1994 (7) TMI 200 - AT - Central Excise

Issues Involved:
1. Validity of import of ball bearings against the licence under Para 59 of the Policy Book AM 82-83.
2. Interpretation of Para 59 of the Policy Book AM 83.
3. Applicability of Section 111(d) and Section 112 of the Customs Act, 1962.
4. Assessment of fine in lieu of confiscation.
5. Imposition and quantum of personal penalty.

Issue-wise Detailed Analysis:

1. Validity of import of ball bearings against the licence under Para 59 of the Policy Book AM 82-83:
The appellants imported ball bearings and sought clearance under an import licence issued for spare parts needed for warranty coverage or after-sale service. The Customs authorities received information that the appellants imported banned ball bearings under this licence and sold them to traders. The appellants contended that the ball bearings were identical to those used in manufacturing vehicles and permissible under the licence. The adjudicating authority concluded that the appellants did not satisfy the licence conditions, as the ball bearings were not used as original components in their vehicles, leading to confiscation and imposition of penalties.

2. Interpretation of Para 59 of the Policy Book AM 83:
The primary issue was whether the import of ball bearings was valid under the licence issued in terms of Para 59 of the Policy Book AM 82-83. Para 59 allows the import of spares needed for warranty coverage or after-sale service, provided they were used as components at the time of manufacture. The Tribunal noted that the term 'spare' implies a part meant to replace an identical component already used in manufacturing. The Tribunal concluded that Para 59 permits the import of spares only if the original components were also imported items. Since the appellants admitted that the original components were domestically manufactured, the import of ball bearings under the licence was deemed non-permissible.

3. Applicability of Section 111(d) and Section 112 of the Customs Act, 1962:
The Tribunal examined whether the confiscation of goods and imposition of penalties under Sections 111(d) and 112 were justified. Section 111(d) pertains to the confiscation of improperly imported goods, while Section 112 deals with penalties for improper importation. The Tribunal held that since the ball bearings were not importable under the licence, the confiscation under Section 111(d) was valid. The Tribunal also upheld the imposition of penalties under Section 112 but showed leniency by reducing the personal penalty from Rs. 1,50,000/- to Rs. 1,00,000/- due to some doubt about the appellants' mala fide intentions.

4. Assessment of fine in lieu of confiscation:
The Tribunal considered the fine in lieu of confiscation assessed by the adjudicating authority. It noted that ball bearings have a high margin of profit and found no evidence to suggest that the fine was excessive. Consequently, the Tribunal did not interfere with the fine amount assessed by the adjudicating authority.

5. Imposition and quantum of personal penalty:
The Tribunal evaluated the imposition of personal penalties on the appellants. While acknowledging that there was no scope to assume the appellants acted bona fide, the Tribunal considered the licensing authority's leniency and reduced the personal penalty from Rs. 1,50,000/- to Rs. 1,00,000/- due to some doubt about the appellants' mala fide intentions.

Conclusion:
The Tribunal confirmed the confiscation of the imported ball bearings and upheld the fine in lieu of confiscation. It reduced the personal penalty to Rs. 1,00,000/- but otherwise confirmed the order in original. The appeal was disposed of accordingly, with consequential relief to follow.

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