2014 (5) TMI 786 - AT - Customs

Confiscation of goods - Goods declared as waste and scrap - On examination it was found that 50% of the goods are scrap but defective and serviceable and remaining 50% are unserviceable and scrap - Adjudicating authority allowed appeal and declared goods as scrap - Held that - report filed by M/s. Anand Kulkarni & Associates itself is contradictory and examination report of M/s. SGS India Pvt. Ltd. clearly state that the goods are scrap. We further find that as the goods were found that the goods are bits which are used in the rigs. It is a clearcut observation that these bits are damaged and broken. Therefore, they cannot be used as such. In these circumstances, as held by the Hon ble High Court of Punjab & Haryana in the case of Patiala Castings P. Ltd. v. UOI - 2002 (5) TMI 72 - HIGH COURT OF PUNJAB & HARYANA AT CHANDIGARH and Board circular dated 12-5-2000, it is clearly held that if the goods are serviceable but cannot be used as such then it is to be treated as scrap. - Decided against Revenue.

Summary

Issues:
1. Classification of imported consignment as waste and scrap.
2. Confiscation and penalty imposed by adjudicating authority.
3. Contradictory valuation reports by M/s. Anand Kulkarni & Associates and M/s. SGS India Pvt. Ltd.
4. Acceptance of declared value by customs authorities.

Analysis:
1. The case involved the classification of an imported consignment declared as high speed steel scrap under heading 7204.29 of the Customs Tariff Act, 1975. Upon examination, it was found that 50% of the goods were serviceable scrap and the remaining 50% were unserviceable scrap. The adjudicating authority confiscated the consignment and imposed fines. The appellant challenged this decision, leading to an appeal before the Commissioner (Appeals) and subsequently before the Tribunal.

2. The Tribunal considered the reports submitted by M/s. Anand Kulkarni & Associates and M/s. SGS India Pvt. Ltd., which provided conflicting assessments of the consignment. The report by M/s. Anand Kulkarni & Associates deemed 50% of the consignment as serviceable scrap, while M/s. SGS India Pvt. Ltd. certified the samples as belonging to the high speed steel scrap category. The Tribunal noted the discrepancies in the reports and emphasized the importance of factual inspection over presumptions in determining the nature of the goods.

3. Furthermore, the Tribunal addressed the valuation of the consignment, highlighting that the valuation based on the report of M/s. Anand Kulkarni & Associates could not be relied upon due to its contradictory nature. The Tribunal also referenced Rule 4(2) of the Customs Valuation Rules, 1988, emphasizing the mandatory acceptance of the price paid or payable for the goods in the absence of specific exceptions. The Tribunal found that the rejection of the transaction value was unjustified, given the lack of evidence supporting misdeclaration.

4. Lastly, the Tribunal referenced legal precedents and guidelines to support its decision to uphold the impugned order. Citing the observations of the Hon'ble High Court of Punjab & Haryana and a Board circular, the Tribunal concluded that goods deemed serviceable but unusable should be treated as scrap. Based on these considerations, the Tribunal dismissed the appeal filed by the Revenue, affirming the decision to classify the consignment as waste and scrap.

This detailed analysis of the judgment provides insights into the classification, valuation, and legal principles applied in the case, ultimately leading to the dismissal of the Revenue's appeal.