2007 (10) TMI 110 - AT - Customs

Whether machinery imported is second hand or new Machinery is tailor made so question of being used doesn t arise Mfg. date is not disputable as it is written on invoice clearly Wear & Tear signs on machinery parts are due to trial use Confiscation on account of misdeclaration set aside.

Summary

Issues:
Importation of machinery claimed as new but found to be old and used. Confiscation and penalty imposed by adjudicating authority. Dispute whether machinery is second hand or new.

Analysis:
The appeal was against an order dated 7.2.2000 regarding the importation of machinery claimed to be new but found to be old and used. The appellant imported "Electrical Lamp making 2nd fusion machine (3 Tubes)" and "electrical lamp making 2nd fusion machine (2 Tubes)" under the freely importable category. However, upon examination, it was discovered that the machinery was not brand new as declared but old and used. The adjudicating authority concluded that the machinery was mis-declared and ordered its confiscation, allowing redemption on payment of a fine and imposing a personal penalty.

The appellant argued that the machinery was tailor-made for their specific requirements, purchased directly from the manufacturer, and had not been used commercially before dispatch to India. Correspondence with the manufacturer indicated that the machinery was manufactured for the appellant only. The appellant highlighted that the machinery was worth Rs.1.40 crores and was put to trial runs at the manufacturer's premises, explaining signs of use on certain parts.

The revenue contended that examination reports showed wear marks on various components, indicating prior use of the machinery. The adjudicating authority's findings were based on these reports, leading to the decision that the imported machinery was old and used. However, the appellate tribunal found that the adjudicating authority did not consider the factual matrix of the case. The appellant had placed an order with the manufacturer in May 1999 for tailor-made machinery, which was not disputed by the revenue. The tribunal noted that the machinery was manufactured in 1999 as per the invoice, and correspondence confirmed negotiations for specific tailor-made machines.

The tribunal held that the machinery was new, considering the tailor-made nature, lack of contradictory evidence, and the necessity of trial runs for high-cost machinery. It was concluded that the impugned order was unsustainable, set aside, and the appeal allowed with consequential relief.