2019 (11) TMI 1091 - AT - Customs

Absolute confiscation of imported goods - prohibited goods or not - old and used digital multifunction devices with standard accessories and attachments of various models - enhancement of assessable value - imposition of redemption fine and penalty as well - Assessable value of the said goods was revised on the strength of Chartered Engineer certificate - alleged violation of Hazardous and Other Waste (Management and Trans-boundary Movement) Rules, 2016 notified by MOEF, Electronics and Information Technology Goods (Requirement of Compulsory Registration) Order, 2012 notified by the Ministry of Electronics Information Technology and Para 2.31 of Foreign Trade Policy, 2015-2020 notified by the Director General of Foreign Trade. HELD THAT - Hon ble Apex Court in the case of Atul Automation Pvt. Limited 2019 (1) TMI 1324 - SUPREME COURT has approved the decision of the Tribunal passed vide Order No. 21592-21594/2017 dated 08 August 2017. The tribunal order specifically covers all the issues raised and disputed in the present appeal and it was held that there was no absolute confiscation and approximately 10% of the value of the goods was imposed as redemption fine in the similar facts and circumstances. Penalty of 5% of assessable value was imposed in the similar facts and circumstances - The said decision of Tribunal was approved by the Hon ble Apex Court. Changes made in the policy vide Notification No. 5/2015-2020 dated 07 May 2019 - HELD THAT - It is seen that the said changes are subsequent to the date of import thus, have no impact on the present proceedings. Consequently, the appeal filed by Revenue seeking confiscation of goods absolutely is dismissed. Revision of assessable value on the strength of Chartered Engineer certificate - HELD THAT - There are no merit in the above observation. The impugned order itself finds flaws in the Chartered Engineer certificate as the Chartered Engineer failed to obtain current market value of the said goods. The impugned order also does not indicate the Rule under which the value was revised. In these circumstances, revision of value by the lower authorities is not sustainable for want of evidence. The declared value is accepted. The redemption fine and penalty under Section 112(a) of the Customs Act, are reduced to 10% and 5% of the assessable value, respectively. Appeal allowed in part.

Issues Involved:
1. Enhancement of assessable value.
2. Confiscation of goods.
3. Imposition of redemption fine.
4. Imposition of penalty.
5. Compliance with Hazardous Waste Rules and Import Policy.

Issue-wise Detailed Analysis:

1. Enhancement of Assessable Value:
The assessable value of the imported old and used digital multifunction devices was revised based on a Chartered Engineer certificate. The appellant argued that no contemporaneous import data was shown, and the value was increased merely on the basis of the Chartered Engineer certificate without any rule from the Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 being applied. The Tribunal found that the impugned order itself highlighted flaws in the Chartered Engineer certificate, as it failed to obtain the current market value of the goods. Therefore, the revision of value by the lower authorities was deemed unsustainable, and the declared value was accepted.

2. Confiscation of Goods:
The goods were initially held liable for absolute confiscation due to violations of the Hazardous and Other Waste (Management and Trans-boundary Movement) Rules, 2016, the Electronics and Information Technology Goods (Requirement of Compulsory Registration) Order, 2012, and Para 2.31 of the Foreign Trade Policy, 2015-2020. However, the Commissioner (Appeals) set aside the absolute confiscation and allowed clearances on payment of redemption fine. The Tribunal found that the imported items could not be considered as waste since they were functional and had a certified residual life. The violation of the Hazardous Waste Rules was limited to the non-production of a satisfactory country of origin certificate. Other conditions were substantially fulfilled.

3. Imposition of Redemption Fine:
The Tribunal referred to the decision in the case of Commissioner of Customs vs. Atul Automation Pvt. Limited, where it was established that the goods could be released on payment of redemption fine. The Tribunal found that redemption fine of approximately 10% of the value of the goods was appropriate, considering the consistent practice and the need to ensure the importer does not gain from the violation. The Revenue's appeal seeking absolute confiscation was dismissed, and the redemption fine was set at 10% of the assessable value.

4. Imposition of Penalty:
The penalty imposed under Section 112(a) of the Customs Act was reduced by the Commissioner (Appeals) to ?2 Lakhs. The Tribunal further reduced the penalties to 5% of the assessable value, aligning with the consistent practice in similar cases. The penalty under Section 114AA was set aside, as there was no evidence of false documentation by the importer.

5. Compliance with Hazardous Waste Rules and Import Policy:
The Tribunal noted that the import was in violation of the Import Policy and some conditions of the Hazardous Waste Rules, specifically the non-production of a satisfactory country of origin certificate. However, other conditions, such as functionality and residual life certification, were met. The Tribunal concluded that the goods were not waste and could be released on payment of redemption fine and duty.

Conclusion:
The appeal was partly allowed, with the redemption fine and penalty reduced to 10% and 5% of the assessable value, respectively. The Revenue's appeal for absolute confiscation was dismissed, and the declared value was accepted due to the lack of evidence supporting the revised value. The Tribunal's decision was in line with the precedent set by the Hon’ble Apex Court in the Atul Automation case, ensuring consistency in the application of the law.

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