1998 (10) TMI 145 - AT - Customs

Summary

Issues:
1. Claim of exemption under Notification No. 16/85-Cus. and Exim Policy 1993 Appendix 1.
2. Confiscation of imported band knife cutting machine.
3. Misdeclaration of the value of the goods.
4. Imposition of penalty under Section 12 of the Customs Act, 1962.

Analysis:

Claim of Exemption: The appellants imported a band knife cutting machine and sought exemption under Notification No. 16/85-Cus. and Exim Policy 1993 Appendix 1. The Customs authorities confiscated the machine, stating it was a general-purpose machine not solely for the garment/hosiery industry. The appellants argued that the machine was suitable for use in the textile and plastic industry, enabling precise cutting of materials, thus qualifying for exemption. The Tribunal agreed with the appellants, emphasizing that the machine was intended for use in the garment/hosiery industries, granting the benefit of exemption and Open General License (OGL).

Confiscation of Machine: The Customs authorities confiscated the imported machine due to the denial of exemption benefits and misdeclaration of value. However, the Tribunal ruled in favor of the appellants, stating that the machine was indeed intended for use in the garment/hosiery industries, making it eligible for exemption and OGL. Consequently, the confiscation was deemed unjustified, and the machine was allowed to be redeemed upon payment of a fine.

Misdeclaration of Value: The Customs authorities alleged misdeclaration of the goods' value, as a slip found with the machine indicated a price higher than the declared value. The appellants argued that the declared price was negotiated due to wear and tear during an exhibition, justifying the lower value. The Tribunal accepted the appellants' explanation, ruling that the negotiated price was correct, and the misdeclaration charge was unsubstantiated. The penalty imposed under Section 12 of the Customs Act was set aside.

Imposition of Penalty: The Customs authorities imposed a penalty of Rs. 50,000 under Section 12 of the Customs Act for alleged misdeclaration of the goods' value. However, the Tribunal found no grounds for sustaining the penalty, considering the marginal difference in prices and the appellants' bona fide belief in the correctness of the declared value. Therefore, the penalty was revoked, and the appeal was disposed of in favor of the appellants.

This comprehensive analysis of the judgment highlights the key issues addressed by the Appellate Tribunal CEGAT, New Delhi, regarding the exemption claim, confiscation of the machine, misdeclaration of value, and imposition of penalties under the Customs Act, 1962.