2019 (7) TMI 912 - AT - Customs

Confiscation - Drill Bits - classification and valuation - non-declared goods - HELD THAT - The goods, admittedly, were not declared as such but subsequently found to be usable and serviceable. It is seen from the orders of the lower authorities that, despite the quantities being in excess of declaration and the appellant herein having been placed on notice about its capability of being used, no steps were taken by the importer to seek a technical or expert opinion. In these circumstances, examination report to the effect that the undeclared drill bits were new and serviceable must be accepted - There is no evidence on record to show that the drill bits, weighing 1107 kgs and assessed as such, would not have been used for that purpose. Accordingly, the classification ordered by the lower authorities cannot be faulted. Confiscation - redemption fine - penalty - HELD THAT - There is no doubt that the goods that were imported were also drill bits but described as scrap. There is also no evidence that the drill bits were sold or disposed off as drill bits . From the unescapable fact that the undeclared drill bits constituted just a mere 5% of the total consignment, it would appear that there has been no deliberate attempt to mis-declare on the part of the importer - the confiscation of the goods under section 112(m) of Customs Act, 1962 and the imposition of redemption fine, along with penalties, does not appear to be sustainable in law. Appeal allowed in part.

Summary

Issues: Valuation and confiscation of undeclared drill bits; Classification of goods as scrap or usable drill bits; Discrepancy in valuation compared to other drill bits

Issue 1: Valuation and confiscation of undeclared drill bits
The case involves an appeal against the order of confiscation and imposition of penalties on undeclared drill bits found during the import of alloy scrap dull bits. The appellant argued that the drill bits were melting scrap, supported by pre-shipment inspection certificates and supplier letters. They contested the valuation, citing disproportionate assessment compared to other drill bits. The Tribunal noted the lack of expert opinion sought by the importer despite being notified about the drill bits' usability. The examination report confirmed the drill bits were new and serviceable, leading to the acceptance of the classification by the lower authorities.

Issue 2: Classification of goods as scrap or usable drill bits
The central dispute revolved around whether the undeclared drill bits should be classified as scrap or usable items. The Tribunal observed that the drill bits were not declared as such but were found to be serviceable. Despite constituting only 5% of the total consignment, there was no evidence of deliberate misdeclaration. As the drill bits were not sold or disposed of as such, the confiscation under section 111(m) of the Customs Act and the associated penalties were deemed unsustainable. The Tribunal modified the impugned order by setting aside the confiscation, redemption fine, and penalties based on this analysis.

Issue 3: Discrepancy in valuation compared to other drill bits
The appellant raised concerns about the valuation of the goods, highlighting a significant difference in assessment compared to other drill bits. They relied on precedents and legal definitions to support their argument. However, the Tribunal emphasized the lack of action taken by the importer to seek expert opinion or challenge the examination report. The Tribunal found no evidence to dispute the intended use of the drill bits and upheld the classification ordered by the lower authorities. Consequently, the valuation discrepancy argument was not sustained, and the classification of the goods as usable drill bits was maintained.

In conclusion, the Tribunal addressed the issues of valuation, classification, and confiscation in the context of the undeclared drill bits, ultimately modifying the impugned order to set aside the confiscation, redemption fine, and penalties based on the findings related to the usability and misdeclaration aspects of the goods.