1985 (4) TMI 166 - AT - Central Excise

Issues Involved:
1. Classification of imported goods as "stock lot" or "disposal goods".
2. Validity of import license for the imported goods.
3. Compliance with Clause 5(3)(iii) of the Import (Control) Order, 1955.
4. Burden of proof regarding classification of goods.
5. Interpretation of the term "disposal goods".

Detailed Analysis:

1. Classification of Imported Goods as "Stock Lot" or "Disposal Goods"
The primary issue was whether the imported Optical Rough Blanks were "stock lot" or "disposal goods." The Customs authorities initially categorized the goods as "stock lot" or "disposal goods," which are prohibited under Clause 5(3)(iii) of the Import Control Order, 1955. The appellants contended that the goods were first-quality, new goods in original packing and not "disposal goods." The Deputy Collector and the Appellate Collector had differing views on the classification, with the former labeling them as "stock lot" and the latter as "disposal goods."

2. Validity of Import License for the Imported Goods
The appellants sought clearance of the imported goods against their Import License. The Customs authorities argued that the license did not specifically endorse the import of "stock lot" goods, making the import unauthorized. The appellants maintained that their license covered the imported goods, which were raw materials for manufacturing lenses.

3. Compliance with Clause 5(3)(iii) of the Import (Control) Order, 1955
Clause 5(3)(iii) prohibits the import of "disposal goods." The Customs authorities issued a show cause notice alleging that the goods were "stock lot" or "disposal goods," thus violating this clause. The appellants argued that the goods did not fall under the prohibited category and that the term "disposal goods" typically refers to second-hand or used goods, not new raw materials like Optical Rough Blanks.

4. Burden of Proof Regarding Classification of Goods
The burden of proof lay on the department to establish that the goods were "disposal goods." The department based its classification on factors such as the goods being in assorted quantities and designs, stocked by a stockist in Singapore, and received on a weight basis. However, the appellants argued that these criteria were insufficient to classify the goods as "disposal goods."

5. Interpretation of the Term "Disposal Goods"
The term "disposal goods" was not defined in the Imports & Exports (Control) Act, the Import (Control) Order, or the Import Policy. The Appellate Collector referred to a Central Board of Excise & Customs order, which characterized "disposal goods" as those sold in "as-is-where-is" condition, often at reduced prices, with the seller anxious to get rid of them. The appellants argued that their goods did not meet these criteria.

Judgment Summary:

The Tribunal carefully considered the submissions and records. It found that the Deputy Collector did not provide sufficient reasons for the confiscation order and that the Appellate Collector made a distinction between "stock lot" and "disposal goods" without a clear finding on the classification of the imported goods. The Tribunal noted that what is prohibited under Clause 5(3)(iii) is "disposal goods," not "stock lot" or "job lot" goods.

The Tribunal held that the department failed to establish that the imported goods were "disposal goods." The department did not provide evidence to show that the goods were sold at a reduced price, in "as-is-where-is" condition, or that the seller was anxious to get rid of them. The appellants' claim that the goods were first-quality, new, and in original packing remained uncontested.

The Tribunal concluded that the goods were not "disposal goods" and, therefore, the import was not prohibited under Clause 5(3)(iii). The appeal was allowed, and the orders of the lower authorities were set aside, granting the appellants consequential relief.

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