2017 (12) TMI 176 - AT - Customs

Classification of imported goods - whether the metal rims found in the two containers of the total consignment are required to be considered as waste and scrap or the same have to be held as metallic rims usable in the motor-vehicles? - Held that - it is for the assessee to test the veracity of the statement, procured by the Revenue, on which they intend to rely. Revenue cannot decide as to whether the cross-examination is useful to the assessee or not. As such, when there are two contra reports of two different Chartered Engineers, the benefit has to go to the assessee rather than to the Revenue, who by adopting a favourable report, cannot hold against the assessee. Except for making a bald declaration that there was deliberate mis-declaration by the importer, there is no evidence on record to show that the appellant knew about the presence of old and refurbished metallic rims in the two containers. All the documents issued by the foreign supplier are only reflecting that the waste and scrap has been imported by him - Revenue has not pointed out to any evidence to establish the knowledge on the part of the importer. As such, such mutilation request made by the appellant should have been accepted by the authorities. The appellant have produced evidence on record that the said rims were actually used by them in the furnace in their factory. Photographs stands produced showing such use along with a certificate of their Chartered Accountant, declaring that the rims in question were consumed for manufacturing of steel ingots on 18.08.2011 and 31.03.2012. Such certificate of the Chartered Accountant has neither been questioned nor doubted by the lower authorities - In the face of such an evidence of use of the rims in the furnace, the Revenue s case that the same are re-usable and serviceable items, cannot stand. Appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Classification of imported goods as waste and scrap or usable metallic rims.
2. Reliability of Chartered Engineers' opinions.
3. Acceptance of mutilation request by the appellant.
4. Evidence of deliberate mis-declaration by the importer.
5. Use of the rims by the appellant in their furnace.

Analysis:
1. The main issue in the case was whether the metallic rims found in two containers of the consignment should be classified as waste and scrap or as usable metallic rims for motor vehicles. The appellant had declared the goods as waste and scrap, but the Revenue disagreed based on the opinions of Chartered Engineers.

2. Two Chartered Engineers provided conflicting opinions on the nature and usability of the metallic rims. While one engineer opined that the rims were old and unlikely to be useful in the market, the other engineer stated that the rims were serviceable and could be used, valuing them at ?800 per piece. The Tribunal noted the contradictory reports and emphasized that the benefit of doubt should favor the appellant when faced with such conflicting expert opinions.

3. The appellant had requested the Revenue to mutilate the goods if they were considered usable motor-vehicle parts. However, this request was denied by the lower authorities on the grounds of deliberate mis-declaration. The Tribunal highlighted that there was no concrete evidence to prove deliberate mis-declaration by the importer, and in such cases, the mutilation request should have been accepted.

4. The Tribunal found a lack of evidence to support the Revenue's claim of deliberate mis-declaration by the importer. All documents from the foreign supplier indicated the importation of waste and scrap, with no indication of the presence of metallic rims. The Tribunal emphasized the importance of concrete evidence to establish knowledge on the importer's part.

5. The appellant provided evidence, including photographs and a certificate from their Chartered Accountant, showing the use of the rims in their furnace for manufacturing steel ingots. This evidence was not challenged by the lower authorities. The Tribunal considered this evidence as proof of the rims being consumed for manufacturing purposes, contradicting the Revenue's claim of the rims being reusable and serviceable items.

In conclusion, the Tribunal set aside the original order and allowed both appeals in favor of the appellant, highlighting the lack of merit in the Revenue's arguments and the presence of substantial evidence supporting the appellant's position regarding the classification and use of the imported metallic rims.