Commissioner of Customs vs Royal Recycling Industries

H.N. Devani, J.—The Appellant-revenue has challenged the order dated 12th September 2008 made by the Customs, Excise & Service Tax Appellate Tribunal (the Tribunal), proposing the following two questions:

[a] Whether in the facts and circumstances of the present case, the Tribunal was justified in holding that confiscation of goods u/s 111(m) and imposition of penalty u/s 112(a) of the Customs Act, 1962 upon the Respondent-importer was neither justified nor warranted despite there being undisputed misdeclaration and violation of the provisions of the Customs Act, 1962?

[b] whether in the facts and circumstances of the case, when there was undisputed misdeclaration and misdescription of the imported goods in the Bill of Entry filed by the Respondent-importer, was the Tribunal justified in setting aside the confiscation of goods and imposition of penalty rendered on account of violation of provisions of the Customs Act, 1962?

The Respondent was registered as a 100% EOU for manufacture and export of Recycled Metal Scrap Ingots and Metal Alloys etc. The Respondent imported a consignment of 75.950 M Ts of old and used transformers during the year 2004 declaring the same as waste and scrap of transformers under Bill of Entry dated 6th January 2004 and claimed exemption from Customs Duty under Notification No. 52/2003 dated 31st January 2003 and from Special Additional Duty under Notification No. 52/2003 dated 31-1-2003. Upon examination of the goods in question, the Department was of the view that the imported goods were not scrap, but old and used transformers, which was also confirmed by an expert and issued a show cause notice dated 29th January 2004. The show cause notice came to be adjudicated vide order dated 30th January 2004, whereby the adjudicating authority ordered confiscation of the goods and also imposed penalty u/s 112A of the Customs Act, 1962 (the Act). Being aggrieved, the Respondent-importer carried the matter before Commissioner (Appeals) who dismissed the appeal. The Respondent carried the matter further in appeal before the Tribunal and succeeded.

Ms. Amee Yajnik, learned Senior Standing Counsel for the Appellant-revenue has supported the order of the adjudicating authority as well as the order passed by Commissioner (Appeals). It is submitted that despite the fact that the goods are freely importable, every importer is bound under law to declare the description of goods correctly for the purpose of ascertaining its duty liability.

As can be seen from the impugned order of the Tribunal, the Tribunal has placed reliance upon its earlier decision in case of M/s. Siyaram Metals Pvt. Ltd. and has set aside the impugned orders and allowed the appeal. The Tribunal has recorded that the Respondent had been permitted to import used old and damaged transformers, which was nothing but transformer scrap; it was not the Revenue''s case that new transformers or transformers in usable condition were imported by the Respondent; even according to the expert opinion, the same were old and used; when the Adjudicating Authority had not confirmed any demand of duty against the Respondent inasmuch as the Respondent was eligible to import old/used/damaged transformers, the findings of misdeclaration and undervaluation become irrelevant. The Tribunal was, accordingly of the view that when no duty is payable on the imported consignment, the charge of undervaluation of the goods cannot be upheld inasmuch as the Respondent Assessee was not going to be benefited from the same.

The record of the case indicates that the Respondent is a 100% Export Oriented Unit licensed for the manufacture and export of Recycled Metal Scrap Ingots and Metal Alloys etc. From the findings recorded by the Tribunal it is apparent that the Respondent had imported used, old and damaged transformers which were nothing but scrap. According to revenue the goods ought to have been declared as old, used and damaged transformers and not scrap. However, whether the goods in question are described as used, old and damaged transformers or scrap is only a matter of nomenclature. Considering the nature of business of the Respondent, viz., manufacture of Recycled Metal Scrap, in relation to its business the goods are nothing but scrap as the same have to be recycled to produce Recycled Metal Scrap. The Respondent has no use for old, used and damaged transformers in such form, as the same have to be recycled to produce Metal Scrap. Besides, it is not even the case of the revenue that the old, used and damaged transformers are being repaired and used as such. Moreover, as found by the Tribunal, the adjudicating authority has not confirmed any demand of duty against the Respondent since the Respondent was even otherwise eligible to import old/used/damaged transformers. That no duty was payable on the imported consignment and as such the Respondent Assessee was not going to benefit on account of undervaluation or misdeclaration.

In the aforesaid factual matrix, it cannot be stated that the impugned order of Tribunal gives rise to any legal infirmity so as to warrant interference. The appeal is, accordingly, dismissed in absence of any question of law, as proposed or otherwise, much less a substantial question of law.