| SooperKanoon Citation | sooperkanoon.com/32494 |
| Court | Customs Excise and Service Tax Appellate Tribunal CESTAT Mumbai |
| Decided On | Sep-30-2003 |
| Judge | J Balasundaram, A M Moheb |
| Reported in | (2003)(158)ELT466Tri(Mum.)bai |
| Appellant | Pooja Circular Saw and Rajesh P. |
| Respondent | Commissioner of Customs |
2. The aggrieved persons filed appeals before the Tribunal along with a stay application. Pre-deposit of duties and penalties was waived while disposing of the stay application. The appeals themselves are now taken up for disposal.
3. The facts are that M/s. PCS imported what they described as "iron and steel scrap (used as secondary consumed blades)' and sought clearance under two bills of entry both dated 24.3.2000, at Kandla. It is not clear why the appellants based in Bangalore were importing goods from Italy at Kandla, particularly having cleared a similar consignment at Bangalore earlier. But it is not important. The goods were examined twice, first by a lay appraiser and then again by an expert appraiser (metallurgy expert) under a panchama. The total quantity of the consignment covered under both the bills of entry was determined to be 44.300 MT under a Panchnama. The expert opined the 85 pieces of blades covered under bill of entry No. F 302646 and 13 pieces of blades covered under bill of entry No. F 302647 were new and serviceable blades and the rest were unserviceable which he called scrap. The appellants were thoroughly dissatisfied with the second examination as well wanted the goods to be examined yet again by a Government approved engineer. Whether the Government, State or Central, has approved engineers to examine circular saw blades is debatable. The third examination however was not carried out and the department relied upon the expert opinion only to an extent. Further investigation revealed that the goods in question were also undervalued. The Customs determined the value of the goods in question under Rule 5 of the Customs Valuation Rules, 1988. The value of old and used blades (scrap) was determined at Rs. 90/- per kg. based on the value accepted by Bangalore Customs when the present appellants imported a 'similar' consignment there on 30.10.1999 and the value of the unused and serviceable blades was determined to be Rs. 2,035/- per kg. as per the value accepted by Mumbai Custom House under bill of entry No. 904708 dated 14.3.2000. The goods covered under the two bills of entry were seized and a show cause notice was issued to the importer, Shri Rajesh P. Soni the power of attorney holder and to the CHA. The last named for "having gone out of the way to hold the description in the bill of entry as used secondary consumed blades." 4. The appellants assailed the order on the ground that the Commissioner's contention that what was imported were second hand circular saw blades was not based on correct appreciation of facts.
They refer to the definition of scrap in Clause (a) of note 8 of Section XV to the schedule to the Customs Tariff Act, which clearly refers to material which cannot be used as it is; the admitted fact according to the appellants is that the imported material is not usable as it is and therefore is waste and scrap only; they further averred that the Commissioner's attempt to redetermine the value on the basis of the value accepted at Bangalore and Mumbai for old and new blades respectively is not correct as the consignments imported in these two places are of not comparable quantities with the ones that are in dispute and finally they argued that the Commissioner's order suffers from infirmities and factual errors.
5. The departmental representative vehemently supported the Commissioner's order and pleaded that the power of attorney holder, Shri Rajesh P. Soni, in his statement dated 6.9.2000, admitted that the goods covered under the said two bills of entry are not scrap of iron and steel as declared, but are second hand goods the import of which should be covered under the valid licence and since they are not, the goods are liable to confiscation under Section 111(d) and 111(m) of the Customs Act as the goods were not declared correctly. The persons concerned are liable to penal action.
6. The rival contentions have been examined in depth by us. As per the question whether the impugned goods are scrap as declared, we observe that the metallurgy expert who has examined the goods has clearly stated that the consignments covered under the two bills of entry consisted of new and unused circular saw blades and scrap as well. He opined that 98 blades in all weighing 2450 kgs. (2.450 MT) were new and unused. The department is bound by this opinion and accepted the opinion of the expert and proceeded to determine the value of the new blades under Rule 5 of the Valuation Rules. The Commissioner determined the value of the new blades on the basis of value accepted for similar goods imported from the same country and cleared at Mumbai. The value declared and accepted at Mumbai is Rs. 2,035/- per kg. The same value is adopted here. It is true that the consignment cleared at Mumbai is of a much smaller quantity. But that does not itself invalidate the proposition of the Commissioner that the value as declared in Mumbai could be accepted. The contention of the appellants, that since the present consignment consisted of a bigger lot, the value adopted for a smaller consignment cannot be the basis, could perhaps be accepted had they themselves declared the price of the new blades that were found in the consignment of scrap. We therefore hold that the value adopted for the new blades has to be upheld.7. The second part of the expert opinion that the balance consignment consisted of only scrap, did not find the Commissioner's favour.
Surely, if the Commissioner had accepted the decision of the metallurgy expert insofar it pertains to new blades, he should also accept the other part of his opinion that the rest of the consignment consisted of only scrap unless he had valid reasons for not doing so. Scrap cannot be considered as second hand goods by any stands. His attempt to determine the value of the balance consignment on the basis of the value accepted at Bangalore Customs cannot be supported. For one thing, what it imported at Kandla is scrap and not samples as is in the case of consignment at Bangalore and for another scrap cannot be consider as second hand goods. The Commissioner in his impugned order valued the scrap part of the consignment at Rs. 90/- per kg. This has to be rejected. The value as declared by the appellant will have to be accepted.
8. As has been pointed out earlier, since the consignment consisted of new blades and scrap which could be imported without the cover of an import licence, the goods are not liable to confiscation under Section 111(d) of the Customs Act, as contended by the Commissioner. The goods however are liable to confiscation under Section 111(m) as the material particulars of the consignment declared in the bills of entry do not correspond to the goods under import inasmuch as around 2450 kgs. of the consignment consisted of new blades and not scrap. Thus the appeals are allowed as under:- The value of the new blades as determined by the Commissioner in the impugned order is upheld. For the balance consignment, the value declared be accepted. For the purpose of calculating the total weight of the consignment of scrap, the weight of new blades be deducted and the balance worked out for the purpose of calculating duty liability at the declared value. Confiscation of the goods under Section 111(d) of the Customs Act is set aside. Confiscation under Section 111(m) is upheld. Redemption fine is reduced to Rs. 2 lakhs. Penalty on M/s. Pooja Circular Saw is reduced to Rs. 1 lakhs.
Penalty on Shri Rajesh P. Soni is set aside.