2024 (1) TMI 783 - AT - Customs

Seeking release of the goods or allow mutilation of the goods so as to use them as scrap - request denied on the ground that request for mutilation was made only after the offence was detected - rejection of declared value - confiscation - redemption fine - penalty - HELD THAT - In the case of PRINCE FORTIFIED STEELS PVT. LTD. VERSUS COMMISSIONER OF CUSTOMS, TUTICORIN AND VICE-VERSA 2018 (5) TMI 270 - CESTAT CHENNAI , the Tribunal has held that It is confirmed that appellant is not a trader of imported goods in the guise of scrap for trading purpose. Therefore, bona fide of the appellant is justified being actual user. We also find that pre-shipment inspection certificate clearly indicates that HMSS supplied was unshredded . In view of the decisions relied upon by the appellant, if the goods are yet to be cleared, we direct that the goods may be released to the appellants after effective mutilation under the Customs supervision (as per the request of the appellant), thereby rendering them as scrap. Scrap so generated after mutilation will be cleared on payment of appropriate Customs duty as per the values declared by the appellant in the documents presented before the authorities. The impugned order is set aside along with confiscation and imposition of penalty and redemption fine - Appeal allowed.

Issues Involved:
1. Classification of imported goods as Heavy Melting Scrap (HMS) or serviceable parts.
2. Denial of the request for mutilation of goods.
3. Rejection of the declared value and re-determination of value for assessment.
4. Validity of certificates and pre-shipment inspection reports.
5. Imposition of fine, penalty, and confiscation of goods.

Summary:

1. Classification of Imported Goods:
The primary issue was whether the imported Heavy Metal Scrap (HMS) could be classified as serviceable parts, thereby denying the exemption availed by the appellants. The department opined that the goods were secondary/defective/rejected stock, comprising stainless-steel U and C channels and HR coils/strips. The appellants contended that the goods were imported as per the Import Policy conditions and supported by a pre-inspection certificate from an accredited agency. The Tribunal found that the technical opinion given by the pre-inspection certificate and other documents describing the goods as HMS could not be disregarded. Therefore, denying the classification and the benefit of exemption was not tenable.

2. Denial of Request for Mutilation:
The appellant's request for mutilation of the goods was denied by the authorities on the grounds that the request was made only after the offence was detected. The Tribunal noted that the appellant had complied with the Import Policy conditions and had no opportunity to verify the content of the goods before shipment. The denial of the request for mutilation was found to be unsustainable, and the Tribunal directed that the goods be released to the appellants after effective mutilation under Customs supervision.

3. Rejection of Declared Value and Re-determination of Value:
The department re-determined the value of the goods for assessment, rejecting the declared value. The Tribunal found that the declared classification and valuation could not be rejected solely based on the examination report of the officers, especially when technical reports were not in favor of the view taken by the Revenue. The Tribunal held that taking recourse to LME prices was not acceptable and that the department had not provided evidence to support the allegation of overvaluation.

4. Validity of Certificates and Pre-shipment Inspection Reports:
The appellants submitted various certificates, including a pre-shipment inspection certificate and a certificate from M/s. Alloys and Metal Test Services, which were ignored by the Adjudicating authority. The Tribunal found that the adjudicating authority had not explained why these certificates were not accepted. The Tribunal upheld the validity of the certificates and pre-shipment inspection reports, noting that the goods were described as steel melting scrap in all shipping documents.

5. Imposition of Fine, Penalty, and Confiscation:
The Adjudicating authority imposed a fine of Rs.3,00,000/- and a penalty of Rs.1,50,000/-, and ordered the confiscation of the goods. The Tribunal found that the department had not made its case for confiscation and imposition of penalty and redemption fine. The impugned order was set aside, and the appeal was allowed, directing the Customs to allow clearance of the goods after mutilation as per the values declared by the appellant.

Conclusion:
The Tribunal set aside the impugned order, including the confiscation and imposition of penalty and redemption fine. The appeal was allowed, and the Customs were directed to release the goods to the appellants after effective mutilation under Customs supervision, with the scrap generated to be cleared on payment of appropriate Customs duty as per the declared values.

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