1990 (3) TMI 221 - AT - Customs

Summary

Issues:
1. Imposition of penalty under Section 112(a) of the Customs Act, 1962 for importing old synthetic rags not in "completely pre-mutilated form."
2. Interpretation of "completely pre-mutilated condition" under the Import Policy of 1985-88.
3. Justifiability of penalty imposition in absence of clear definition of "complete mutilation."
4. Comparison with previous tribunal decisions regarding the concept of "complete mutilation."

Analysis:

The appeal before the Appellate Tribunal CEGAT, CALCUTTA challenged the penalty imposed by the Collector of Customs under Section 112(a) of the Customs Act, 1962, for importing 160 bales of old synthetic rags not in "completely pre-mutilated form" as claimed under the Import Policy of 1985-86. The Customs found the goods not meeting the required condition and held the import unauthorized under relevant provisions. The Adjudicating Authority imposed a penalty of Rs. 1,00,000.00 and ordered the goods to be "completely mutilated" before clearance.

The appellant's representative contended the absence of a clear definition of "complete mutilation" in the policy and argued that the imported goods were already "completely mutilated," challenging the penalty imposition. On the other hand, the Respondent's representative argued that the goods were not "completely pre-mutilated" as required, pointing out the ability to stitch and assemble them as readymade garments, thus justifying the penalty.

The Tribunal analyzed the Import Policy of 1985-88 allowing woollen rags import under OGL in "completely pre-mutilated condition." It noted the lack of a specific definition for "completely pre-mutilated condition" and emphasized that Customs could further mutilate goods if necessary for clearance. Referring to previous tribunal decisions, including one upheld by the Supreme Court, the Tribunal concluded that in the absence of a clear test for "complete mutilation," the benefit should favor importers. Citing precedents, the Tribunal set aside the penalty of Rs. 1,00,000.00 imposed on the appellants, ruling the imposition unjustifiable in this case.

In light of the above analysis, the Tribunal allowed the appeal, overturning the penalty imposition under Section 112(a) of the Customs Act, 1962. The decision highlighted the importance of clarity in defining terms like "complete mutilation" in import policies to avoid ambiguity and ensure fair treatment of importers.