2017 (8) TMI 501 - AT - Customs

Mutilation of Imported goods before provisional release - HMS/Re-Rollable scrap - Held that - the report of Chartered Engineer is not supported by any market enquiry or has not assigned any reasons as to how he has held the same to be New CRGo Sheets and the material which possesses the properties of a electric insulation. If such a material does not poses such properties, it is scrap only. No expert opinion has been obtained from any laboratory to get tested the said goods by the respondent whether the material is prime in nature or not.The pre inspection certificate issued by the Agency certified by DGFT has not been rejected or objected to by the authorities below. No enquiries have been made overseas to find out the composition of the material. In that circumstances, the report of the chartered engineer is not acceptable, as he is not a metallurgical engineer, therefore, in the absence any evidence on record, the goods are to be cleared as scrap, therefore, there is no requirement of any mutilation. The goods are to be released immediately under section 110 of the Customs Act, 1962, on furnishing of Bond - appeal allowed - decided in favor of appellant.

Issues Involved:

1. Legitimacy of the mutilation order for imported goods.
2. Validity of the Chartered Engineer's report and its reliance.
3. Classification and valuation of imported goods.
4. Requirement of market enquiry and testing from a Government Laboratory.
5. Adherence to the declared invoice value for provisional release.
6. Furnishing of a bond for provisional release.

Issue-wise Detailed Analysis:

1. Legitimacy of the Mutilation Order for Imported Goods:

The appellant contested the order of mutilation of imported goods, arguing that it was based solely on the conclusion of a local Chartered Engineer who lacked the requisite expertise as a Metallurgical Engineer. The Tribunal found that the Chartered Engineer's opinion, which was based on visual inspection without any market enquiry or testing from a Government Laboratory, was insufficient. The Tribunal held that the material should not be mutilated for provisional release as the Chartered Engineer's report was not supported by concrete evidence.

2. Validity of the Chartered Engineer's Report and Its Reliance:

The Tribunal scrutinized the Chartered Engineer's report, which classified the goods based on visual examination. The Tribunal noted that the Chartered Engineer was not a Metallurgical Engineer and his findings lacked supporting market enquiry or laboratory testing. Consequently, the Tribunal deemed the report unreliable and not acceptable for determining the nature of the goods.

3. Classification and Valuation of Imported Goods:

The appellant declared the goods as 'HMS/Re-Rollable scrap' under Tariff item 72044900. The Tribunal examined the Chartered Engineer's classification and found discrepancies. For instance, the goods in certain containers were classified as CRGO Sheet Cutting Melting Scrap, which did not require mutilation. The Tribunal also referenced previous cases (e.g., Ansun System Consulting Pvt. Ltd. and Kishore K. Aggarwal) to support the classification of materials obtained from dismantled transformers as scrap, thereby negating the need for mutilation.

4. Requirement of Market Enquiry and Testing from a Government Laboratory:

The Tribunal emphasized the necessity of conducting market enquiries and obtaining laboratory testing to validate the classification and nature of the imported goods. The lack of such enquiries and tests in the Chartered Engineer's report rendered it insufficient for making a conclusive determination. The Tribunal highlighted that the respondent failed to conduct these essential steps, which undermined the reliability of the report.

5. Adherence to the Declared Invoice Value for Provisional Release:

The Tribunal upheld the condition that the goods should be assessed to duty provisionally based on the declared invoice value. This assessment was to be done purely for the purpose of provisional release, without prejudice to the final adjudication order concerning the show cause notice issued to the importer.

6. Furnishing of a Bond for Provisional Release:

The Tribunal required the importer to furnish a bond equal to the re-determined assessable value of ?1,36,20,117/- for the provisional release of the seized goods. This bond was to ensure that the importer would pay any differential duty, fine, penalty, or interest if the goods were later determined to be other than scrap.

Conclusion:

The Tribunal modified the impugned order, stipulating that the goods should be assessed provisionally based on the declared invoice value and released upon furnishing the required bond. The Tribunal dismissed the requirement for mutilation, citing the unreliability of the Chartered Engineer's report and the absence of supporting market enquiry and laboratory testing. The order emphasized the need for concrete evidence and expert validation in determining the nature and classification of imported goods.

← Previous Next →