2024 (2) TMI 825 - AT - Customs

Plastic injection moulds qualify for EPCG exemption under Notification 22/2013 despite authorities' second-hand classification

M/s. Salzer Electronics Ltd. Versus The Commissioner of Customs (Seaport-Export), Chennai

The CESTAT Chennai allowed the appeal regarding import of plastic injection moulds. The appellant imported moulds under EPCG scheme claiming exemption ... Import of Plastic Injection Moulds - News goods or used / second hand goods - Benefit of Notification No.22/2013 dt. 18.4.2013 was denied - Mis-declaration of imported goods - Order for clearance of the goods on payment of appropriate duty - confiscation - redemption fine - penalty - enhancement of value - HELD THAT:- As per para 5.1 (e) of FTP, the second hand goods are not permitted to be imported under EPCG scheme. From the records, it is seen that the goods were examined by a Chartered Engineer who has reported that the goods are ‘used’ and ‘not new’. It is to be noted that in the purchase order the appellant has mentioned the supplier to comply with the specifications / requirements. So also, the purchase order shows the drawing number, description of the material (As per Annexure to Purchase Order No.00029). This proves that the appellant had submitted drawings of the items to their supplier. The said drawings are enclosed in the appeal paper book. These drawings show that the word ‘SALZER’ has to be etched on the moulds. The photographs of the imported goods have been placed before us. On perusal of these photographs, it is seen that the item bears the etching of the word ‘SALZER’. The appellant has submitted that they do not have any other company outside India - the opinion of the Chartered Engineer that the moulds are ‘used’ and ‘not new’ does not seem to be factually proper. It requires to be mentioned that even though the etching of word ‘SALZER’ is prominent in the photographs, the Chartered Engineer has not mentioned anything about this in the report. Further, the report says that it is not rapidly used. The appellant has stated that other than the trial runs, the moulds have not been used and are entirely new. The report given by the Chartered Engineer that the goods appear to be used is not supported by any scientific or technical basis. The expert opinion cannot be used as a conclusive proof and is only corroborative in nature - Though opinion of an expert does help Court to arrive at a satisfactory conclusion; but this not mean that an expert opinion has to be accepted invariably in all situations. This would amount to delegation of judicial function. The report does not state the facts on which the Chartered Engineer made the conclusion that the moulds are used, second hand moulds. The expert is not to expected to give his impressions but has to state the facts on which he draws the opinion. The reliance placed by the adjudicating authority and Commissioner (Appeals) solely on the expert opinion cannot be accepted. Enhancement of value of goods - HELD THAT:- The impugned order does not give how such enhanced value has been arrived at by the department. There are no satisfactory reasons given for doubting and rejecting the transaction value. Though the department has accepted the report of the Chartered Engineer in regard to the opinion that the imported items are used and second hand, surprisingly, the opinion given by him that the value declared by the importer is fair and reasonable, has been rejected. The reasons for such rejection is not available. Thus, as per the records such as date and description in purchase order, drawings and the photographs, the contention of the appellant that the goods imported are new is probable and acceptable. The overseas supplier has issued a certificate stating that the goods are new. The said certificate though produced before the authorities, was not considered at all. There are no grounds to deny the benefit of exemption of Notification No.22/2013 dt. 18.04.2013. So also, there is no legal basis for enhancement of the value. The duty demand, confiscation or redemption fine and the penalties cannot sustain. The impugned order is set aside. The appeal is allowed. Issues Involved:1. Eligibility for the benefit of Notification No.22/2013 dt. 18.04.2013.2. Determination of whether the imported goods are second-hand.3. Enhancement of the assessable value of the goods.4. Imposition of penalty and redemption fine.Summary:1. Eligibility for the benefit of Notification No.22/2013 dt. 18.04.2013:The primary issue was whether the imported '14 sets of Plastic Injection Moulds' were eligible for the benefit of Notification No.22/2013 dated 18.04.2013. The department denied the benefit, alleging the goods were used/second-hand, which is not permitted under the EPCG scheme as per para 5.1 (e) of the Foreign Trade Policy.2. Determination of whether the imported goods are second-hand:The appellant argued that the moulds were new and specifically manufactured for them, bearing the etching 'SALZER,' indicating they were not used by any other entity. The Chartered Engineer's report stated the moulds were 'used' and 'not new,' but did not provide details of wear and tear. The Tribunal found the Chartered Engineer's opinion lacked factual support and did not mention the etching, which was crucial evidence. The Tribunal concluded that the moulds were new, as supported by the purchase order, drawings, photographs, and the supplier's certificate.3. Enhancement of the assessable value of the goods:The appellant contested the enhancement of the value of the goods from Rs.60,33,695/- to Rs.79,01,295/-. The Chartered Engineer's report stated the declared value was correct, yet the department enhanced it without providing a basis for such an increase. The Tribunal found no satisfactory reasons for doubting and rejecting the transaction value and deemed the enhancement unjustified.4. Imposition of penalty and redemption fine:The original authority imposed a penalty of Rs.3,50,000/- under Section 112 (a) of the Customs Act, 1962, and a redemption fine of Rs.7,90,000/- under Section 125 of the Customs Act, 1962. The Tribunal found no grounds to deny the benefit of the exemption notification or to enhance the value, rendering the duty demand, confiscation, redemption fine, and penalties unsustainable.Conclusion:The Tribunal set aside the impugned order, allowing the appeal with consequential relief, if any. The judgment emphasized the lack of factual support in the Chartered Engineer's report and the improper enhancement of the assessable value by the department.