CMI METALS RECYCLING (INDIA) PVT. Vs. CC, (EXPORTS)

JUDGEMENT

(1.) THIS is a case of import of old and used photo -copiers, printers and fax machines along with a few other items such as UPS, wooden trolley and sorters by a 100% Export Oriented Unit, M/s CMI Metal Recycling (I) Pvt Ltd. After investigation pursuant to suspected misdeclaration and undervaluation of the goods under import, adjudication proceedings were initiated which concluded in the subject order in original dated 18.10.2005. In the process of adjudication, the Commissioner of Customs rejected the transaction value as the importers did not produce either the manufacturer's invoice or load port Chartered Engineer's certificate to show that the declared value was the transaction value. It was observed that the goods had been misdeclared as mixed electronic scrap and photo copier scrap. It was also found on examination that the imported goods were old/used photo copiers, fax machines and printers. The Commissioner had got the goods assessed by the Chartered Engineers M/s Hi -tech Associates, Chennai. In the order, the Commissioner re -determined the assessable value in the light of the certificate of the Chartered Engineer in terms of Rule 8 of the Customs Valuation Rules, 1988. In re -determining the assessable value, the Commissioner went by the Chartered Engineer's certificate which had classified the goods as, (1) machines requiring minor reconditioning (2) machines requiring extensive reconditioning and (3) machines in which a few components can be retrieved as spares. The Commissioner confiscated the imported goods under Section 111(m) of the Customs Act, 1962 for the misdeclaration of description and value of the goods. He gave the owner of the goods an option to redeem them on payment of a fine of Rs. 8 lakhs. The appellants have not exercised the option and the goods are still with the Customs department. No duty was demanded on the goods that were covered by letters of permission (LOP) issued by the Development Commissioner, MEPZ, Chennai as the importer is a 100% EOU. In respect of the goods not covered by LOP, the Commissioner ordered appropriate duty to be paid. Penalty of Rs. 1 lakh was also imposed on the importer under Section 112 of the Act.

(2.) IN the appeal, the assessee argued that it was an EOU and the goods imported were covered by LOP issued to them on 5.4.2005 by the Development Commissioner. In the invoice raised by M/s Canon Singapore, Pte Ltd, on appellants' supplier M/s Cimelia Resource Recovery Pte Ltd, Singapore, the goods have been described as scrap equipment for recycling. As per the agreement entered into between Canon Singapore and M/s Cimelia Singapore, it provided for collection of Canon's used products collected from sellers/traders/consumers etc for the exclusive purpose of providing proper recycling services of the products. Subject to the conditions of scrap purchase agreement between the two parties, dated 23.3.2005, Canon Singapore appointed Cimelia Singapore as its approved vender to collect, process, recycle and dispose the scrap materials listed in Annexure B to the agreement. Annexure B to the agreement contained various Canon products such as photo copiers, fax machines, ink cartridges, scanners, and other competitors products, camera plastic casings, camera accessories and parts, camera PCBs, Mother boards, Memory cards, PGBs and Power supply boards. The importers also produced literature of Cimelia, Singapore high lighting its service of recycling, providing cost competitive, metal recycling, metals recovery and refining in tune with environmental laws. All these documents establish that what they had imported was scrap equipment. Cimelia Singapore also described the imported goods as mixed electronic scrap in their invoice covering the imported goods; also the Bill of Lading showed the same description.

(3.) IN the statement dated 28.7.2005 of Shri Mohammed Gani, Managing Director of the assessee firm, it was stated that the old used machines were referred to as scrap in the foreign countries. As the EOU was allowed to import the impugned goods freely and clear the same for its use without payment of duty, they had no reason to misdeclare either the description or the value of the goods. The Chartered Engineer did not mention the basis for the classification he adopted in his report. Therefore, the certificate should not have been followed by the Commissioner. They prayed that the impugned order deserved to be set aside. The importer also submitted some case laws which supported the stand that in the case of 100% EOUs, since no duty was payable, the question of misdeclaration did not arise and consequently, no fine or penalty was to be imposed.