2013 (11) TMI 1353 - AT - Customs

Confiscation of goods - Mis declaration of goods - Imposition of redemption fine - Import of parts of a motor cycle - whether the imported items would make a complete motor bike or not - Held that - even the Chartered Engineer appointed by the department stated that fuel tank assembly, rear wheel assembly, front wheel assembly, steering assembly and frame assembly would be required to complete the motor cycle - motor cycle parts or the items mentioned above cannot be treated as a complete motorcycle in terms of the Rules of the Interpretation of Customs Tariff. According to the Rules of Interpretation, an article which is incomplete or unfinished and has the essential character of the complete or finished product has to be treated as finished product and classified accordingly. We cannot imagine a complete motor cycle without two wheels, fuel tank, etc. Therefore, even though both the appellants had admitted the classification of the item as a full motor cycle and the department has treated the same accordingly, we cannot uphold this view. appellants have apparently planned the import of these items through their friends in consultation with mechanic and deliberately declared only as motor cycle engine . Even assuming that it was a gift, even if we accept that engines were gift, we cannot imagine a situation where a friend would send motor cycle engine and various other parts without informing the friend as to what are the items he has sent - similar items have been sent as a gift by two different persons from Singapore to two persons in India which would clearly go against the claim of the appellants that parts of the motor cycles were sent by them were gifts. Therefore, this is a case of mis-declaration and therefore, the confiscation of the goods is in order and the redemption fine was imposable. However, there is no finding to the contrary in respect of the claim made by the appellants that motor cycles were imported for their own use and a mechanic would convert to a motor cycle by assembling local parts. Therefore, the redemption fine appears to be slightly excessive. appellants cannot be considered as innocent and they have indulged in mis-declaration of the goods and therefore, penalty imposed is also in order. Nevertheless, our observations as regards redemption fine would apply to the penalty also - redemption fine and the penalty to reduced 50% of the actual amounts imposed on the appellants which, in our opinion, would meet ends of justice - Decided partly in favour of assessee.

Summary

Issues:
Classification of imported goods as 'Motor Cycle', mis-declaration, imposition of redemption fine and penalty, requirement of Bank Guarantee, whether imported items constitute a complete motorbike, mis-declaration by the appellants, reduction of redemption fine and penalty.

Classification of Goods:
The appellants imported goods classified as 'Motor Cycle' but claimed they were parts sent as gifts to assemble locally. The Chartered Engineer assessed the goods' value at Rs. 3.78 lakhs. The Tribunal analyzed the essential components required to complete a motorbike and concluded that the imported items did not constitute a complete motorbike as per Customs Tariff rules.

Mis-Declaration and Penalty:
The appellants declared the goods as 'motorcycle engine' despite importing various parts along with the engine. The Tribunal found the appellants had planned the import with misrepresentation and upheld the mis-declaration charge. However, considering the appellants' acceptance of value and payment of applicable duty, a lenient view was taken, reducing the redemption fine and penalty by 50%.

Bank Guarantee Requirement:
The Tribunal decided that the Bank Guarantees executed by the appellants need not be retained by the Revenue, given the reduction in redemption fine and penalty. The judgment aimed to balance justice by reducing the financial burden on the appellants while acknowledging their involvement in mis-declaration.

This comprehensive analysis of the judgment highlights the key issues of classification, mis-declaration, penalty imposition, and Bank Guarantee requirement. The Tribunal's decision to reduce the redemption fine and penalty by 50% while eliminating the need for Bank Guarantees demonstrates a nuanced approach to addressing the complexities of the case.