2008 (2) TMI 128 - AT - Customs

Mutilation of goods rejected by commissioner on ground that importer is trader importer, not manufacturer importer is not justified when out of four containers only one container had tor/ribbed steel bars instead of Heavy Melting Scrap, it can t be said that fresh material was attempted to be imported as HMS request for mutilation (convert steel bars in scrap) shows bonafide of importer goods should not be confiscated but allowed to be mutilated, and then release them as Scrap to importer

Summary

Issues: Classification of imported goods, detention of goods, request for mutilation, applicability of Customs Act provisions, Board's instructions, reliance on Supreme Court judgment, release of goods after mutilation, confiscation, penalty, redemption fine.

Classification of Imported Goods:
The case involved the classification of imported goods, specifically Heavy Melting Scrap (HMS) imported by the trader importers. The Bill of Entry classified the goods as HMS under Tariff Heading 7204.49 of the Customs Tariff Act, claiming a concessional rate of duty. However, upon inspection, one container was found to contain tor/ribbed steel bars instead of HMS, leading to detention by customs authorities.

Detention of Goods:
Customs authorities detained one container out of five due to doubts about the description of the material. The container was found to contain steel bars instead of the declared HMS. The appellants requested release after mutilation, but the authorities seized the goods, suspecting misclassification and higher customs duty implications.

Request for Mutilation:
The appellants repeatedly requested mutilation of the goods to render them as scrap, satisfying customs officials about the nature of the material. They cited similar cases where mutilation was allowed for serviceable material found in scrap. The authorities, however, initially refused the request, leading to the appeal.

Applicability of Customs Act Provisions:
The appellants invoked Section 24 of the Customs Act, 1962, which allows for mutilation of imported goods. They argued that the request for mutilation should have been considered favorably by the authorities to demonstrate the material as waste and scrap.

Board's Instructions and Supreme Court Judgment:
The appellants referred to Board's instructions allowing mutilation when serviceable goods are noticed in scrap. They distinguished their case from a Supreme Court judgment where respondents expressed willingness for mutilation but did not formally request it. The appellants' repeated formal requests for mutilation demonstrated their bona fides.

Release of Goods After Mutilation:
The tribunal directed the release of offending goods after effective mutilation under customs supervision, classifying the scrap under the appropriate tariff heading. Confiscation, penalty, and redemption fine imposed by lower authorities were set aside, emphasizing that the goods were to be released as scrap after mutilation.

This comprehensive analysis of the judgment highlights the issues of classification, detention, mutilation request, legal provisions, instructions, judicial precedents, and the final decision regarding the release of goods after mutilation.