1997 (11) TMI 325 - AT - Customs

Issues Involved:
1. Confiscation of Embroidery Machines
2. Misdeclaration of Age of Machines
3. Requirement of Import License
4. Alleged Undervaluation of Machines
5. Imposition of Penalty

Issue-wise Detailed Analysis:

1. Confiscation of Embroidery Machines:
The Commissioner of Customs ordered the confiscation of embroidery machines under Sections 111(d) and 111(m) of the Customs Act, 1962, but allowed redemption on a fine of Rs. 50,000. The machines were imported under Bill of Entry No. 106797 and Bill of Entry No. 107131. The adjudicating authority found that the machines were more than 7 years old, violating import conditions. However, the Tribunal noted that the Commissioner himself observed that the age of the machine could not be judged correctly by its appearance, and the Chartered Engineer's Certificate should not have been dismissed. The Tribunal concluded that the confiscation and fine were not justified.

2. Misdeclaration of Age of Machines:
The importer was charged with misdeclaring the age of the machines to circumvent ITC provisions and evade customs duty. The Commissioner found that the machines were reconditioned and appeared new, which could mislead purchasers. The Tribunal noted that the Commissioner himself acknowledged the difficulty in determining the age of the machines and that there was no deliberate misdeclaration. The Tribunal held that the benefit of doubt should be given to the importer regarding the age of the machines.

3. Requirement of Import License:
The Import Policy 1992-97 allowed the import of second-hand capital goods without a license if they were not more than 7 years old and had a minimum residual life of 5 years. The Commissioner found that the machines were more than 7 years old but noted that such machines could still be imported under an import license. The Tribunal agreed with the Commissioner's observation that the violation was of minor consequence and did not warrant severe penalties.

4. Alleged Undervaluation of Machines:
The Commissioner observed that there was no evidence of under-invoicing, and the value declared by the importer was correct. The total assessable value arrived at was Rs. 3,92,305, with a differential duty of Rs. 46,896. The Tribunal found no evidence of deliberate undervaluation or suppression of value by the importer.

5. Imposition of Penalty:
The Commissioner imposed a penalty of Rs. 10,000 under Section 112(a) of the Customs Act, 1962. The Tribunal noted that the Commissioner himself found no deliberate attempt to suppress the value or misdeclare the machines. The Tribunal relied on several judgments, including Akbar Badruddin Jiwani v. Collector of Customs, which held that confiscation and penalty cannot be imposed in the absence of mens rea. The Tribunal set aside the order of confiscation, redemption fine, and penalty, allowing the appeal.

Conclusion:
The Tribunal concluded that the evidence did not support the charges of misdeclaration, undervaluation, or deliberate violation of import conditions. The benefit of doubt was given to the importer regarding the age of the machines. The order of confiscation, redemption fine of Rs. 50,000, and penalty of Rs. 10,000 was set aside, and the appeal was allowed.

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