2003 (11) TMI 456 - AT - Customs

Tribunal grants partial waiver of duty and penalty, directs pre-deposit, stays recovery.

The Tribunal acknowledged the financial hardship claimed by the appellants importing live animals and directed them to pre-deposit Rs. 4.50 lakhs within ... Meaning of 'zoo' under the Wild Life (Protection) Act, 1972 - classification as live animals versus 'zoo' import - tariff classification - pre-deposit requirement for stay of recovery - stay of recovery and waiver on deposit - financial hardship as ground for reduction of pre-deposit - prima facie conclusionMeaning of 'zoo' under the Wild Life (Protection) Act, 1972 - classification as live animals versus 'zoo' import - prima facie conclusion - Whether the appellant's imported live animals could prima facie be held to qualify as import for a 'zoo' and thus be classifiable under the NIL tariff heading relied upon by the appellant - HELD THAT: - The Tribunal examined the factual and legal material, including the clarification from the Ministry of Environment and Forest, and concluded that on the limited record before it a definitive finding that the appellant is a 'zoo' cannot be reached. Prima facie the activities and nature of the appellant do not fall within the meaning of 'zoo' as understood under the Wild Life (Protection) Act, 1972 and as clarified by the Ministry, and the department's reclassification of the imported animals as wild animals under the relevant tariff heading cannot be rejected at this stage. The Tribunal therefore did not decide the merits finally but recorded that a prima facie view does not favour the appellant's claim of zoo classification. [Paras 5]On the material before it, the Tribunal declined to accept that the appellant prima facie qualifies as a 'zoo' for the purpose of NIL classification and did not allow the claim of zoo classification to prevail at this interlocutory stage.Pre-deposit requirement for stay of recovery - financial hardship as ground for reduction of pre-deposit - stay of recovery and waiver on deposit - Extent of pre-deposit to be directed for continuation of the appeal and the effect of such deposit on recovery of duty and penalty - HELD THAT: - The Tribunal considered the appellants' plea of severe financial hardship and the documentary material regarding losses. Balancing the prima facie view against the appellants' financial adversity, the Tribunal exercised its discretion to reduce the pre-deposit originally directed by the department. It directed the appellants to pre-deposit a specified reduced amount within three months, and on such deposit stayed recovery of the balance of duty and penalty and waived the balance for the time being. The Tribunal also provided that on payment of the deposit the appeal would be listed for out-of-turn hearing on the specified date. [Paras 5]The appellants were directed to pre-deposit the reduced amount within three months; upon such deposit the balance of duty and penalty recovery was stayed and the balance waived, and the appeal was to be heard out of turn on the specified date.Final Conclusion: The Tribunal recorded a prima facie view that the appellant does not, on the material before it, qualify as a 'zoo' for NIL classification, and in exercise of its discretion reduced the pre-deposit to the specified sum payable within three months; on payment recovery of the balance of duty and penalty is stayed and the appeal is listed for out-of-turn hearing. Issues:Classification of imported live animals as 'Zoo' under tariff heading 9908, re-classification under tariff heading 0106.00, imposition of duty and penalty, financial hardship of the appellants.Analysis:The appellants imported live animals like dolphins and sealions and declared themselves as a 'Zoo' seeking classification under tariff heading 9908 at NIL rate of duty. However, the department argued that the appellants did not meet the criteria of being termed a zoo as per the Wild Life (Protection) Act, 1972, and the clarification from the Ministry of Environment and Forest. Consequently, the department re-classified the imported animals under tariff heading 0106.00, attracting duty rates of 65% for sealions and 45% for dolphins. The goods were assessed, duty demand confirmed, and a penalty imposed on the appellant company's Chairman and Managing Director.During the hearing, the counsel for the appellants contended that the term 'Zoo' should be interpreted broadly and not as per the department's narrow interpretation. The appellants presented numerous documents to support their case and highlighted their significant financial losses, amounting to Rs. 13.00 crores with a daily loss of Rs. 80,000. The counsel argued that the appellants were unable to pre-deposit any amount and requested either an absolute waiver or expressed concerns about severe financial hardship if not granted.On the other hand, the SDR representing the department maintained that the appellants did not qualify as a 'zoo' under the Wild Life (Protection) Act and the Ministry's clarification. She argued that the appellants were engaged in a commercial amusement activity rather than operating as a zoo under the Act. Therefore, she asserted that the appellants should not be classified at a NIL rate of duty but as wild animals, subject to appropriate tariff.After careful consideration, the Tribunal found it challenging to conclude definitively at that stage that the appellants operated a zoo, especially in light of the Ministry's clarification. However, considering the financial hardship claimed by the appellants and the evidence of substantial losses presented, the Tribunal acknowledged the potential hardship the appellants would face. Consequently, the Tribunal directed the appellants to pre-deposit an amount of Rs. 4.50 lakhs within three months, waiving the remaining duty and penalty amounts and staying the recovery. The appeal was scheduled for an expedited hearing on a specified date, subject to compliance with the deposit requirement.