2016 (8) TMI 673 - AT - Customs

Import of Silicon Electrical Steel Scrap - whether classifiable as old and used Silicon Electrical Strips under CTH 72261100 and not as scrap as claimed by the appellant. - Held that - As per the above provisions of Section 24 mutiliation of imported goods, if any can be made only at the request of the owner of the imported goods. Secondly, the goods should ordinarily be used for more than one purposes which has not been proved by the department. Thirdly, appellant has been importing the said goods for nearly 15 years and department did not feel the necessity to mutiliate the imported scrap imported earlier. Adjudicating authority while passing Order-in-Original dated 9/10/2015 has thus gone beyond the scope of show cause notice, thus violating the principles of natural justice. - Decided in favor of assessee.

Summary

Issues Involved:
Classification of imported goods as scrap, legality of ordering mutilation of imported goods, interpretation of Section 24 of the Customs Act, violation of principles of natural justice.

Classification of Imported Goods:
The appellant imported Silicon Electrical Steel Scrap classified under Customs Tariff Heading 7204. The Customs authority argued that the goods should be classified as old and used Silicon Electrical Strips under CTH 72261100. The Adjudicating authority held the goods to be scrap under CTH 7204. The issue of classification was ultimately decided in favor of the appellant by the Adjudicating authority in the remand proceedings.

Legality of Ordering Mutilation:
The Adjudicating authority ordered the mutilation of imported goods, which the appellant contested. The appellant argued that the Customs Act, 1962 does not have any provision for the Adjudicating authority to order mutilation suo motu. The Revenue contended that the goods, capable of being used as such, should be mutilated to prevent alternative use. The Adjudicating authority's decision to order mutilation was challenged on the grounds that there was no proposal for mutilation in the show cause notice and that it violated the principles of natural justice.

Interpretation of Section 24 of the Customs Act:
The Revenue relied on Section 24 of the Customs Act, 1962, which allows for denaturing or mutilation of imported goods at the request of the owner to render them unfit for certain purposes. The appellant argued that the department did not prove that the goods were ordinarily used for more than one purpose. It was highlighted that the appellant had been importing similar goods for nearly 15 years without the need for mutilation. The Adjudicating authority's decision to order mutilation was deemed to be beyond the scope of the show cause notice, thus violating the principles of natural justice.

Violation of Principles of Natural Justice:
The Adjudicating authority's decision to order the mutilation of imported goods was considered to be beyond the scope of the show cause notice issued to the appellant. It was argued that the decision violated the principles of natural justice as there was no provision in the Customs Act, 1962 for the Adjudicating authority to order mutilation suo motu. The appeal filed by the appellant against the mutilation order was allowed, emphasizing the need to uphold natural justice principles in such cases.