2023 (10) TMI 824 - AT - Customs

Import of old and used parts of plate leveler machines - requirement of possession of valid licence for import - Valuation of imported goods - redetermination of value by recourse to rule 9 of Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 - confiscation - penalty. Description of the goods - HELD THAT - The appellant has chosen to describe the goods as plate leveller in the bill of entry and, in accordance with section 17 and section 47 of Customs Act, 1962, there is no reason to expect a different classification to be substituted. Even now, it is not their claim that goods are scrap but merely that it is not intended to be erected as machinery and the goods, in disassembled form, have not been claimed to fit any other classification with declaration disowned as in error. Usage after import is not a criterion for classification. Therefore, the goods merit assessment in accordance with the declaration. The goods are admittedly of 1942 vintage and it is seen that paragraph 2.31 of the Foreign Trade Policy restricts second hand goods other than capital goods and, as it is not the case of customs authorities that these are not capital goods , the impugned goods would be freely importable. Consequently, confiscation under section 111(d) of Customs Act, 1962 lacks authority of law. Value for assessment - HELD THAT - The system for valuation in Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 for operation of section 14 of Customs Act, 1962 has neither been followed by the adjudicating authority nor such departure taken note of in the impugned order. The law exists for a purpose and that purpose must be served. Appeal allowed.

Summary

Issues involved:
The issues involved in this legal judgment are the import of 'old and used parts of plate leveler machines' against a bill of entry, redetermination of value under Customs Valuation Rules, confiscation of goods, misdeclaration of value, and imposition of penalty under Customs Act.

Import of 'old and used parts of plate leveler machines':
The appellant, M/s Jindal Saw Limited, challenged the redetermination of value for the import of 'old and used parts of plate leveler machines' against a bill of entry. The appellant claimed that the goods were nothing but scrap, as the plate leveler had been manufactured in 1942 and dismantled, rendering it unfit for use. The appellant argued that the certification from a chartered engineer supported their claim, and the relationship with the supplier did not influence the price. They also disputed the valuation methodology adopted by the customs authorities.

Confiscation of goods and misdeclaration of value:
The Commissioner of Customs upheld the redetermination of value to be higher than declared, leading to the confiscation of the goods under section 111(d) of the Customs Act for not having a valid import license and under section 111(m) for misdeclaration of value. The appellant contended that the goods were imported in a disassembled and unusable state, resembling scrap, and should be assessed based on the declaration.

Imposition of penalty under Customs Act:
A penalty of Rs. 3,50,000 was imposed under section 112 of the Customs Act, 1962. The appellant argued that the contraventions were discovered post-clearance and cited precedents to support their case that accompanying documents did not have to be accepted in such cases.

Valuation under Customs Valuation Rules:
The valuation of the imported goods was disputed, with the declared value being based on a sale contract with a related person. The customs authorities rejected the declared value, citing a report from an overseas chartered engineer. The appellant claimed that the goods were scrap, while the authorities argued that the parts were serviceable. The legal provisions under Customs Valuation Rules were analyzed, emphasizing the need for proper justification before redetermination of value.

Conclusion:
The Tribunal set aside the impugned order, noting that the Customs Valuation Rules were not followed in determining the value of the imported goods. The judgment highlighted the importance of adhering to the rules and procedures for valuation under the Customs Act, ultimately allowing the appeal of M/s Jindal Saw Limited.