2016 (12) TMI 574 - AT - Customs

Appeal allowed for imported tires classification with modification of orders emphasizing compliance.

The Tribunal partially allowed the appeal regarding the classification of imported old and used tires. It modified the orders to uphold confiscation, ... Confiscation of imported goods under Section 111(d) of the Customs Act, 1962 - Redemption of confiscated goods on payment of redemption fine - Penalty under Section 112 of the Customs Act, 1962 - Applicability of Hazardous Wastes (Management, Handling and Transboundary Movement) Rules, 2008 to import of second hand tyres - Release of confiscated goods on payment of customs duty, redemption fine and penaltyConfiscation of imported goods under Section 111(d) of the Customs Act, 1962 - Applicability of Hazardous Wastes (Management, Handling and Transboundary Movement) Rules, 2008 to import of second hand tyres - Redemption of confiscated goods on payment of redemption fine - Release of confiscated goods on payment of customs duty, redemption fine and penalty - Validity of confiscation and the consequential orders for re export, and scope for redemption and release of the imported second hand tyres - HELD THAT: - The Tribunal found that an order of absolute confiscation and, at the same time, an order directing re export of the same goods are inconsistent because absolute confiscation vests the goods in the Government and the importer cannot lawfully export them. Relying on a prior Division Bench decision on goods of similar description, the Tribunal held that although confiscation under Section 111(d) of the Customs Act was sustainable, the concomitant direction for re export could not stand. In exercise of appellate jurisdiction the Tribunal modified the lower orders to uphold confiscation but permit redemption of the goods on payment of a redemption fine and prescribed conditions for release. The Tribunal thereby effectively treated the goods as redeemable from confiscation on payment of the prescribed fines and duties, permitting release once customs formalities, duty, redemption fine and penalty are paid within the stipulated period.Confiscation under Section 111(d) is upheld; the prior order directing re export is set aside as inconsistent with absolute confiscation; goods permitted to be redeemed and released on payment of duty, a redemption fine of 15% of the assessable value and a penalty of 10% of the assessable value, subject to completion of customs formalities within two weeks of payment.Penalty under Section 112 of the Customs Act, 1962 - Quantum of penalty to be imposed on the importer under Section 112 - HELD THAT: - While the Original Authority imposed a penalty, the Tribunal exercised its appellate power to moderate the penalty. Applying the reasoning used in the Tribunal's earlier decision on similar facts, the Tribunal reduced the penalty to 10% of the assessable value. This reduction reflects the Tribunal's view on proportionality of penalty in the factual matrix where goods were treated as redeemable rather than requiring absolute confiscation without redemption.Penalty under Section 112 is upheld but quantified at 10% of the assessable value.Final Conclusion: Appeal allowed in part: confiscation under Section 111(d) sustained but redemption permitted on payment of a redemption fine of 15% of the assessable value and a penalty of 10% of the assessable value; applicable customs duty shall also be paid and, upon payment and completion of customs formalities within two weeks, the goods shall be released. Issues:1. Classification of imported old and used tyres under CTH 40122020.2. Confiscation of goods under Section 111(d) & (o) of the Customs Act, 1962.3. Requirement of authorization from DGFT and permission from Ministry of Environment and Forest for import.4. Imposition of redemption fine and penalty under Customs Act, 1962.5. Applicability of Hazardous Wastes (Management, Handling and Transboundary Movement) Rules, 2008.6. Comparison with a previous Tribunal case regarding similar circumstances.Detailed Analysis:1. The appellant imported old and used tyres claiming classification under CTH 40122020. The Original Authority held that the tyres fell under Hazardous Wastes Rules, 2008, requiring authorization from DGFT and permission from Ministry of Environment and Forest. Confiscation was ordered under Section 111(d) & (o) of the Customs Act, 1962, with an option to redeem on payment of a fine.2. The Order-in-Appeal upheld the confiscation, redemption fine, and re-export order. The appellant argued that the import was allowed under Exim Code 401232020 of the ITC (H.S.) classification and that the tyres were reusable, not scrap. The appellant also cited a previous Tribunal case where similar goods were allowed clearance with a redemption fine and penalty.3. The Tribunal analyzed the case records and the cited case law. It found that absolute confiscation and re-export orders were contradictory. The Tribunal modified the orders to allow redemption of goods on a fine of 15% of the assessable value and imposed a penalty of 10% of the assessable value. The applicable duty was to be paid for release of goods within two weeks of payment.4. The Tribunal's decision partially allowed the appeal, modifying the orders to uphold confiscation, allow redemption on a fine, impose a penalty, and require payment of applicable duty for release. The judgment clarified the application of rules and penalties in cases of imported goods, emphasizing compliance with classification and authorization requirements.