1996 (6) TMI 355 - AT - Customs

Tribunal rules in favor of appellant, overturns duty demand on machine import.

Indian Thermoplastic (P) Ltd. Versus Collector of Customs

The tribunal ruled in favor of the appellant, setting aside the order demanding differential duty on the import of a slitter cum rewinder machine. The ... - Issues:1. Appellant's challenge against the order demanding differential duty on the import of a machine.2. Allegations of misdeclaration of description and value of the machine to evade duty.3. Imposition of penalty on the appellant and a director of the appellant's sister concern.4. Dispute regarding the classification of the imported machine.Analysis:1. The appellant contested the order demanding differential duty on the import of a slitter cum rewinder machine, challenging the Collector of Customs' decision. The Collector accused the appellant of misdeclaration of the machine's description and value to benefit from Open General Licence (OGL) and avoid duty payment. The machine was confiscated under Sections 111(d) and (m) of the Customs Act, 1962, with an option for redemption upon payment of a specified amount. Penalties were imposed on the appellant and a director of the appellant's sister concern.2. The dispute arose when the Central Economic Intelligence Bureau received information suggesting that the imported machine was undervalued. The Collector determined the machine to be a slitter cum rewinder machine, not a paper cutting machine as declared, and valued it differently. The appellant refuted these allegations, but the Collector upheld the decision, leading to the present appeal.3. The appellant argued that the imported machine, even if considered a slitter cum rewinder, was essentially a paper cutting machine suitable for the printing industry and the appellant's colored paper and photo film manufacturing business. The appellant emphasized the usability of the machine in their industry, citing a precedent from Northern Plastic Ltd. v. COC [1996 (83) E.L.T. 192]. The department countered, stating that the paper cutting machine under consideration was meant exclusively for the printing industry.4. The tribunal analyzed the classification issue, referring to the Northern Plastic Ltd. case, which recognized a slitter cum rewinding machine as a type of paper cutting machine. The tribunal noted the absence of specific restrictions in the policy regarding the import of paper cutting machines by industries other than printing. Consequently, the tribunal disagreed with the Collector's conclusion and deemed the import under OGL permissible.5. Regarding the valuation, the tribunal found discrepancies in the determination of the machine's value. The tribunal criticized the Collector's method of calculating depreciation, deviating from established norms. The tribunal concluded that there was no deliberate undervaluation, as the declared invoice value exceeded the value derived from the Chartered Engineer's certificate.6. Ultimately, the tribunal set aside the impugned order, ruling in favor of the appellant. The tribunal highlighted the lack of evidence supporting any unlawful intent on the appellant's part, leading to the dismissal of penalties imposed. The appeals were allowed, overturning the penalties and duty demands.This comprehensive analysis delves into the issues raised, the arguments presented, and the tribunal's reasoning behind setting aside the impugned order.