2006 (11) TMI 468 - AT - Customs

Customs Act: Import of diesel engines for vessels denied exemption, penalty upheld. Lack of evidence leads to dismissal.

The Commissioner's decision was upheld, affirming the confiscation of imported old diesel engines under the Customs Act due to failure to meet exemption ... Confiscation and penalty Issues:1. Import of old diesel engines without payment of duty under exemption Notification.2. Confiscation of goods under Customs Act and imposition of penalty.3. Lack of response from importer leading to examination and confiscation.4. Classification of imported engines and eligibility for exemption.5. Challenge against auction proceedings and lack of interest from importer.6. Classification of imported diesel engines as consumer goods.7. Failure to meet conditions for exemption under Notification No. 211/83.8. Entitlement to claim exemption for repairs of ocean-going vessels.9. Appellants' conduct leading to confiscation and penalty.Analysis:1. The appellants imported old diesel engines under an exemption Notification but failed to clear the goods, leading to examination and subsequent confiscation under Section 111(d) of the Customs Act. The Collector's initial order was set aside for fresh adjudication based on natural justice principles.2. The Commissioner held that the imported engines were not eligible for the exemption as they were classified under a category meant for vehicles like motor cars, not ocean-going vessels. The goods were deemed liable for absolute confiscation and a penalty of Rs. 5 lakhs was imposed under Section 112(a) of the Customs Act.3. Despite multiple opportunities, the appellants did not participate in the proceedings, leading to auction of the goods. The lack of response indicated a marked lack of interest, and the challenge against the auction proceedings was not entertained due to the absence of material supporting their claim.4. The appellants failed to establish that the imported diesel engines were treated as capital goods under the Exim Policy, leading to the Commissioner's finding that they were consumer goods requiring a specific license for import. The absence of such a license attracted Section 111(d) of the Customs Act.5. The classification of the engines as intended for vehicles, not ocean-going vessels, aligned with the Commissioner's findings. The appellants, despite being registered as a ship repair unit, could not demonstrate that the engines were for repairs of ocean-going vessels, rendering them ineligible for the exemption under Notification No. 211/83.6. The conduct of the appellants in failing to meet the necessary conditions for exemption and in not participating in the proceedings ultimately led to the goods being confiscated and the imposition of a penalty under the Customs Act.7. The Commissioner's order was upheld, and the appeal was dismissed, affirming the confiscation of the goods and the penalty imposed. The decision was pronounced in open court on 30-11-2006.