2005 (10) TMI 196 - AT - Customs

Successful Appeal on Confiscation & Penalty for Import of Second-Hand Diesel Engines

BALU INDIA Versus COMMISSIONER OF CUSTOMS, NHAVA SHEVA

The appeal against confiscation and penalty determination related to the import of second-hand diesel engines under an Advance License was successful. The ... Demand - Import for reconditioning the goods Issues:Import of second-hand diesel engines, Exemption under Notification No. 204/92-Cus, Compliance with conditions of Advance License, Confiscation under Section 111(d) of Customs Act, Penalty under Section 112(a) of Customs Act, Appeal against confiscation and penalty determination.Analysis:The appellants imported second-hand disposal diesel engines and claimed exemption under Notification No. 204/92-Cus against an Advance License. The Customs officer did not levy any duty during importation as per the license conditions. However, the appellants failed to recondition the engines for re-export as required by the license. The question arose whether the goods claimed duty exemption were made duty-free at the time of clearance. The license was subsequently canceled, leading to confiscation liability under Section 111(d) of the Customs Act and a penalty. The lower authorities ordered confiscation of the goods and imposed a redemption fine and a personal penalty on the importer.The condition of reconditioning the diesel engines within the duty-free import period specified in the Advance License was not met, rendering the exemption claim invalid. The duty liability exemption is subject to meeting the notification conditions, which in this case required re-export after processing and reconditioning. The Commissioner of Customs had initially determined the value of imported goods, demanded customs duty, ordered confiscation with a redemption option, and imposed a penalty on the importer.The appellants appealed the confiscation and penalty determination to the CEGAT, which set aside the confiscation and penalty orders but upheld the customs duty demand. The case law of Union of India v. Sampat Raj Dugar was referenced for the validity of the license. Considering the circumstances, the Tribunal set aside the impugned order and allowed the re-export of goods within three months. Failure to re-export would result in duty payment by the appellants.In agreement with the re-export order, it was clarified that the three-month period for re-export would start from the date of receipt of the order, not from the date of pronouncement in court. The judgment concluded with the disposal of the appeal in the specified terms.