1989 (9) TMI 267 - AT - Customs

Summary

Issues Involved:
1. Clubbing of consignments.
2. Unauthorized import.
3. Under-valuation.
4. Personal penalty on M/s. Mahendra Mechanical Industries.

Detailed Analysis:

1. Clubbing of Consignments:
The primary issue revolves around the Custom House's decision to club two separate consignments imported by M/s. Kakar Toys Industries and M/s. Mahendra Mechanical Industries. The Custom House argued that the mechanism imported by M/s. Kakar Toys Industries and the plastic components imported by M/s. Mahendra Mechanical Industries, when combined, would form complete toys, which are banned items under the Import Policy. The appellants contended that the two firms are independent entities with no relation to each other, and thus, their consignments should not be clubbed. The tribunal found that there was no direct evidence linking the two firms and that the Custom House's clubbing of the consignments was based on assumptions rather than concrete evidence. The tribunal referred to precedent cases, such as Collector of Customs, Calcutta v. Mitsuny Electronic Works, where it was held that consignments cannot be clubbed merely based on their arrival time or other coincidental factors.

2. Unauthorized Import:
The Custom House alleged that the import of complete toys, split into two consignments, violated Import Trade Control Regulations. The tribunal noted that the Custom House's case was built on the clubbing of consignments, which was not substantiated by sufficient evidence. The tribunal highlighted that M/s. Kakar Toys Industries had independently settled the price with the supplier after correspondence and inquiries with other suppliers, indicating a legitimate import process. Therefore, the charge of unauthorized import could not be upheld without valid grounds for clubbing the consignments.

3. Under-valuation:
The Custom House accused the appellants of under-valuing the imported goods by comparing the combined value of the two consignments to the value of complete toys. The tribunal found that the enhancement of the value was based on the erroneous clubbing of the consignments. Since there was no valid ground for clubbing, the charge of under-valuation also failed. The tribunal emphasized that no direct evidence was provided to support the claim of under-valuation, and the comparison should have been made with the value of comparable mechanisms rather than complete toys.

4. Personal Penalty on M/s. Mahendra Mechanical Industries:
The Custom House imposed a personal penalty on M/s. Mahendra Mechanical Industries based on the assumption that their consignment was part of the same import as M/s. Kakar Toys Industries. The tribunal noted that M/s. Mahendra Mechanical Industries had abandoned the goods under Section 23(2) of the Customs Act, 1962, before the issuance of the show cause notice and the start of adjudication proceedings. Since the clubbing of consignments was not supported by evidence, the personal penalty on M/s. Mahendra Mechanical Industries could not be justified. The tribunal set aside the personal penalty but maintained the order of absolute confiscation of their consignment.

Conclusion:
The tribunal allowed the appeal of M/s. Kakar Toys Industries, setting aside the charges of unauthorized import and under-valuation due to the lack of valid grounds for clubbing the consignments. The personal penalty on M/s. Mahendra Mechanical Industries was also set aside, while the order of absolute confiscation of their consignment was maintained. The appeals were disposed of accordingly.