2022 (9) TMI 1013 - AT - Customs

Waiver of redemption fine and reduction in penalty under Section 112 ibid - Rubber Tyre Scrap - Restricted goods or not - importation of excess quantity of waste/used Rubber Tyre Scrap over a period of time - HELD THAT - The Adjudicating Authority has discussed about the instructions/import policy of the DGFT to inter alia hold that the excess import by the respondent was in violation of the statutory policies. The Adjudicating Authority has also referred to the Decisions of 57th meeting of the Technical Review Committee (TRC) under the Hazardous Waste (Management Handling and Trans-boundary Movement) Rules 2008 held on 18th and 19th October 2016 wherein the said Committee has decided that its intention was not to allow used tyres for use as such . In view of the above therefore it is incumbent upon the Adjudicating Authority to deliberate / adjudicate as to whether the importer has used the imported waste/used tyres as such or not. The Adjudicating Authority has accepted the plea of the respondent that the respondent had debited the licence for single-cut bead tyres that did not require DGFT licence has also observed at paragraph 26 of his order that he has found nothing adverse with regard to the intended use (outcome of investigation of the concerned Revenue authorities) nor was there any evidence to even suggest the same from the communication issued by the Office of the Principal Commissioner of Customs Hyderabad - By this it is clear that there was no violation of the decision arrived at by the Technical Review Committee as to the intended usage of the impugned goods in question by which it only renders that the excess import during the period in question by the respondent was only irregular and not prohibited. At no stretch of imagination could it be held to be prohibited since there are sufficient materials available on record including the licence issued by the appropriate authority for import of a particular quantity of the goods and hence it cannot be held that a part of the same import is prohibited while the other part is permitted. The Revenue has not satisfied the conditions laid down under Section 112 (a) or (b) ibid. to justify its challenge to the findings arrived at by the First Appellate Authority - appeal dismissed - decided against Revenue.

Summary

Issues:
Waiver of redemption fine and reduction in penalty under Section 112 of the Customs Act, 1962 by the First Appellate Authority.

Analysis:
The appeal was filed by the Revenue against the Order-in-Appeal passed by the Commissioner of Customs (Appeals-II), Chennai, which allowed the taxpayer's appeal by deleting the redemption fine and reducing the penalty under Section 112 of the Customs Act, 1962. The main issue to be decided was whether the actions of the First Appellate Authority were in order. The case involved the importation of Rubber Tyre Scrap in excess of the DGFT authorization. A Show Cause Notice was issued, alleging violations and proposing confiscation of goods and penalties. The Adjudicating Authority confirmed the proposals, leading to an appeal by the taxpayer. The First Appellate Authority set aside the redemption fine but reduced the penalty, prompting the Revenue to challenge this decision.

The Adjudicating Authority discussed the violation of DGFT instructions and policies due to the excess import of Rubber Tyre Scrap. Reference was made to the decisions of the Technical Review Committee regarding the intended use of the imported goods. It was noted that the respondent had debited the license for specific types of tyres that did not require DGFT approval, and investigations did not reveal any adverse findings regarding the intended use of the goods.

The Tribunal found that the excess importation was irregular but not prohibited, as there was no evidence of prohibited use of the goods. The imposition of penalties under Section 112 of the Customs Act requires conscious acts or omissions, with intention playing a crucial role. The Tribunal concluded that there were no mala fides involved on the part of the importer, as evidenced by the licensee's actions and lack of evidence suggesting improper use of the goods.

The Tribunal held that the Revenue failed to satisfy the conditions under Section 112 of the Customs Act to challenge the findings of the First Appellate Authority. Consequently, the appeal filed by the Revenue was dismissed, and the decision of the First Appellate Authority was upheld. The judgment was pronounced in open court on 22.09.2022 by Mr. P. Dinesha, Member (Judicial) of the Appellate Tribunal CESTAT Chennai.