2016 (2) TMI 101 - AT - Customs

Levy of penalty - mis-declaration of goods - import of second hand machines as scrap - appellant contended that supplier instead of sending after mutilation had supplied as uncut scrap. - Held that - Appellant is a actual user having manufacturing facility for re-melting the scrap. - Considering the fact that the goods are still lying in customs custody since 2004, and appellants have not exercised the option of redeeming the goods on payment of redemption fine, and only pleading for setting aside penalty, taking into over all facts and circumstances of the case, the penalty is liable to be redeemed. Accordingly we uphold the impugned order in so far as confiscation of the machinery and melting scrap. We reduce the penalty of ₹ 3,00,000/- imposed on the appellant to ₹ 50,000/- (Rupees Fifty thousand only) - Decided partly in favor of assessee.

Summary

Issues:
Classification of imported goods as Heavy Melting Scrap or used machinery, Time-barred appeal, Restoration of appeal by High Court, Imposition of penalty under Section 112 (a) of the Customs Act.

Classification of Imported Goods:
The case involved the import of goods declared as "Heavy Melting Scrap (uncut)" but found to be "Used Second Hand Plastic Injection Moulding Machinery." The Chartered Engineer's report confirmed the nature of the goods. The adjudicating authority classified 142.10 MT under Chapter 8477.10 as second-hand machinery, leading to confiscation, redemption fine, and penalty under Section 112 (a) of the Customs Act. The appellant contested the penalty, arguing correct declaration and lack of malafide intent to evade duty.

Time-barred Appeal and Restoration:
Initially, the Tribunal dismissed the appeal as time-barred. However, the High Court set aside this order and directed the Tribunal to hear the appeal on merits. The appellant then focused on contesting the penalty imposed under Section 112 (a) of the Customs Act.

Imposition of Penalty:
The appellant, an actual user with a melting furnace, had a history of importing melting scrap for re-melting. Despite declaring the goods as "Heavy Melting Scrap (uncut)," they were also found to be used machinery upon examination. The adjudicating authority, after following natural justice principles, reclassified the goods as machinery chargeable to appropriate duty. The penalty of &8377; 3 lakhs was contested by the appellant, emphasizing correct declaration and lack of malafide intent.

Judgment:
The Tribunal upheld the confiscation of the machinery and melting scrap but reduced the penalty from &8377; 3 lakhs to &8377; 50,000. Considering the appellant's status as an actual user and the circumstances of the case, the penalty was deemed excessive. The appeal was partly allowed, maintaining the impugned order with a reduced penalty.