2024 (7) TMI 1323 - AT - Customs

Request for provisional release of the goods pending investigation - use of the tyres imported by the appellants - whether this imported tyres can be released provisionally to the appellants pending investigation? - HELD THAT - It is the case of the appellants that the tyres are of a kind used in mining and other off-road purposes whereas it is apprehended by the department that the tyres are being misused as truck and bus tyres. It is found that the impugned goods are not subjected to any tests/analysis by any authority having technical competence. The apprehension of the department is on the basis of a statement, of Shri Pannalal Choudhary, who looks after maintenance of trucks belonging to M/s Vikas Road Carriers Ltd, stating that these tyres are being used for trucks and buses. It is found that no corelation has been made to identify the tyres imported by the appellants and the subsequent mis-use, if any, thereof. It is settled principle of law that the classification of the goods is to be made with reference to the technical parameters of the goods in the condition in which they are imported and end-use or subsequent possible mis-use cannot be a criteria for the classification of the goods. The Learned Commissioner (Appeals) and the lower authority have relied upon the CBEC circular 35/2017-Cus dated 16/08/2017 stating inter alia that goods prohibited, under the Customs Act, 1962 or any other Act for the time being in force, may not be released provisionally - the impugned orders have not appreciated the circular in a correct manner. Whereas the circular advices that prohibited goods may not be released provisionally, the nature of the impugned goods being prohibited is yet to be established. No test report whatsoever, has been placed on record. There are force in the argument of the appellants that in case of any such misuse the competent authority, i.e. the road transport authority can take necessary action in public interest. The customs cannot assume the cause of such authority. In view of the discussion, the department has made no case for rejection of provisional release of the impugned goods. However, since the investigation is pending it will be in the interest of justice to accord provisional release subject to some conditions and restrictions. The impugned goods shall be provisionally released, within two weeks of receipt of this order subject to the fulfilment of conditions imposed - the impugned order is set aside and the appeals are partly allowed.

Summary

Issues:
1. Denial of provisional release of imported tyres under CETH 4011 8000 seized by the Directorate of Revenue Intelligence.
2. Classification of imported tyres under CTH 4011 2010 by the department and the contention of the appellants regarding the classification under HSN 4011 8000.
3. Allegations of misuse of tyres for trucks and buses by the department and the appellants' argument regarding the usage of tyres in mining vehicles.
4. Discrepancies in the treatment of appellants compared to other importers by the customs authorities.
5. Interpretation of CBEC circular 35/2017-Cus regarding the provisional release of goods.

Analysis:
1. The appellants sought provisional release of imported tyres seized by the Directorate of Revenue Intelligence, which was denied by the original authority and upheld by the Learned Commissioner (Appeals). The dispute revolved around the classification and potential misuse of the tyres.

2. The appellants argued that the imported tyres were for vehicles used in construction, mining, and industrial handling, classified under HSN 4011 8000, while the department alleged they were for trucks and buses under CTH 4011 2010. The authorities had not provided a reasonable cause for denial of provisional release.

3. The department suspected misuse of tyres for trucks and buses, while the appellants contended they were for mining vehicles, highlighting the potential stress on engines and safety risks of misusing them. The appellants accused the customs authorities of discriminatory treatment.

4. Discrepancies were noted in the treatment of appellants compared to other importers, with the appellants citing previous favorable decisions by CESTAT. The customs authorities were accused of unequal treatment and harassment.

5. The interpretation of CBEC circular 35/2017-Cus was crucial, as it guided the provisional release of goods. The tribunal found that the impugned goods were not proven to be prohibited, and the investigation did not establish misuse. Thus, the provisional release was granted with specific conditions to safeguard against potential misuse.

This detailed analysis of the judgment covers the issues involved comprehensively, addressing the legal arguments, factual contentions, and the final decision rendered by the tribunal.