2001 (2) TMI 163 - AT - Customs

Summary

Issues:
1. Classification of imported items under ITC (HS) policy.
2. Confiscation of items for lack of import license.
3. Imposition of redemption fine and penalty.

Classification of imported items under ITC (HS) policy:
The appellants imported various items covered by entries in the ITC (HS) Classification of Export and Import, which were found to be restricted for imports. The Collector confiscated the items valued at Rs. 12,31,648 under Section 111(d) of the Customs Act, 1962, and imposed a penalty of Rs. 3 lakhs under Section 112. The appellants argued that the import was of 'The Article Sound System,' and import of such professional-grade equipment could be made without a license as per ITC Circular No. 10/92-97. However, the Tribunal upheld the Collector's findings, stating that the goods were separately classified and required an import license as per the ITC (HS) classification.

Confiscation of items for lack of import license:
The appellants contended that the Hon'ble Minister's statement during the release of the ITC (HS) Classification implied that the items were freely importable without a license. The Tribunal acknowledged the Minister's statement but emphasized that it could not override the statutory status of the ITC (HS) policy. The Tribunal reduced the redemption fine from Rs. 6 lakhs to Rs. 4 lakhs, considering the circumstances and the Minister's statement as a mitigating factor.

Imposition of redemption fine and penalty:
Regarding the penalty imposed under Section 112, the Tribunal noted that the importers could have reasonably believed the items were freely importable due to the earlier policy and the Minister's statement. Citing legal precedents, the Tribunal concluded that the penalty was imposed on a technical breach of the law and was not justified. Therefore, the Tribunal set aside the penalty of Rs. 3 lakhs. In light of these findings, the Tribunal partially allowed the appeal by reducing the redemption fine and setting aside the penalty.

In conclusion, the Tribunal upheld the requirement of an import license for the restricted items under the ITC (HS) policy, reduced the redemption fine, and set aside the penalty imposed under Section 112 of the Customs Act, 1962.