2008 (4) TMI 154 - AT - Customs

Allegation that Ingots/Bars/Rods/Wires were misdeclared as Nickel Silver Scrap-Malic - Merely because the scrap is in the shape of big lumps, as also clarified by Chemical Examiner, it cannot be held that the same is not scrap scrap was modified in large lumps as there is ban on export of scrap in exporting country no mala fide no misdeclaration moreover goods were meant for 100% EOU, the same were exempted from customs duty - confiscation, penalty is set aside

Summary

Issues:
1. Confiscation of imported goods declared as "Nickel Silver Scrap-Malic"
2. Imposition of redemption fine and penalty
3. Allegations of mis-declaration and undervaluation
4. Applicability of customs duty exemptions for 100% EOU
5. Interpretation of the nature of imported goods as scrap or not
6. Justification for confiscation and penalty imposition

Analysis:
1. The Commissioner confiscated the imported goods declared as "Nickel Silver Scrap-Malic" by the appellant and imposed a redemption fine of Rs. 6 lakhs, along with a penalty of Rs. 2.5 lakhs on the proprietor of the importing firm. The issue primarily revolved around the nature of the imported goods and the allegations of mis-declaration and undervaluation.

2. The appellant, a 100% EOU, imported the goods under a claim of exemption in accordance with Notification No. 53/97. Despite the Commissioner upholding the mis-declaration and undervaluation charges, it was noted that the goods were meant for use in a 100% EOU, thereby exempting them from customs duty. The Adjudicating Authority did not confirm any demand of duty against the appellant due to the exemption, indicating no mala fide intent on the appellant's part.

3. The key point of contention was the interpretation of the imported goods as scrap. The Chemical Examiner's report described the goods as irregular metallic lumps, leading to a debate on whether they qualified as scrap. The appellant argued that the goods, though in the form of large lumps, were still considered scrap based on industry definitions and the circumstances of export from a country with restrictions on scrap export.

4. The Tribunal found merit in the appellant's explanation, emphasizing that the goods, despite being in a different form, still fell within the definition of scrap based on industry standards. The conversion of the goods into lumps for transportation due to export restrictions did not negate their classification as scrap, especially since they did not fit the definitions of ingots/bars/rods.

5. Ultimately, the Tribunal set aside the impugned order, ruling in favor of the appellant. Given the goods' exemption from customs duty as they were intended for a 100% EOU, the confiscation and penalty imposition were deemed unjustified. The judgment highlighted the importance of considering the specific circumstances of importation and the nature of goods in customs disputes.