1998 (3) TMI 440 - AT - Customs

Customs Tribunal denies Customs exemption for gear machine due to multi-function capabilities

The Tribunal ruled in favor of the Customs House, denying the appellant's claim for Customs exemption benefits for importing a gear tooth chamfering ... Import trade control Issues:1. Interpretation of the Customs exemption and Open General Licence (OGL) provisions for the clearance of goods.2. Determination of the machine's capabilities based on manufacturer's descriptions and operational features.3. Analysis of the manufacturer's brochure, packing list, and machine drawings to ascertain the machine's functions.4. Assessment of the machine's design and intended functions for classification under OGL and Customs exemption notification.5. Examination of the I.T.C. Policy regarding the import of multi-function machines and its implications on the case.6. Differentiation between the denial of OGL benefits and the denial of Customs exemption notification benefits.7. Consideration of penalties and confiscation in relation to misdeclaration or mala fide intentions.Analysis:The case involved the appellant's import of a gear tooth chamfering machine under OGL provisions and Customs exemption notification. The Customs House contested the clearance, alleging the machine could perform additional functions beyond chamfering, leading to proposed denial of benefits, confiscation, and penalties. The appellant argued that the machine was solely a chamfering machine, supported by manufacturer descriptions, operational instructions, and packing lists. The Departmental Representative, however, claimed the machine was capable of deburring and tooth rounding based on the manufacturer's brochure indicating multiple functions without part changes.The Tribunal analyzed the manufacturer's brochure, which described the machine's design for chamfering, rounding, and deburring, suggesting it could perform all three functions with minor adjustments. The Tribunal highlighted the importance of the machine's overall capabilities and design intent, concluding it was a multi-function machine requiring only cam changes for different tasks. Despite the I.T.C. Policy's restrictions on multi-function machines under OGL, the Tribunal found no justification for confiscation or penalties due to the lack of mala fide intentions or misdeclaration by the appellant.Regarding the Customs exemption notification, the Tribunal upheld the Addl. Collector's decision, strictly interpreting the notification's specific function-based exemptions. As the imported machine did not align with any listed functions in the notification, it was deemed ineligible for exemption benefits. Consequently, the Tribunal allowed the appeal in part, denying the Customs exemption but ruling against penalties and confiscation. The judgment emphasized the strict construction of exemption notifications while considering the overall machine capabilities for OGL eligibility.