot be confiscated unless reviewed under Section 129 of the Act. The Tribunal referenced a similar case where it was held that an order under Section 47 attaches finality to the satisfaction of the officers that the goods are not prohibited. This finality cannot be disturbed except through a legal review process.

The Tribunal concluded that the goods released under Section 47 could not be confiscated by the adjudicating authority without following the proper review procedure. This principle was reinforced by the Tribunal's observation that the Collector of Customs had not exercised the necessary review powers under Section 129D, rendering the confiscation orders legally unsustainable.

3. Violation of principles of natural justice in adjudication:

The Tribunal noted that the adjudicating authority relied on documents not mentioned in the Show Cause Notices, specifically the letter dated 2-3-1990 and the appellants' previous replies. This reliance without prior notice to the appellants violated the principles of natural justice, as the appellants were not given an opportunity to present their defense regarding these documents.

The Tribunal cited the Supreme Court's decision in Muniyalappa v. B.M. Krishnamurthy, emphasizing that when principles of natural justice are violated, the matter should be remanded for fresh disposal. Consequently, the Tribunal remanded the case to the adjudicating authority for de novo adjudication, ensuring that the appellants are given the opportunity to address the documents in question and present their defense comprehensively.

Conclusion:

The Tribunal set aside the confiscation orders and remanded the cases for fresh adjudication. The adjudicating authority was instructed to consider the principles of natural justice, provide the appellants an opportunity to address the documents relied upon, and ensure that the de novo adjudication is conducted in accordance with the law. The Tribunal also emphasized that goods cleared under Section 47 could not be confiscated without following the proper review procedure.

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