2024 (1) TMI 195 - AT - Customs

Valuation of imported goods - secondary quality rusted pipes - rejection of declared value - enhancement of value - Department was of the view that these rusted pipes are serviceable and cannot be considered as 'scrap'. Whether the 22 MTs of goods imported as scrap is liable for confiscation or not? - HELD THAT - From the impugned order, it is seen that the department has concluded that the goods are not scrap and are in the nature of serviceable pipes only on visual examination. The Commissioner (Appeals) has observed that the department has not adduced any documentary evidence in the nature of expert opinion so as to arrive at the conclusion that the goods are not scrap. When there is such categorical finding by the Commissioner (Appeals) and the Department has not adduced any evidence to show that the goods imported are not scrap but are serviceable pipes, the confiscation is not justified. Further, it is also seen that the appellant had requested for mutilation of the said quantity of goods before home clearance. The said request has not been considered by the department. The request for mutilation of the goods would show bonafides of the appellant that they intended only to import scrap and not pipes which are to be reused. It is also seen that the value of 22 MTs of goods has been enhanced by the original authority from USD 370 per MT to USD 600 per MT which is incorrect as department has not established that the goods are not scrap. Thus, the confiscation of goods as well as enhancement of value cannot be justified - the impugned order is modified to the extent of setting aside the enhancement of value of 22 MTs of goods as well as confiscation of the same - redemption fine and penalty imposed are also set aside - appeal allowed in part.

Summary

Issues involved:
The issues involved in the judgment are the confiscation of goods declared as scrap, the enhancement of value of the goods, and the imposition of redemption fine and penalty under the Customs Act, 1962.

Confiscation of Goods:
The appellant imported goods declared as "Heavy Melting Iron Scrap of 46.47 MTs", but upon examination, it was found that 22 MTs contained secondary quality rusted pipes. The Department contended that these pipes were serviceable and not scrap. The original authority rejected the declared value, enhanced the value of the 22 MTs of goods, and ordered for their confiscation with an option for redemption on payment of a fine. The Commissioner (Appeals) reduced the redemption fine and penalty, but the appellant appealed to the Tribunal against this decision.

Expert Opinion and Nature of Goods:
The appellant argued that the Department did not produce any expert opinion to establish that the 22 MTs of goods were not scrap but serviceable pipes. The Commissioner (Appeals) acknowledged the absence of expert opinion and stated that without such evidence, it cannot be concluded that the goods are not scrap. The appellant also requested for mutilation of the goods to render them as scrap before clearance, but this request was not considered by the authorities.

Decision and Rationale:
The Tribunal noted that there was no expert opinion provided by the Department to prove that the imported goods were not scrap but serviceable pipes. The Commissioner (Appeals) had also highlighted this lack of evidence. Additionally, the appellant's request for mutilation of the goods indicated their intention to import scrap, not pipes for reuse. The Tribunal held that the confiscation of the goods and the enhancement of their value were not justified. Consequently, the impugned order was modified to set aside the enhancement of value, confiscation of the goods, redemption fine, and penalty. The appeal was partly allowed in favor of the appellant.