2012 (11) TMI 639 - AT - Customs

Penalty - Prohibition on import of second hand goods Held that - Initially Tribunal had reduced fine and penalties to the range of 15% and 5% of the assessable value. From the repeated imports made by the importer it is quite clear that the fine and penalties imposed are not wiping out the profit margin, probably because the wrong value declared also. Considering the repeated nature of the offence there is need to increase this fine and penalty. But still there is no justification for increasing the penalty to about 62% and 25% of the assessable value approved - penalty reduced - appeal is allowed partially.

Summary

Issues:
1. Classification and valuation of imported goods.
2. Confiscation of goods under Customs Act.
3. Imposition of redemption fine and penalty.
4. Prohibition on import of old and used capital goods.

Classification and Valuation of Imported Goods:
The appellants imported old and used parts of photocopiers, declaring a certain value. Customs Officers, suspecting undervaluation, had a Chartered Engineer assess the goods at a higher value. The appellants claimed the goods should be classified under Tariff Item 9009 99 00, while Revenue argued for classification under Tariff Item 9009 12 00. The adjudicating authority upheld the Engineer's valuation, leading to confiscation of the goods and imposition of penalties. On appeal, the Commissioner agreed with the appellants' classification but found the Engineer's valuation unsubstantiated. The Tribunal noted that while the goods could be classified as parts of capital goods, the import of second-hand capital goods was restricted without a license, and photocopier parts did not qualify as capital goods. They reduced the penalty and fine due to repeated offenses and incorrect valuation.

Confiscation of Goods under Customs Act:
The adjudicating authority confiscated the goods under Section 111(d) of the Customs Act, citing the restriction on importing old and used capital goods without a license. The Commissioner upheld the confiscation, leading to the appeal. The Tribunal considered the repeated nature of the offense and the lack of justification for high penalties, ultimately reducing the fine and penalty imposed on the appellants.

Imposition of Redemption Fine and Penalty:
The adjudicating authority imposed a redemption fine and penalty on the appellants under Sections 111(d) and 112(a) of the Customs Act, respectively. The Commissioner upheld the redemption fine but questioned the basis of the valuation. The Tribunal, recognizing the need for increased penalties due to repeated offenses, reduced the fine and penalty amounts imposed on the appellants.

Prohibition on Import of Old and Used Capital Goods:
The import of old and used capital goods was prohibited without a license, as per para 2.17 of the Foreign Trade Policy. The appellants argued against the confiscation and penalties, citing previous Tribunal decisions and the reduction of assessable value. The Tribunal acknowledged the import restrictions on second-hand goods and the need for penalties but found the original fines excessive, reducing them in the final judgment.