By TIOL News Service

MUMBAI, NOV 12, 2016: THIS is an appeal filed in the year 2006.

The Commissioner confiscated the parts of the capital goods valued at Rs.1,03,84,580/- with an option for redemption of the same on payment of fine of Rs.5 lacs and also imposed penalty of Rs.1 lac under Section 112(a) of Customs Act, 1962. The grounds for confiscation are that imported goods are parts of second hand machine and, therefore, require licence for import and clearance of the same.

Before the CESTAT, the appellant submitted that they had placed an order for the complete machine, one set, which is second hand to the supplier vide their purchase order dt. 20 October 2005 which was valued at USD 8,50,517.02. However, due to logistics difficulties, majority parts of the machine were imported at NhavaSheva Port and some parts were imported at New Customs House, Mumbai Port. Furthermore, since the present consignment is not separate consignment, it 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. Therefore, there is no need of any licence for import of the part cargo of the second hand machine at Custom House, Mumbai Port, therefore, adjudicating authority has wrongly confiscated the consignment.

The AR while reiterating the findings of the impugned order submitted that this particular consignment is only part of the second hand machine and, therefore,licence is required, though 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 Bench observed -

"5. I find that purchase order is comparison with the invoices of both the consignment, it clearly established that it is one consignment of second hand machine which has been ordered by the importer and imported accordingly. 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 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 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 Interpretations 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 consignment put together comprises of single machine and it is observed that in the present case common purchase order which is complete 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 Bill of Entry was filed on 4/5/2006 and at New Custom House, Mumbai the present Bill of Entry was filed on 22/5/2006 therefore irrespective of fact that both the consignment were imported on different port at different time will not change the classification of a whole machine. As per my above discussion, I am of the view that consignment in the present appeal is nothing but part and parcel of the machine as a whole and could not be classified and were assessed as independent part hence no licence is required, accordingly confiscation is set aside…."

The Appeal was allowed.

In parting : Also see  2016-TIOL-2876-CESTAT-MUM. 

(See 2016-TIOL-2885-CESTAT-MUM)