2018 (8) TMI 1701 - AT - Customs

Import of restricted goods - second-hand goods, other than capital goods - Confiscation - redemption fine - penalty - Held that - Though the importer had declared the goods to be secondary and defective , the examination report indicates that these were also not new goods. Furthermore, the report of the Chartered Engineer is categorical in taking note of the welding on several pipes which would indicate that these had been previously utilized before export. Therefore, there can be no doubt that the goods are used as contemplated for restriction in para 2.31 of the Foreign Trade Policy 2015-2020. However, the import of the goods does not pose any threat to the safety of the citizenry of the country, these are also not prohibited goods. Accordingly, while upholding the confiscation of the imported goods, the same is allowed to be redeemed to be cleared for home consumption on payment of fine of ₹ 50,000/- - penalty is also reduced to ₹ 25,000/-. Appeal allowed in part.

Summary

Issues:
Confirmation of confiscation of imported goods, imposition of penalty under section 112(a) of Customs Act, 1962 for violation of import restrictions on 'second-hand' goods.

Analysis:
The appeal by M/s Suman Metals challenged the order-in-appeal confirming the confiscation of imported 'stainless steel secondary defective pipes grade 437' and imposition of penalties under the Customs Act, 1962. The goods were noted to be 'old and used' upon examination, prompting the authorities to impose a fine for re-export and penalty for violation of import restrictions. The appellant argued that the examining officer's observation lacked basis and the Chartered Engineer's report did not explicitly state the goods were used. Citing precedents, the appellant contended that such violations were minor and certain goods, even if old, were exempt from licensing requirements. The appellant also questioned the contradictory nature of the order permitting redemption for re-export while confiscating the goods. The Customs Act's section 125 on redemption for home consumption was highlighted as well.

The Authorized Representative contended that the appellant had agreed with the Chartered Engineer's certificate. Despite the importer declaring the goods as 'secondary and defective,' the examination report revealed they were not new, with welding on the pipes indicating prior use. The Chartered Engineer's report explicitly mentioned the welding, signifying prior utilization before export. The goods were deemed 'used' as per the Foreign Trade Policy, rendering them liable for confiscation under section 111(d) of the Customs Act, 1962. The absence of a defense to challenge the Chartered Engineer's report weakened the appellant's position. Consequently, the impugned order upholding the confiscation was deemed appropriate.

While acknowledging that the imported goods did not pose a safety threat and were not prohibited, the Tribunal allowed redemption for home consumption upon payment of a reduced fine. The confiscation was upheld, but the goods were permitted to be cleared for home consumption on payment of a reduced fine. The penalty imposed was also reduced significantly. The appeal was partially allowed with the modifications mentioned above.