The Customs, Excise and Service Tax Appellate Tribunal ( CESTAT ) has ruled that the confiscation of goods on the non-payment of customs duty cannot be justified solely on the basis of accusations by the Revenue. For such confiscation to stand, corroborative evidence is necessary. The two member bench observed that the assesse’s actions did not demonstrate any intent to reuse the imported pipes and hence the pipes imported were to be considered ‘scrap’.
The assessee, ESSA Exports filed Bill of Entry for import of goods declared as “Heavy Melting Iron Scrap of 46.47 MTs”. On examination, it was found that the total quantity was 50.332 MTs and out of this, 22 MTs were found to contain secondary quality rusted pipes. Revenue was of the view that these rusted pipes were serviceable and cannot be considered as ‘scrap’. After due process of law, the original authority rejected the declared value and enhanced the value of 22 MTs of goods and ordered for confiscation of the same with option to redeem the goods on payment of redemption fine of Rs.3 lakhs
The assessee contended that during the examination of the goods 22 MTs of goods which had been confiscated was alleged to be rusted pipes serviceable in nature.The assessee further contended that the department has not produced any expert opinion to establish that the 22 MTs of goods are not scrap and are in the nature of serviceable pipes.
The assessee contended that Revenue had relied on visual examination and concluded that the goods are serviceable in nature and cannot be considered as ‘scrap’. The assessee argued that there is a finding by the Commissioner ( Appeals ) that in the absence of expert opinion regarding quality of the pipes whether they are serviceable pipes by themselves, they can be considered scrap. In spite of such a finding, Revenue had only reduced the redemption fine and penalty without giving the absolute relief to the appellant.
The assessee further argued that the appellant had requested for mutilation of the goods so as to render the goods as ‘scrap’ before clearance of the goods. The said request was not considered by the original authority or the Commissioner ( Appeals ). The assessee prayed for the redemption fine and penalty imposed to be set aside.
Revenue contended that the goods imported are in the nature of pipes and are completely serviceable in nature and therefore the finding of the authorities below that these are not scrap is correct. The order of confiscation and the imposition of redemption fine and penalty is legal and proper.
The two member bench comprising Sulekha Biwi C.S ( Member, Judicial ) and Vasa Sheshagiri Rao held that when Revenue had not adduced any evidence to show that the goods imported are not scrap but are serviceable pipes, the confiscation is not justified. The bench further noted that the assessee had requested for mutilation of the said quantity of goods before home clearance which demonstrates the bonafide intent of the appellant that they intended only to import scrap and not pipes which are to be reused. The redemption fine and penalty imposed were also set aside.
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