2013 (9) TMI 249 - AT - Customs

Import of goods - whether scrap or parts of machine - Origin of the goods - assesse had issued invoices to various re-rolling units describing goods as re-rollable goods - Held that - Revenue had not conducted any investigation to show that the purchaser of the goods in question had not used the said goods as re-rollable but had used the same as parts of steel sheet/plate bending machines - There was virtually no evidence on record to indicate that the goods in question stand utilised as parts of plate bending machines and not as scrap - the goods on examination were found to be used and old rollers appearing to be part of steel sheet/plate bending machines - As per test report the sample was a circular metallic piece made of steel having uneven flat surface on top and bottom following the judgement of Patiala Castings P. Ltd. v. Union of India 2002 (5) TMI 72 - HIGH COURT OF PUNJAB & HARYANA AT CHANDIGARH . The imported consignment consisted of old and used, rusted and waste & scrap - the consignment was of non-usable pipes mere fact that they can be used as pipes in some of the cases by itself will not lead to the conclusion that what had been imported was not scrap but pipes - it may be possible that one person considers the goods as scrap which may appear different or reusable to another. The observations of the Chartered Engineer were to the effect that such rollers after repairing/re-conditioning were capable of being used as rollers - It was well settled law that the goods had to be assessed in the condition in which they were imported - Even if some of the rollers can be put to use after some re-conditioning - the said fact will not make the imported goods as rollers to be used as parts of the machine order set aside Decided in favor of assesses.

Summary

Issues:
1. Classification of imported goods as re-rollable scrap or parts of steel sheets/plate bending machines.
2. Interpretation of test reports and certificates provided.
3. Compliance with Foreign Trade Policy regulations.
4. Imposition of duty, confiscation of goods, and penalties.

Issue 1: Classification of imported goods
The case involved the import of a consignment declared as re-rollable scrap but later contested by the Revenue as parts of steel sheets/plate bending machines. The Commissioner upheld the Revenue's view, resulting in the imposition of higher duty rates and other penalties. The Tribunal analyzed various documents, including invoices, packing lists, and certificates, to determine the nature of the imported goods. The Tribunal observed that the goods were old, used, rusted, and corroded parts of machines, as described in the documents provided by the supplier. The Chartered Engineer's report highlighted the condition of the goods, indicating that they could be used after repair/re-conditioning. However, the Tribunal emphasized that the goods must be assessed in the condition they were imported, and the fact that some items could be reused did not change their classification as scrap.

Issue 2: Interpretation of test reports and certificates
The Tribunal scrutinized the reports from the Chartered Engineer and CRCL to assess the condition and usability of the imported goods. While the Chartered Engineer's report suggested that the goods could be used as rollers after repair, the Tribunal emphasized that the goods were ordered and paid for as re-rollable scrap. The Tribunal cited legal principles that goods must be evaluated based on their imported condition, even if they could be reconditioned for use. The Tribunal also noted discrepancies in the Commissioner's reliance on the Chartered Engineer's report over the pre-shipment inspection certificate, which led to a different conclusion regarding the classification of the goods.

Issue 3: Compliance with Foreign Trade Policy regulations
The case involved an allegation of violating the provisions of the Foreign Trade Policy due to the misclassification of the imported goods. The Commissioner considered the pre-shipment inspection certificate submitted by the appellants as insufficient and relied on the Chartered Engineer's report instead. However, the Tribunal disagreed with this approach, emphasizing that the goods were consistently described as re-rollable scrap in all relevant documents, and there was no evidence to suggest otherwise. The Tribunal highlighted the importance of assessing goods based on their declared nature and the lack of conclusive evidence to support the Revenue's classification of the goods.

Issue 4: Imposition of duty, confiscation, and penalties
The impugned order imposed a duty demand, confiscation of goods, redemption fine, and penalties on the appellants based on the Commissioner's classification of the goods. However, the Tribunal overturned this decision, citing precedents from the Hon'ble High Court of Punjab & Haryana and Tribunal cases that supported the appellants' position. The Tribunal noted that there was no substantial evidence to prove that the imported goods were used as parts of machines instead of re-rollable scrap. Consequently, the Tribunal set aside the impugned order, allowing the appeal in favor of the appellants.

This detailed analysis of the judgment showcases the thorough examination of the issues involved, including the classification of imported goods, interpretation of reports and certificates, compliance with regulations, and the imposition of duties and penalties. The Tribunal's decision was based on a comprehensive review of the evidence and legal principles, ultimately leading to the reversal of the initial order and providing relief to the appellants.