2014 (12) TMI 897 - AT - Customs

Import of Stainless Steel Coils & Sheets under DEEC Licences - allegation of diversion of diverting the said S.S. Coils & Sheets to various places in Chennai - validity of The physical inspection of the aforesaid detained goods - Held that - While drawing sample by M/s. Geo-chem Laboratories the appellant had written a letter to the customs to remain present for taking the samples but the departmental officials did not remain present for drawing the samples. Moreover, the manufacturer/supplier of the impugned goods has stated that these goods are considered as scrap from their international classification. Therefore, they were sold to the appellant as third choice material. The said statement of the supplier has not been controverted by the Revenue. Therefore, in this case as Revenue opted not to remain present while drawing samples by the private lab, M/s. Geo-chem Laboratories and no counter to the supplier s certificate was adduced in the impugned order. Further, we find that no cross-examination of the examiners of IIT, Mumbai was granted. In these circumstances, benefit of doubt goes in favour of the appellants - inspection report of IIT, Mumbai is not acceptable. Therefore the description given by the appellant is accepted. Accordingly, impugned order is set aside - Following decision of Mehta Steel Corporation 1998 (11) TMI 587 - CEGAT, MUMBAI - Decided in favour of assessee.

Summary

Issues:
Appeal against order confiscating goods, duty demand confirmation, interest imposition, and penalty imposition.

Analysis:
The case involved importers in Chennai diverting Stainless Steel Coils & Sheets to local markets in Mumbai. The investigation revealed the diversion of goods from Chennai Port to Mumbai warehouses. The detained goods were suspected to be misdeclared as lower-grade material. The Indian Institute of Technology, Mumbai conducted an examination, concluding that some goods were first-grade material misdeclared as third choice. Subsequently, a weighment was conducted, confirming the quality of the goods. The appellants challenged the examination report, seeking cross-examination of IIT officials, which was denied. They also obtained reports from private labs contradicting the IIT report. The supplier confirmed the goods were sold as scrap, not prime quality, a fact not contested by Revenue. Citing precedent, the Tribunal held that visual inspection alone cannot determine quality. As Revenue did not supervise sample collection by the private lab and failed to counter the supplier's statement, the benefit of doubt favored the appellants. Consequently, the Tribunal rejected the IIT report, accepted the appellant's description, and set aside the impugned order, allowing the appeals.

Conclusion:
The Tribunal found the IIT examination report unreliable, granted relief to the appellants, and set aside the impugned order. The decision highlighted the importance of thorough examination procedures and the need to address conflicting reports and supplier statements in customs cases.