1998 (9) TMI 300 - AT - Customs

Summary

Issues Involved:
1. Licensing requirements for import.
2. Valuation of imported goods.
3. Classification of imported goods.
4. Imposition of fines and penalties.

Issue-wise Detailed Analysis:

1. Licensing Requirements for Import:
The appellants imported used rubber tyres without a valid import license, which were not cut into two pieces as required by the Export and Import Policy 1992-97. According to the policy, second-hand goods, including used rubber tyres, require a specific import license unless they are cut into two pieces. The Commissioner held that the import was unauthorized under Sections 3(2) and 3(3) of the Foreign Trade (Development and Regulation) Act, 1992 read with Section 11 of the Customs Act, 1962, making the goods liable for confiscation under Section 111(d) of the Customs Act, 1962.

2. Valuation of Imported Goods:
The declared value of Rs. 1,000/- per metric ton CIF was rejected as it appeared to be significantly lower than the market value. The Commissioner initially relied on market inquiries and contemporaneous imports to determine the value at Rs. 3,155/- per metric ton CIF. However, the Tribunal found the market inquiry unreliable and noted that the Commissioner had improperly relied on fresh material not included in the original show cause notice. The Tribunal ultimately set aside the charges of undervaluation and accepted the declared value, citing the absence of concrete evidence from the department.

3. Classification of Imported Goods:
The Commissioner classified the tyres under Heading 4011.40 for saloon cars and Heading 4011.50 for other motor vehicles, rejecting the appellants' classification under Heading 4011.99. The Tribunal, however, determined that the tyres should be classified under Heading 4011.99, as they were used tyres not intended for immediate use on vehicles but for retreading. The Tribunal also held that countervailing duty (CVD) was applicable under Heading 4011.99, following the precedent set in the case of M.A. Export v. Collector of Customs.

4. Imposition of Fines and Penalties:
The Commissioner imposed a penalty of Rs. 8,00,000/- under Section 112(a) of the Customs Act, 1962, and a redemption fine of Rs. 8,00,000/-. The Tribunal found the penalty and fine to be excessively harsh, reducing both to Rs. 50,000/-. The Tribunal noted that there was no misdeclaration or undervaluation and that the appellants had described the goods accurately in the Bill of Entry.

Separate Judgments Delivered:
The Vice President, S.K. Bhatnagar, disagreed with the Judicial Member, S.L. Peeran, on the extent of undervaluation and the need for a fresh assessment. The matter was referred to a third member, K. Sankararaman, who concurred with the Judicial Member, leading to the final order.

Final Order:
The Tribunal set aside the charges of misdeclaration of value and misclassification. The goods were allowed to be cleared upon mutilation under Customs supervision, with the declared value accepted for basic customs duty and countervailing duty assessed under CET sub-heading 4011.99. The redemption fine and penalty were both reduced to Rs. 50,000/-.