2015 (10) TMI 1775 - SC - Customs

Valuation - Zinc Die Cast Scrap imported; claimed classification under Chapter Sub-Heading 7902.00 On examination, very few pieces were found to be scrap and balance all items were found to be unused and they were serviceable High Court held that the imported goods are nothing but scrap and valued the same as per the highest bid received. - Seizure and confiscation of goods under Section 111(d) and 111(m) of the Customs Act, 1962 Held That - After reading the report obtained by Department, it is evident that items imported were nothing but scrap - Valuation report obtained by Department cannot be acted upon as it did not value the product correctly Department had no other evidence to value goods thus the High Court had no other option but to go by the highest bid No merit found in the appeal Decided against the Revenue.

Summary

Issues:
1. Classification of imported goods under Customs Tariff Act, 1975
2. Seizure of goods under Customs Act, 1962
3. Confiscation of goods and levy of duty
4. Challenge of Order-in-Original before CESTAT
5. Appeal before High Court regarding valuation and misdeclaration

Classification of Imported Goods under Customs Tariff Act, 1975:
The respondent imported Zinc Die Cast Scrap but upon examination, it was discovered that the goods were actually articles of zinc in unused and serviceable condition. An expert opinion confirmed that only a few pieces were scrap, while the rest were usable items like door handles and bathroom fittings. The entire consignment was seized under the belief that it was misdeclared, leading to a detailed valuation report being obtained to ascertain the value of the fittings.

Seizure of Goods under Customs Act, 1962:
During the investigation, statements were recorded from the partners of the Customs House Agent Firm and the Proprietor of the respondent, wherein they admitted an attempt to evade tax. A show cause notice was issued under Section 124 of the Act, leading to the Commissioner of Customs upholding the allegations of misdeclaration and ordering confiscation of goods, duty levy, and penalty.

Confiscation of Goods and Levy of Duty:
The Order-in-Original was challenged before CESTAT, which upheld the order but set aside the penalty on the Proprietor. Subsequently, an appeal was made to the High Court of Gujarat, which ruled in favor of the respondent, stating that the imported goods were indeed scrap, as confirmed by the inspection report obtained by the Department. The High Court found no misdeclaration by the respondent and rejected the valuation report obtained by the Department, emphasizing that the goods were treated as scrap in the USA and were bought as such by the respondent.

Challenge of Order-in-Original before CESTAT:
The respondent's appeal before CESTAT resulted in the penalty on the Proprietor being set aside, but the Order-in-Original being upheld. However, the subsequent appeal to the High Court of Gujarat saw a different outcome, with the High Court ruling in favor of the respondent based on the nature of the imported goods and the valuation discrepancies highlighted during the proceedings.

Appeal Before High Court Regarding Valuation and Misdeclaration:
The High Court found that the Department's valuation report was inaccurate and extraneous, as it did not consider the goods' status as scrap in the USA. With no other evidence presented by the Department to support valuation, the High Court relied on the highest bids received during the auction of the goods. Consequently, the High Court dismissed the appeal, affirming that there was no error in its decision based on the evidence presented.