By TIOL News Service

MUMBAI, NOV 05, 2016: THE Commissioner (Import) confiscated alleged parts of capital goods valued at Rs.2,98,02,672/- with an option for redemption of the same on payment of fine of Rs.14 lakhs and also imposed penalty of Rs. 2 lakhs u/s 112(a) of Customs Act, 1962.

The reason for confiscation - that imported goods are parts of second hand machine and, therefore,requirelicence for import and clearance of the same.

Before the CESTAT, the appellant submitted that they placed an order with the supplier vide purchase order dated October 2005 for one set of the complete machine which is secondhand and valued at USD 720,000. However, due to logistics difficulty, majority parts of the machine were imported at NhavaSheva Port and some parts were imported at New Custom House, Mumbai Port. Furthermore, since the present consignment is not separate consignment but is part and parcel of complete machine, therefore, it cannot be treated as individual part but it is part of the entire machine and should be classified as a machine only. Inasmuch as there is no need of any licence for import of the part cargo of the secondhand machine at Custom House, Mumbai port and hence the adjudicating authority has wrongly confiscated the consignment.

The AR submitted that although the majority parts have been imported at JNPT, NhavaSheva but this particular consignment has to be assessed independently, therefore, it will fall under the classification of parts of machine and needs import licence, therefore, there is violation of condition of ITC and adjudicating authority has rightly confiscated the goods.

The CESTAT observed –

+ Even though the part of the second hand machine were imported at JNPT, NhavaSheva and part imported at New Customs House, Mumbai Port that will not make both the consignments as separate consignment.

+ In terms of Interpretation Rule 2(a), if complete machine is presented unassembled or disassembled, it has to be classified under classification of particular machine and not as parts. In the present case, even though the second hand machine has been imported and cleared from two different ports but both consignments put together comprises of one second hand machine which in my view covered in this Rule 2(a) of General Rules for Interpretation therefore the present consignment has to be classified under classification of machine and not as a part, if it is so then no licence is required for clearance of such goods.

+ The adjudicating authority in his findings has contended that since goods were imported at different port and different time, therefore, it has to be assessed differently in the form as presented at respective port. I do not agree with the Adjudicating authority on this point for the reason that irrespective whether it is imported at different date at different port but it is undisputed that both the consignments put together comprises of single machine and it is observed that in the present case common purchase order which is into two invoices, purchase order value as well as invoices value tallies, even the time of import also not much different because at NhavaSheva the Bills of Entry was filed on 5/4/2006, 13/4/2006 and 25/4/2006 and at New Custom House, Mumbai the present Bill of Entry was filed on 27/4/2006, therefore, irrespective of fact that both the consignment were imported on different ports at different time will not change the classification of a whole machine.

+ Holding that the consignment is nothing but part and parcel of the machine as a whole and could not be classified and assessed as independent part and hence no licence is required, the confiscation was set aside.

The Appeal was allowed.

(See 2016-TIOL-2876-CESTAT-MUM)