1997 (12) TMI 113 - SC - Customs

Whether the goods had been imported for the purpose of recycling in the manufacture of mono-filament yarn and the respondent was not interested in using the goods for any purpose other than as scrap? Held that - The order of the Tribunal does not discuss the merits of the case. It does not hold as a fact that the goods were scrap or that the respondent had not sought to clear as scrap what was really serviceable material or that the confiscation, redemption fine and penalty were uncalled for. Without so finding, the Tribunal could not have set aside the Collector s order and directed merely the mutilation of the goods. Appeal allowed and matter remanded to the Tribunal for being heard and disposed of on merits, uninfluenced by the judgment and order that we have set aside.

Summary

Issues:
1. Appeal against order passed by Customs, Excise and Gold (Control) Appellate Tribunal regarding import of goods.
2. Examination of imported goods revealed they were not scrap but serviceable material.
3. Tribunal's decision based on Section 24 of the Customs Act for mutilation of goods.
4. Dispute over whether Tribunal's decision was justified without discussing the merits of the case.
5. Remand of the appeal to the Tribunal for a fresh hearing on merits.

Analysis:
1. The case involves an appeal by the Revenue against an order passed by the Customs, Excise and Gold (Control) Appellate Tribunal concerning the import of goods purported to be polyethylene scrap. The Customs authorities discovered that the imported goods were plastic rolls of LDPE films and bags ready for use, not scrap, leading to the seizure of the goods.

2. The Collector of Customs issued an order directing the assessment of the goods as serviceable material, enhancement of their value, confiscation with an option for redemption on payment of a fine, and imposition of a personal penalty on the respondent. The respondent appealed this order before the Tribunal, arguing that the goods were imported for recycling purposes and not for use as scrap.

3. The Tribunal, invoking Section 24 of the Customs Act, directed the mutilation of the goods to render them fit only for recycling and not for any other purpose. It justified its decision by stating that the provision allows for denaturing or mutilation of imported goods used for multiple purposes to ensure they are chargeable to duty appropriately.

4. The Additional Solicitor General contended that the Tribunal's decision solely based on Section 24 disregarded the consequences of the offense committed by attempting to clear serviceable material as scrap. It was argued that the Tribunal's order nullified the previous penalties without examining the merits of the case.

5. The Supreme Court found that the Tribunal's order did not delve into the merits of the case or establish whether the goods were genuinely scrap or serviceable material. As a result, the Court set aside the Tribunal's decision and remanded the appeal for a fresh hearing on its merits, emphasizing that the Tribunal should consider all aspects of the case before making a decision.

6. Ultimately, the Supreme Court allowed the appeal, overturned the Tribunal's decision, and restored the case to the Tribunal for a comprehensive review. The respondent was directed to pay the costs of the appeal, ensuring a fair and thorough examination of the matter based on the merits presented during the new hearing.