1996 (11) TMI 252 - AT - Customs

Court affirms decision on machine import violation, reduces penalties, stresses due diligence

The court upheld the Collector's decision to confiscate the machine and impose fines and penalties on the appellant for importing a machine that did not ... Import - OGL Issues:1. Interpretation of the description in the Open General License (OGL) entry for import clearance.2. Determination of whether the imported machine falls within the scope of the OGL entry.3. Assessment of the penalty imposed on the appellant for lack of due diligence in ensuring compliance with the OGL entry.Analysis:1. The appellant imported a machine declared as an 'Automatic Point Grinding Machine with accessories' under the provisions of the OGL in terms of specific Entry Nos. in the Import Policy. Customs authorities found that the machine did not match the description in the OGL Entry for an 'Automatic Drill Point Grinder.' The Collector issued an order confiscating the machine and imposing fines and penalties after the appellant waived the written Show Cause Notice. The main contention revolved around the discrepancy in the description of the imported machine compared to the OGL entry.2. The appellant's advocate presented a certificate from the manufacturer and an affidavit from a Chartered Engineer to support the machine's capability to grind drill bits used in surgical needles. However, the Collector determined that the machine was an automatic drill point grinding machine, not covered by the OGL entry. The Collector correctly interpreted the OGL entry as limited to grinding machines capable of grinding cutting tools of drills specifically used in needles. The technical literature and certificates provided did not conclusively prove the machine's compliance with the OGL entry requirements.3. The penalty imposed on the appellant was justified based on the lack of sufficient precautions taken to ensure the machine's compliance with the OGL entry. The appellant failed to provide evidence of efforts made to verify the machine's eligibility under the OGL entry, indicating a lack of due diligence. Considering the substantial difference in the composition of needles and drill bits, it was reasonable to conclude that the appellant should have known the machine's limitations. The penalty was reduced from Rs. 3.00 lacs to Rs. 1.5 lacs, taking into account the value of the goods involved.In conclusion, the judgment upheld the Collector's decision to confiscate the machine and impose fines and penalties on the appellant due to the machine's non-compliance with the OGL entry requirements. The appellant's failure to exercise due diligence in ensuring compliance led to the imposition of penalties, albeit reduced upon review.