Judgment:
1. This appeal is directed against Order-in-Appeal No. 1559-DLH/88, dated 4-10-1988.
2. The appellants received a consignment of Melting Scrap of Alloy Steel Stainless Steel Scrap on High seas Sales basis through M/s. Metal Scrap Trade Corporation Ltd. The appellants claimed this consignment as scrap. On examination of what was claimed to be imported scrap weighing in all 36,739 kgs., the Customs Authorities at ICD, Pragati Maidan, New Delhi sorted and singled out a quantity of 2,500 kgs. which they alleged was not scrap but threaded articles of steel namely hooks, nuts, rivets, strips, circles and sheets etc. Consequent to proceedings initiated against the appellants, the Customs Authorities confiscated these goods as the goods needed ITC licence, not being scrap. The consignment was, however, allowed to be released on redemption fine of Rs. 17,000/- and penalty of Rs. 1,000/- was imposed.
3. Arguing for the appellants, the ld. Advocate submits that the articles like nuts, rivets, sheets etc. are in facts discarded items of steel and are correctly claimed to be scrap only. In fact Customs Authorities also valued this on pro rata basis adopting value of scrap only. There was no basis for taking their price as the same as the price of scrap if it was not scrap. Drawing attention to Chapter 8 of "Scrap for Steel making" from the book "making, shaping and treating of steel", he submitted that dormant scrap can comprises [obsolete], worn out or broken products of consuming industries such as discarded steel furniture, worn out broken products of consuming industries etc. There could be no mala fides on their part since goods had been imported through M.M.T.C. and therefore, there was no case for imposition of penalty.
4. Arguing for the Revenue, ld. DR submits that examination revealed that the said articles are different from scrap. He however, concedes that examination report does not reveal that these articles in fact are usable as such i.e. usable as hooks, nuts, rivets etc.
5. We have heard both sides. Extracts from scrap for Steel making cited by ld. Advocate makes it clear that dormant scrap comprises [obsolete], worn out or broken products of consuming industries. Typical examples of dormant scrap are : discarded steel furniture, washing machines, stoves and other outdated consumer goods, beams, angles, channels, girders, railing, grilles, pipe etc. arising from the demolition of buildings; useless farm machinery, obsolete, broken or damaged industrial machinery. We also take note of the fact that out of the total consignment of 36,739 kgs., the quantity of these articles is mere 2,500 kgs., only 6.8%. The fact that Customs Authorities themselves took the price of these items only as applicable to scrap would further reinforce the plea that the articles were genuine scrap not usable as such articles. Customs examination reports does not reveal that these articles are definitely usable as such as is required by the definition of scrap which excludes such articles from the category of scrap. Considering the facts and circumstances in totality, we are of the view that there is no justification for rejecting the claim of the appellants that these items which comprise only a small percentage of the total consignment were scrap.
6. In view of this, we set aside the impugned order and allow the appeal.