1988 (6) TMI 231 - AT - Customs

Issues Involved:

1. Validity of Import License for Pneumatic Tools
2. Classification of Imported Goods as Hand Tools or Capital Goods
3. Justification of Confiscation Order
4. Appropriateness of Imposed Fine

Issue-wise Detailed Analysis:

1. Validity of Import License for Pneumatic Tools:

The appellants, manufacturers of air and gas compressors and rock drilling equipment, imported 18 Torque Wrenches and sought clearance against Import Licence No. P/D/1940334, dated 24-11-1981. The Customs objected, arguing that the imported goods were pneumatic tools classified as 'capital goods,' requiring a specific license. The appellants contended that the goods were covered under Sl. No. 547(8) and 547(17) of Appendix 5 of the Policy AM 82, which allowed the import of hand tools and torque wrenches. The appellants cited previous clearances of identical goods under similar licenses during Policy AM 79, arguing that the policies were identical for the relevant periods. The appellants relied on certificates from the Central Machine Tools and the Indian Institute of Technology, Bombay, asserting that the imported tools were torque wrenches.

2. Classification of Imported Goods as Hand Tools or Capital Goods:

The Deputy Collector of Customs did not accept the appellants' contention and ordered confiscation, allowing redemption on payment of a fine. The Collector (Appeals) upheld this decision. The appellants argued that the tools were torque wrenches, supported by catalogues and certificates. The Customs authorities classified the tools under Chapter 84 of the Customs Tariff Act, which pertains to machinery, not hand tools. The expression "hand tools" was not defined in the Policy, and the Deputy Collector linked Sl. No. 547(8) of Appendix 5 with Sl. No. 675(8) of Appendix 3, which dealt with forged hand tools. The classification under Chapter 84 indicated that the tools were machinery, supporting the view that they were not hand tools.

3. Justification of Confiscation Order:

The authorities held that the 18 Torque Wrenches were not covered by the license and were capital goods requiring a specific license. The appellants' reliance on catalogues and certificates did not conclusively prove that the imported goods were torque wrenches. The description in the invoice as 'Impactool' and the lack of a copy of the order placed with the foreign supplier weakened the appellants' case. The Deputy Collector's decision to link the imported goods with machinery under Chapter 84 was justified, leading to the conclusion that the confiscation order could not be assailed.

4. Appropriateness of Imposed Fine:

The Deputy Collector imposed a fine of Rs. 50,000, which was confirmed by the Collector (Appeals). The value of the imported goods was Rs. 66,068. The Deputy Collector acknowledged that previous clearances of similar items under similar licenses might have guided the importers, suggesting a lenient view. However, the fine imposed was almost equivalent to 100% of the cif value. The Collector (Appeals) justified the fine based on the market price of the goods, but this was not substantiated. The appellants argued that identical imports were previously cleared without objections, and the policies for AM 79 and AM 82 were identical. The absence of any Public Notice or Trade Notice altering the scope of entries 547 of the Policy AM-82 further supported the appellants' case. The authorities' view that fines should always be levied when goods are liable to confiscation was incorrect. Given the bona fides of the importers, the fine was deemed harsh and unjustified.

Conclusion:

The order of confiscation was confirmed, but the fine was set aside. The fine, if paid, was to be refunded to the appellants.

← Previous Next →