2023 (11) TMI 489 - AT - Customs

Incorrect declaration of the description, value and classification of the imported goods - Replica Fire Arms - daggers and swords - rejection of declared value - import of replicas of contemporary or modern firearms would be subject to the submission of a certificate of innocuousness from the manufacturing company of the country of Export or not - Absolute Confiscation - penalty - non-application of mind - HELD THAT - On perusal of the impugned order, it is found that the same is repetition of the order in original passed by the adjudicating authority - the learned counsel for the appellant is agreed upon that the impugned order lacks application of mind, in as much as it is verbatim the same as the order under challenge. Neither the applicability of the legal provisions particularly with reference to the Arms Act and the Rules and various notifications have been considered nor any reasoning has been given with reference thereto by the Commissioner (Appeals) though being the first appellate authority. The impugned order is therefore unsustainable and deserves to be set aside with a direction to the appellate authority to consider the appeal and decide the same giving proper and substantive reasoning in support thereof. Since the impugned order does not reflect any application of mind, it would be appropriate to remand the appeal to the Commissioner (Appeals) to discuss the issues on merit - appeal allowed by way of remand.

Summary

Issues Involved:
1. Classification and valuation of imported goods.
2. Compliance with Arms Act and Foreign Trade Policy.
3. Application of principles of natural justice.

Summary:

Issue 1: Classification and Valuation of Imported Goods
The appellant filed Bill of Entry No.7205764 for clearance of goods described as "Decoration and Gift Articles, Replica Weapons for display purpose." The goods were declared under CTH 8306 29 90 and 4203 40 90. Upon examination, the goods were found to be "Antique Finished Pistols," "Antique Finished Rifles," and "Antique Finished Carbine Guns," which appeared to be articles of lethal weapons. The Department reclassified the goods under CTH 9304 00 00 and CTH 9307 00 00 and rejected the declared assessable value, re-determining it at Rs.31,80,469/-. The goods were ordered for absolute confiscation and penalties were imposed under Sections 112(a) and 114(AA) of the Customs Act, 1962.

Issue 2: Compliance with Arms Act and Foreign Trade Policy
The Department issued a show cause notice alleging incorrect declaration and contravention of Section 46(4) of the Customs Act read with Rule 11 of the Foreign Trade Regulation Rules, 1993. The appellant was accused of importing "Replica Fire Arms" convertible into firearms without a license from DGFT, and "daggers" and "swords" with blade sizes more than 9 inches without fulfilling requirements specified in MHA Notifications. The appellant argued that the goods do not fall within the definition of "firearms" under Section 2(1)(e) of the Arms Act, 1959, and referred to an earlier FSL report and MHA Notification No.2461(E) dated 18.07.2016, which exempted replica firearms from the Arms Act.

Issue 3: Application of Principles of Natural Justice
The appellant contended that the impugned order lacked application of mind and violated principles of natural justice. The Tribunal observed that the appellate authority merely repeated the order-in-original without considering the legal provisions and notifications. The Tribunal found the impugned order unsustainable and remanded the matter to the Commissioner (Appeals) for reconsideration with proper reasoning.

Conclusion:
The appeal was allowed by way of remand, directing the Commissioner (Appeals) to reconsider the issues on merit and provide substantive reasoning in support of the decision. The Tribunal refrained from commenting on the merits of the matter.