Judgment:
1. The respondents herein imported a consignment of Tungsten Carbide Scrap Tool Form serviceable/defective and claimed clearance under OGL under Bills of Entry filed by them, which was objected to on the ground that the goods were subject to 1st check examination and found to be "old and used serviceable carbide tips". The Department denied the claim since the goods were old and used serviceable carbide tips and the same were classifiable under Customs Tariff Heading 8207.90, and also requires an import licence, as they were second-hand goods and import without licence was not allowed in terms of Import Policy 1997-2002. The value of the goods declared has also been found not to be acceptable. The adjudicating authority, for the above reason ordered confiscation of the goods under Provision of Section 111(d) and (m) of the Customs Act, 1962 with an option to the importers to redeem the goods on payment of redemption fine of Rs. 3,00,000/- and Rs. 5,00,000/- respectively. He has also imposed penalty of Rs. 75,000/- and Rs. 1,50,000/- respectively upon the importers under Section 112(a) of the Customs Act. The value of the goods was enhanced to US$ 4,510 per MT under Rule 8 of the Customs (Valuation) Rules, 1988 i.e. best judgment method, taking value of insurance namely, 110% of the GIF value (declared unit price was US $ 3565 per MT was rejected). The Commissioner (Appeals) held that the adjudicating authority has not clearly set out how there is any mis-declaration so as to warrant confiscation of goods under Section 111(d). He has also held that the rejection of transaction value and confiscation of goods under Section 111(m) was not acceptable, as the adjudicating authority had nowhere discussed in the adjudication order as to why Rule 4 for the transaction value is not acceptable before proceeding to rule out earlier rules in sequence. He therefore set aside the confiscation and penalty imposed upon the importers. Hence these appeals.
2. We have heard ld. DR, Shri Manoj Krishna and ld. Counsel, Shri S.N.Kantawala. The submission of ld. DR is that the imported items although old, had to be definitely used as tools and part of it had to be used as scrap. We find that the goods do not conform to scrap in Tariff which defines waste and scrap as "Metal waste and scrap from the manufacture or mechanical working of metals, and metal goods definitely not usable as such because of breakage, cutting-up. wear or other reasons". Therefore, confiscation under provisions of Section 111(d) is justified and set aside the Commissioner (Appeals)'s finding that there is no mis-declaration of the goods.
3. Coming to the charge of mis-declaration of value of the goods, we agree with the Commissioner (Appeals) that there is no reason adduced in the adjudication order for resorting the best judgement assessment method without considering why Rules 4 & 5 could not be applied for the purpose of determination of correct value of goods. Therefore, his finding that there is no mis-declaration of value of the goods particularly in absence of contemporaneous imports, is required to be upheld. Therefore, the redemption fine, which has been imposed, keeping in view the liability of the goods to confiscation under Section 111 (d) and (m), is reduced to Rs. 1,50,000/- and Rs. 2,50,000/- respectively. The penalty imposed upon the importers is justified for the reason that we have upheld the charge of liability of confiscation under Section 111(d). However, penalties arrived at by adjudicating authorities are, on the basis of contravention both under Section 111 (d) and (m), and since we have upheld the confiscation only under Section 111(d), we reduce the penalties imposed upon the importers to Rs. 40,000/- and Rs. 75,000/- respectively.