2018 (10) TMI 1573 - AT - Customs

Classification of imported goods - Silicon Steel Sheet Cuttings (CRGO) (Secondary & Defective) having different irregular shapes and sizes - classified under CTH 72261100 or otherwise - Confiscation - penalty - change of classification based on the reports of the Chartered Engineers - Whether the Chartered Engineer report is acceptable in the facts and circumstances of the case or not? - Held that - The Chartered Engineer who has examined the goods are not metallurgical engineer and the reports were based on visual examination without any market inquiry, therefore, the reports provided by the Chartered Engineers are not acceptable as held by this Tribunal in the case of R.G. Gupta 2017 (8) TMI 501 - CESTAT CHANDIGARH - as Chartered Engineers who were not metallurgical engineer and given the reports without market survey on visual examination cannot be relied upon. Therefore, the reports given by the Chartered Engineers are not acceptable for assessment of the bills of entry in question. Whether the classification of the impugned goods has been done by the adjudicating authority correctly or not in the absence of any test report? - Held that - Admittedly, no samples have been drawn for testing despite several requests were made by the appellant in terms of Steel and Steel Products (Quality Control) second order dated 12.03.2012 wherein para 3(ii) deals with how the goods are to be disposed of - Admittedly, as per the steel and steel products (quality control) second order 2012, the goods are required to be testing and inspection of the Bureau of Indian Standard and the same has not been done. In that circumstances, the classification arrived by the adjudicating authority is not acceptable, therefore, classification is declared by the appellant is accepted. Whether the goods are required to be mutilated as directed by the adjudicating authority? - Held that - As the reports of the Chartered Engineers are not acceptable and the goods declared by the appellant as scrap has been accepted. In that circumstances, the goods are none other than the scrap as declared by the appellant, therefore, the same are not required to be mutilated. Whether in the facts and circumstances of the case redemption fine and penalty can be imposed on the appellant or not? - Held that - Admittedly, the declaration made by the appellant has been accepted. Moreover, the goods were not mis- declared and held to be scrap. In that circumstances, the redemption fine and penalty imposed on the appellant are set aside. The appeal is allowed with the direction the goods to be released immediately - decided in favor of appellant.

Summary

Issues Involved:
1. Acceptability of the Chartered Engineer report.
2. Correctness of the classification of the impugned goods by the adjudicating authority.
3. Requirement of mutilation of the goods as directed by the adjudicating authority.
4. Imposition of redemption fine and penalty on the appellant.

Comprehensive, Issue-wise Detailed Analysis:

(A) Acceptability of the Chartered Engineer report:

The Tribunal found that the Chartered Engineers who examined the goods were not metallurgical engineers and their reports were based on visual examination without any market inquiry. The Tribunal cited previous cases, such as R.G. Gupta, Pashupati Industries INC., Marvel Agencies, and Ocean Marketing, to support the position that reports based merely on visual inspection and without proper market analysis or testing cannot be relied upon. Therefore, the reports provided by the Chartered Engineers were deemed not acceptable for the assessment of the bills of entry in question.

(B) Correctness of the classification of the impugned goods by the adjudicating authority:

The Tribunal noted that no samples were drawn for testing despite several requests made by the appellant. According to the Steel and Steel Products (Quality Control) Second Order dated 12.03.2012, sub-standard or defective steel products must be disposed of as scrap following the scheme of testing and inspection of the Bureau of Indian Standards. Since the required testing and inspection were not carried out, the classification determined by the adjudicating authority was not acceptable. Consequently, the Tribunal accepted the classification declared by the appellant.

(C) Requirement of mutilation of the goods as directed by the adjudicating authority:

Given that the reports of the Chartered Engineers were not acceptable and the goods were accepted as scrap as declared by the appellant, the Tribunal held that the goods did not require mutilation. The Tribunal also referred to the Bombay High Court's decision in Madhu Sudan Metals, which held that in the absence of any rules permitting the mutilation of goods, such mutilation cannot be allowed. Therefore, the Tribunal concluded that the mutilation of the said goods could not be permitted.

(D) Imposition of redemption fine and penalty on the appellant:

Since the declaration made by the appellant was accepted and the goods were not misdeclared, the Tribunal found no grounds for imposing redemption fine and penalty. The Tribunal set aside the redemption fine and penalty imposed on the appellant.

Conclusion:

As all the issues were resolved in favor of the appellant, the Tribunal set aside the impugned order and allowed the appeal, directing that the goods be released immediately.