2020 (1) TMI 947 - AT - Customs

Confiscation - imposition of redemption fine and penalty - classification of goods - heavy melting scrap - legality of reports of the Chartered Engineers for change of classification - 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 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, 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 - in the absence of any rules framed for mutilation, the mutilation of the said goods cannot be allowed. 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. Appeal allowed - decided in favor of appellant.

Summary

Issues:
(A) Acceptability of Chartered Engineer report
(B) Correctness of classification without test report
(C) Necessity of mutilation of goods
(D) Imposition of redemption fine and penalty

Issue (A) - Acceptability of Chartered Engineer report:
The Tribunal analyzed the Chartered Engineer reports, emphasizing that reports based solely on visual examination without market inquiry are not acceptable. Citing precedents, the Tribunal highlighted that reports lacking concrete evidence or expertise in the relevant field cannot be relied upon. The decision underscored the importance of thorough examination and market survey for accurate assessment, ultimately concluding that the Chartered Engineers' reports in this case were inadequate for bill of entry assessment.

Issue (B) - Correctness of classification without test report:
The Tribunal noted the absence of testing despite requests, contrary to the Steel and Steel Products (Quality Control) second order's provisions. Since the goods were not tested as required by regulations, the classification determined by the adjudicating authority was deemed unacceptable. Consequently, the classification declared by the appellant was upheld as valid.

Issue (C) - Necessity of mutilation of goods:
Given the rejection of Chartered Engineers' reports and acceptance of the goods as scrap, the Tribunal ruled that mutilation was unnecessary. Referring to legal precedents and the absence of rules permitting mutilation, the decision emphasized that in the absence of specific regulations, mutilation cannot be mandated. Therefore, the directive for mutilation was deemed improper in this context.

Issue (D) - Imposition of redemption fine and penalty:
As the appellant's declaration was accepted and the goods were not mis-declared but recognized as scrap, the redemption fine and penalty imposed were overturned. The decision highlighted that in such circumstances, where the goods were correctly declared, penalties should not be levied. Consequently, the redemption fine and penalty imposed on the appellant were set aside.

In conclusion, the Tribunal set aside the impugned order and allowed the appeal, providing consequential relief as necessary. The comprehensive analysis of each issue highlighted the importance of adherence to regulations, expert examination, and accurate classification in customs matters, ensuring fair treatment and appropriate penalties in line with legal provisions.