2017 (9) TMI 1202 - AT - Customs

Confiscation - redemption fine - penalty - Classification of imported goods - used rails - whether classified under CTH 72 or under CTH 73? - Held that - the classification of the impugned goods namely used rails was doubtful and the Board has issued a Circular in 2005 holding that the said goods are classifiable under CTH 72 and later Board has changed their view by issuing another Circular in 2006 stating that such goods are classifiable under CTH 73 - the appellant has not acted dishonestly and contumaciously or with the deliberate or distinct object of breaching the law - confiscation of the goods is unjustified - redemption fine and penalty also unjustified - decided partly in favor of appellant.

Summary

Issues Involved:
Classification of imported goods under CTH 72 or CTH 73, imposition of redemption fine, and penalty.

Classification Issue:
The appellants imported MS Re-rolling scrap declared as "MS Rolling Material consisting of used rails" under CTH 72, but the department argued for classification under CTH 73 due to the requirement of a license for importing used rails. The original authority classified the goods under CTH 73, leading to confiscation and penalty. The appellant contested only the redemption fine and penalty, citing Circulars from the Board supporting their initial classification under CTH 72. The appellant argued that the change in classification under Circular No. 8/2006-Cus. was not intentional, especially as it was challenged in court. The Tribunal found the classification issue to be doubtful due to conflicting Circulars and judicial positions, concluding that the appellant did not act dishonestly.

Redemption Fine and Penalty Issue:
The appellant argued that the redemption fine and penalty were unjustified since there was no malafide intent in the initial classification under CTH 72, supported by a Board Circular. The department maintained that the correct classification should have been declared based on the Circular issued in 2006. The Tribunal agreed with the appellant, finding the confiscation unjustified and setting aside the redemption fine and penalty. The Tribunal held that the goods were not liable for confiscation, modifying the impugned order accordingly.

In conclusion, the Tribunal partially allowed the appeal, setting aside the confiscation of goods, redemption fine, and penalty, based on the lack of dishonest intent by the appellant and the conflicting Circulars and judicial positions regarding the classification of the imported goods.