2016 (4) TMI 608 - AT - Customs

Confiscation and imposition of penalties - Import of Defective shafts - Classified the same under Customs Tariff Heading 84831099 as capital goods - Held that - on perusal of the provisions of Foreign Trade Policy, all second hand goods except second hand capital goods, are only restricted. In the present case, it is not disputed by the Revenue that the imported goods are not capital goods being shafts of ships. By virtue of the wordings of para 2.17 of the hand book of procedures under Foreign Trade Policy, the goods imported by the appellant were thus not restricted. Even if it is considered that the shafts were cut into small pieces of different sizes then also the same has to be considered as scrap for which no license is required. Therefore, defective shafts imported by the appellant were not prohibited/restricted goods. Accordingly, the confiscation of goods and imposition of penalties upon the appellant were not justified. - Decided in favour of appellant with consequential relief

Summary

Issues:
1. Imposition of redemption fine and penalties on imported defective shafts under Customs Tariff Heading 84831099.
2. Interpretation of Foreign Trade Policy regarding restrictions on imported goods.
3. Justification of the confiscation of goods and imposition of penalties.

Analysis:
1. The appellant filed an appeal against the Order-in-Appeal modifying the Order-in-original by imposing a redemption fine and penalties on imported defective shafts. The appellant argued that the shafts were classified as capital goods and not restricted under the Foreign Trade Policy, hence no fines or penalties should apply.

2. The Revenue contended that the goods were not imported as intact shafts but as scrap pieces, declared under Customs Tariff Heading 84831099. The first appellate authority upheld this view. However, the Tribunal examined the Foreign Trade Policy, specifically para 2.17, which restricts only second-hand goods other than second-hand capital goods. The Tribunal concluded that the imported goods were not restricted under this provision.

3. After reviewing the case records and the provisions of the Foreign Trade Policy, the Tribunal found that the imported defective shafts were not prohibited or restricted goods. Therefore, the confiscation of goods and imposition of penalties on the appellant were deemed unjustified. Consequently, the appeal was allowed, granting the appellant consequential relief.

This judgment clarifies the interpretation of the Foreign Trade Policy in relation to imported goods and emphasizes the importance of correctly classifying goods for customs purposes to avoid unnecessary fines and penalties.