(A.K. Sikri and Rohinton Fali Nariman, JJ.)
Union of India & Anr. ___________________ Appellant(s)
v.
M/s. Jayshree Metal Corporation __________ Respondent
Civil Appeal No(s). 2349/2007, decided on October 6, 2015
The Order of the court was delivered by
Order
1. The respondent imported Zinc Die Cast Scrap and claimed classification under Chapter Sub-Heading 7902.00 of the Customs Tariff Act, 1975. A Bill of Entry denoting value at Rs. 10,04,792/- was filed with the Customs Department and along with the duty, the value was shown at Rs. 12,55,990/-. During the course of examination, it was found that the goods imported were actually articles of zinc such as door handles, door lock nobes, water tap handles or shower handles and bathroom fitting covers of virgin quality and of serviceable nature. This discovery as to the nature of the consignment was based on an expert opinion obtained from M/s. S.G.S. India Ltd. The expert opined that very few pieces were found to be scrap and balance all items were found to be unused and they were serviceable.
2. The entire consignment was placed under seizure under a reasonable belief that the same was misdeclared for description and value and were liable for confiscation under Section 111(d) and 111(m) of the Customs Act, 1962 (hereinafter referred to as ‘the Act’). A detailed valuation report was obtained from an expert valuer to ascertain the value of fittings which was ascertained at Rs. 68,17,235/-.
3. Furthermore, during the course of investigation on the date of seizure itself, statement of one of the partners of the Customs House Agent Firm and the Proprietor of the respondent was recorded under Section 108 of the Act wherein they admitted that there was an attempt to evade tax.
4. A show cause notice was issued by the Joint Commissioner of Customs, Kandla under Section 124 of the Act relating to confiscation of goods, levy of duty on valuation done by the valuer and levy of penalty. The Commissioner of Customs, Kandla upheld all the allegations made in the show cause notice and ordered accordingly. The respondent challenged the Order-in-Original before the Customs, Excise & Service Tax Appellate Tribunal (hereinafter referred to as ‘CESTAT’) which upheld the Order-in-Original but set aside the penalty on the Proprietor.
5. The respondent went into appeal before the High Court of Gujarat against the order of CESTAT. The High Court allowed the writ petition filed by the respondent herein holding that what was imported was nothing but scrap and further it was sold as scrap even by the Department and in two rounds of auction the highest bids received for the same were Rs. 11,75,000/- and Rs. 13,55,555/-, therefore, the value of this scrap could not have been higher. After reading the inspection report which was obtained by the Department itself, we are convinced that the goods imported were nothing but scrap. In such a case, it becomes clear that there was no misdeclaration by the respondent whatsoever. Insofar as valuation of these goods is concerned, the valuation report obtained by the Department cannot be acted upon as it did not value the product correctly. Moreover, it was based on the value as prevailing in the Indian market which would alone be extraneous. It is on record that the exporter in USA who had exported these items to the respondent herein itself is a scrap dealer. These items were treated as scrap in USA and were exported from USA to India which was bought by the respondent as scrap.
6. Once the aforesaid valuation is discarded, the Department has no other evidence to show how these goods could be valued. It may be noted that the burden to show the valuation was on the Department. In the absence of the evidence produced by the Department, the High Court had no option but to go by the highest bid that was received while auctioning these goods.
7. We, thus, do not find any error in the order of the High Court and dismiss this appeal.
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