The Bangalore bench of the Customs Excise & Service Tax Appellate Tribunal ( CESTAT ) directed to release of the Confiscated Goods Which were cleared as HMS Scrap without Proper Mutilation. The CESTAT directed to conduct the effective mutilation under the supervision of the Customs Authority.
A P Steel Re-Rolling Mills Ltd, the Appellant had imported Heavy Metal Scrap ( HMS )and filed B/E for clearance of the same on 19.01.2010. On examination, it is found that the goods are of assorted size and cannot be considered as HMS scrap. However, Appellant vide letter dated 10.02.2010 stated that the goods imported as scrap which can be used to melt only. They have requested for the release of the goods or allow mutilation of the goods to use them as scrap.
The request was denied on the ground that a request for mutilation was made only after the offence was detected. Thereafter SCN was issued proposing confiscation of the same, rejecting the declared value and goods were assessed as per Rule 5 of the Customs Valuation Rules, 2007. The Appellant submitted that the goods were imported as per the Import Policy conditions that prevailed at the time of import and to support the declaration, they produced a certificate from an accredited agency.
The Adjudication authority rejected their request vide Order-in-Original adopted value as proposed in the SCN and allowed the Appellant to redeem the goods on payment of Rs.3,00,000/- as a fine and Rs.1,50,000/- as a penalty.
Counsel for the Appellant drew our attention to the documents including the sale contract dated 23.12.2009, invoice issued by an overseas supplier dated 31.12.2009, relevant pages of the Hand Book of Procedure related to the import of metallic waste, Scrap etc; the Appendix file showing the list of inspection & certification agency including the agency M/s. World Wide Logistics, Pre-shipment certificate etc; showing that the goods imported by the Appellant are Heavy Melting Scrap and it was subject to 100% visual inspection during the loading process.
The allegation regarding the presence of assorted size of scrap was brought to the notice of the Appellant only when it was subject to inspection by the proper officer and there is no allegation that the Appellant knew of the presence of assorted size of panels having lengths between 1.5 m to 5.5 m. Immediately when the above fact was brought to the notice of the Appellant, they requested for mutilation of the same as per Section 23 of the Customs Act, 1962.
It was found that the Appellant can only verify the conditions in the Import Policy and there is no opportunity for the Appellant to verify the content of the goods before its shipment. Considering the same, denial of the request for mutilation is unsustainable. The authorities also do not dispute the fact that the shipment certificate from the port of export certified the goods as Heavy Metal Scrap ( HMS ) and the certificate has been issued by the agency registered with DGFT. All other documents like invoices, packing lists, etc., also describe the goods as heavy metal scrap.
A two-member bench comprising Mr P.A. Augustian, Member ( Judicial ) and Mrs R. Bhagya Devi, Member ( Technical ) observed that the goods may be released to the appellants after effective mutilation under the Customs supervision ( as per the request of the appellant ), thereby rendering them as scrap. Scraps so generated after mutilation will be cleared on payment of appropriate Customs duty as per the values declared by the appellant in the documents presented before the authorities.
The CESTAT held that the impugned order is set aside along with confiscation and imposition of penalty and redemption fine.
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