SUPER AUTOFORGE LTD. Vs. COMMISSIONER OF CUSTOMS

JUDGEMENT

(1.) THE appellants had placed a purchase order dated 12.10.2004 on a US company for purchase of one used "SAKAMURA MODEL OSF -100 36MM SINGLE STROKE SOLID DIE SLUG & BALL FORMER RE: 13345, NEW 1984, TRUE FORGE RE: 13345 ALONG - WITH STANDARD ACCESSORIES". It appears, the entire machine with all its parts could not be shipped in one consignment. It is the case of the appellants that the various parts of the machine were shipped by a container vessel and the main machine was shipped later in a break bulk vessel due to technical reasons. The two consignments were accompanied by the respective bills of lading and invoices. The invoice covering the first consignment mentioned an amount of USD 7,500 as the F.OB. value of the goods. The invoice which accompanied the second consignment mentioned an amount of USD 1,22,500 as the F.O.B. value of the goods. The F.O.B. value mentioned in the aforesaid purchase order was USD 1,30,000 equivalent to the sum of the F.O.B. values mentioned in the two invoices. A bill of entry was filed on 15.12 .2004 by the party for clearance of the goods covered by the first invoice. This bill of entry described the various goods as "parts of machine tools for working metal". None of these descriptions contained the word 'used', nor the word 'new'. In a letter dated 18.01.2005, the importer informed the Additional Commissioner of Customs that the overseas supplier had forwarded the ordered machinery in two consignments, that parts of the machine had reached the Chennai port and that the main machine was on its way. This letter was submitted with reference to bill of entry dated 15.12.2004 filed for the clearance of the so -called parts. It appears from the conclusive part of this letter that, before submitting this letter, the importer had been confronted with a proposal to impose penalty. It further appears from the records that the goods covered by the above bill of entry were cleared on payment of duty on 22.01.2005. It further appears that when the Customs authorities proposed to confiscate the goods under Section 111 of the Customs Act and to impose penalty on the importer, the latter waived show -cause notice and pleaded for leniency. The original authority found the goods to be liable for confiscation under Section 111(d) and (m) of the Customs Act and the importer to be liable for penalty under Section 112(a) of the Act. This view was based on the finding that new capital goods had been imported in the guise of used ones without requisite import licence and that the goods were misdeclared in the bill of entry for the said purpose. On this basis, the authority confiscated the goods with option for redemption against payment of fine of Rs. 3 lakhs. It also imposed a penalty of Rs. 70,000/ -. The appeal filed by the party against the Additional Commissioner's decision was dismissed by the Commissioner (Appeals) on merits. The present appeal is directed against the appellate Commissioner's order.

(2.) AFTER careful scrutiny of the records, I find that there is a formidable link between the goods covered by the said bill of entry and the main machine subsequently cleared on payment of duty based on the F.O.B. value of USD 1,22,500. The main machine was allowed to be cleared as second -hand capital goods (albeit without licence) without any hitch. As early as on 18.01.2005, the assessee had informed the assessing authority that the goods covered by the earlier bill of entry dated 15. 12.2004, were parts of this main machine. In support of this plea, they had also pointed out that the F.O.B. value mentioned in the common purchase order for both the consignments was the exact arithmetical sum of the F.O.B. values of the main machine and its parts as mentioned in the separate invoices. The only reasons stated by the lower authorities for holding the goods in question to be liable for confiscation under Section 111(d) & (m) is that these goods were not shown to be used (second -hand) goods. This reasoning is based on the description of goods given in the bill of entry. The bill of entry did not contain expressions like 'used", 'second hand' etc. However, it did mention that the goods were "parts of machine tools for working metal". The assessee claimed that the main machines (machine tools) mentioned in the bill of entry were in the pipeline for import. They also adduced evidence in support of this claim. The main machine was subsequently imported and cleared as secondhand capital goods on payment of duty. The F.O.B. value mentioned in one of the invoices issued by the supplier was accepted as basis of assessment of this main machine. The F.O.B. value mentioned in the other invoice of the supplier has been accepted by the lower authorities for payment of duty on the goods covered by bill of entry dated 15.112.2004. The Order -in -Original passed by the Additional Commissioner enabled the importer to redeem the goods on payment of duty on this basis as well as on payment of redemption fine and penalty. Yet, the authorities would not accept the obvious fact that the goods (sic) covered by bill of entry dated 15.12.2004 were parts of the machine tools for working metals, which was subsequently allowed to be cleared as second -hand capital goods on payment of duty! This approach cannot be countenanced.