1991 (5) TMI 194 - AT - Customs

Appeals allowed, orders set aside due to failure in proving imported goods as disposal goods. Consequential reliefs granted.

MARKETING ENTERPRISES Versus COLLECTOR OF CUSTOMS

The Tribunal allowed the appeals, setting aside the orders passed by the authorities below. It concluded that the department failed to prove that the ... Import - Disposal goods Issues Involved:1. Violation of Import and Export Procedure2. Classification of Goods as Disposal Goods3. Burden of Proof on the Department4. Examination and Re-examination of Goods5. Pricing and Trade PracticesIssue-wise Detailed Analysis:1. Violation of Import and Export Procedure:The appellants were accused of violating para 100(1) of the Import and Export Procedure, 1988-91, by importing Polyester Woven Labels without a valid ITC license. The department argued that the goods were unauthorized under Section 3 of the Import and Export (Control) Act, 1947, read with Section 11 of the Customs Act, 1962. The Assistant Collector confiscated the goods and imposed fines and penalties, which were later reduced by the Collector of Customs (Appeals).2. Classification of Goods as Disposal Goods:The department's case was based on the observation that the imported labels were jumbled together and not in marketable condition, suggesting they were disposal goods. The appellant contended that the goods were stock lot items, not disposal goods. The appellant argued that the goods were new and appropriately packed, and that the term 'disposal goods' implies goods that the owner is anxious to get rid of due to deterioration, outdatedness, or lack of marketability. The Tribunal agreed with the appellant, noting that the department failed to prove that the goods were disposal goods.3. Burden of Proof on the Department:The Tribunal emphasized that the burden of proof lies on the department to establish that the imported goods were disposal goods. The department relied on the fact that the goods were of different sizes and purchased at a lower price, but failed to provide sufficient evidence to prove that the goods were disposal goods. The Tribunal cited previous decisions, including the Bombay High Court's ruling in 1981 (8) E.L.T. 936, which stated that the mere fact that goods are of varying sizes and sold at a reduced price is not sufficient to classify them as disposal goods.4. Examination and Re-examination of Goods:The appellant requested a re-examination of the goods to prove that they were new and appropriately packed. The department did not consider this request. The Tribunal noted that the appellant had pressed for re-examination in their reply to the show cause notice and that it was the department's responsibility to conduct the re-examination. The Tribunal found that the department's failure to re-examine the goods weakened their case.5. Pricing and Trade Practices:The department argued that the goods were purchased on a weighment basis, which is against trade practice, and that the price was significantly lower than similar goods. The Tribunal found that the price variation alone was not sufficient to classify the goods as disposal goods. The Tribunal noted that the price of goods can vary based on quality and that the department did not provide adequate evidence to prove that the lower price indicated the goods were disposal goods.Conclusion:The Tribunal concluded that the department failed to establish that the imported goods were disposal goods. The appeals were allowed, and the orders passed by the authorities below were set aside. The appellant was granted consequential reliefs.