2019 (6) TMI 25 - AT - Customs

Valuation of imported goods - Scrap - rejection of declared value - enhancement of value in terms of Rule 4 of the customs Valuation (Determination of value of imported goods) Rules, 2007 - HELD THAT - There are reports of Chartered Engineers which suggest that part of the material is serviceable. We have seen the pictures of material, from which it appears that it contains certain triangular shaped material which could also be used as such. However, the same can also be used as heavy melting scrap for the purpose of melting. The appellant had approached Revenue for mutilation of goods, however, the said request was not considered. We find that in the present circumstances, the appellant may be permitted to clear the scrap after mutilation at their own cost - appeal allowed - decided in favor of appellant.

Summary

Issues Involved:
1. Re-classification of imported product
2. Rejection of declared value and enhancement
3. Confiscation of material and redemption fine
4. Imposition of penalty under Section 112A (2)(i) of Customs Act, 1962
5. Examination by Chartered Engineers
6. Classification of material as prime material under heading 7226 1100
7. Request for mutilation of goods for clearance as scrap
8. Comparison with similar case of M/s Agarwal Impex

Analysis:

1. The appeal was filed against re-classification of the imported product from scrap under chapter heading 7204 to tariff heading 7220 1100. Additionally, the declared value was rejected and enhanced as per Rule 4 of the customs Valuation Rules. The impugned order also included confiscation of the material and offered redemption on payment of a fine of ?4 Lakhs.

2. The appellant's counsel argued that the imported material was heavy melting scrap and presented reports from Chartered Engineers supporting the claim that the material was not serviceable. Subsequent examinations by a committee led to the opinion that the product should be classified as prime material under heading 7226 1100, resulting in a revision of the value.

3. The counsel contended that the material was not usable and provided evidence, including pictures of the consignment, to support their claim. They requested mutilation of the goods for clearance as scrap, as they were traders of scrap intending to use the material as melting scrap. A previous case, M/s Agarwal Impex, was cited where similar circumstances led to permission for mutilation of scrap at the appellant's cost.

4. The Tribunal reviewed the reports of Chartered Engineers indicating that part of the material was serviceable and observed that the material could be used as heavy melting scrap. Citing the case of M/s Agarwal Impex, the Tribunal directed that the appellant be permitted to clear the scrap after mutilation at their own cost, similar to the terms set in the previous case.

5. In conclusion, the impugned order was set aside, and the appeal was allowed for the appellant to clear the material as scrap after mutilation, following the precedent established in the case of M/s Agarwal Impex.

Judgment Delivery:
The judgment was pronounced in the open court on 13.03.2019 by the members of the Appellate Tribunal CESTAT Ahmedabad, Mr. Ramesh Nair (Member Judicial) and Mr. Raju (Member Technical). The appellant was represented by Shri Rohit Lalwani, Advocate, while the respondent was represented by Shri S.N. Gohil, AR.