2008 (2) TMI 223 - AT - Customs

Import of second hand machine - entire machine could not be shipped in one consignment so parts were shipped by a container vessel and main machine was shipped later - Confiscation on ground that new capital goods had been imported in the guise of used ones without requisite import licence and that the goods were misdeclared in B/E since parts of machine has been cleared treating as second hand capital goods, then it is point less to say that goods in another consignment are not second hand

Issues:
1. Confiscation of goods under Section 111 of the Customs Act.
2. Imposition of penalty under Section 112 (a) of the Act.
3. Interpretation of the description of goods in the bill of entry.
4. Compliance with the Foreign Trade Policy, 2004-09.
5. Consideration of examination report by Chartered Engineers.

Confiscation of Goods under Section 111:
The case involved the import of machinery parts declared as "parts of machine tools for working metal" without the explicit term 'used' or 'new'. The authorities confiscated the goods under Section 111 (d) and (m) of the Customs Act, alleging misdeclaration as new capital goods without the required import license. However, the Tribunal found a direct link between these parts and the main machine subsequently cleared as second-hand capital goods. The F.O.B. values of the parts and the main machine matched, supporting the claim that the parts were indeed used. The Tribunal held that the confiscation was unjustified as the goods were parts of a machine later cleared as second-hand, leading to the appeal being allowed.

Imposition of Penalty under Section 112 (a):
The original authority imposed a penalty under Section 112 (a) of the Act, citing misdeclaration of goods as new without the necessary import license. However, the Tribunal overturned this decision based on the finding that the goods were linked to the main machine cleared as second-hand capital goods. The penalty was vacated along with the confiscation, as the goods were deemed to be rightfully declared and cleared.

Interpretation of Goods Description in the Bill of Entry:
The lower authorities based their decision on the absence of terms like 'used' or 'second-hand' in the bill of entry's description of the goods. However, the Tribunal emphasized that the description as "parts of machine tools for working metal" was sufficient, especially considering the subsequent clearance of the main machine as second-hand capital goods. The discrepancy in terminology did not warrant confiscation or penalty, as the goods were correctly identified and cleared.

Compliance with the Foreign Trade Policy, 2004-09:
The authorities claimed that the goods were restricted for import under the Foreign Trade Policy, 2004-09, despite evidence indicating they were parts of a machine later imported and cleared as second-hand capital goods. The Tribunal highlighted that the policy exempted second-hand capital goods from restrictions, and the examination report by Chartered Engineers confirmed the goods as used. Therefore, the confiscation under Section 111 (d) was deemed unsustainable, and the appeal was allowed.

Consideration of Examination Report by Chartered Engineers:
An important aspect of the case was the examination report by Chartered Engineers certifying the goods as 'used' and 'second-hand'. The lower authorities overlooked this crucial evidence while making their decision to confiscate the goods. The Tribunal emphasized the validity of this report, supporting the claim that the goods were indeed second-hand and correctly declared, leading to the reversal of the confiscation and penalty.

← Previous Next →