ORDER
P.G. Chacko, Member (J)
1. The respondents had imported 80.11 MTs of what was declared as “non-alloy steel melting scrap” and valued by them at Rs. 3,99,346/- @ US$ 110 per MT. The Bill of Entry which was filed for clearing the goods claimed the benefit of Customs Notification No. 20/99. Upon examination of the goods, it appeared to the department that the consignment contained 45 MTs of “Tin Plate Misprints” and 30 MTs of “Secondary/defective cold rolled sheets (8″x 6″)” besides 5 MTs of “Light Melting Scrap”. The original authority accepted the declared value in respect of the 5 MTs of Tight melting scrap’ but rejected the same in respect of the rest of the goods. It enhanced the unit price to US$ 270 per MT CIF and US$ 300 per MT CIF in respect of the ‘tin plate misprints’ and ‘cold-rolled sheets’ respectively. The benefit of the Notification was denied and the goods were ordered to be reassessed on merits. The authority also found that 45 MTs of ‘tin plate misprints’ and 30 MTs of ‘cold-rolled steel sheets’ had been misdeclared as “melting scrap” and, accordingly, these goods were confiscated under Section 111 of the Customs Act with option for redemption against payment of a fine of Rs. 4.7 lakhs. A penalty of Rs. 47,000/- was also imposed on the importer under Section 112 of the Act. Against the decision of the original authority, the party preferred appeal to the Commissioner (Appeals). Before the appellate authority, apart from challenging the order of the lower authority on various grounds, the appellants requested for permission to mutilate the non-scrap goods. This request was acceded to under Section 24 of the Customs Act. It was directed that, after mutilation, the goods be allowed to be cleared as ‘waste and scrap’ with the benefit of the Notification. Ld. Commissioner (Appeals) also set aside the fine and penalty, in the conclusive part of her order, which reads : “since mutilation is being ordered and the importer would also have to incur expenditure for this purpose, the order of the lower authority in respect of confiscation of the goods, fine and penalty is set aside”. The present appeal of the department is against this part of the impugned order.
2. It is submitted by ld. SDR that the respondents have abandoned the goods, a fact noted by the Bench in Stay Order No. 514/2000 dt. 4-7-2000 passed in the present appeal. According to ld. SDR, the party, obviously, has no intention to take the benefit of the impugned order and, therefore, they must be held liable for penalty under Section 112 of the Customs Act. It is the argument of ld. SDR that the respondents cannot exonerate themselves from the consequences of misdeclaration by simply abandoning the goods. In this connection, reliance is placed on the Supreme Court’s judgment in Collector of Customs, Bombay v. Hardik Industrial Corporation , wherein, on more or less similar facts, it was held that it was inappropriate to direct mutilation of goods without discussing merits of the case.
3. Ld. counsel has argued in defence of the impugned order. However, he has not contested the fact that the goods have already been abandoned. It is his further submission that, in the event of a favourable decision being taken in the appeal, leniency be shown in the matter of imposing penalty on the respondents.
4. After giving careful consideration to the submissions, we find that the respondents have already abandoned the entire goods. Obviously, they are not taking the benefit of the order of the Commissioner (Appeals) who, in the impugned order, allowed mutilation of the goods under Section 24 with a further direction that, upon such mutilation, the goods be allowed to be cleared as ‘waste and scrap’ with the benefit of the Notification. Now that the benefit of mutilation stands declined, the direction of the lower appellate authority for permitting clearance of the goods as ‘waste and scrap’ with the benefit of the Notification is also of no avail to the party. It is also noticed that, in the context of permitting mutilation of goods, Id. Commissioner (Appeals) was choosing to vacate redemption fine and penalty. Where the benefit of mutilation is not taken by the importer, the question whether they are liable to penalty under Section 112(a) of the Customs Act gets revived, though there will be no question of payment of fine by the party who does not want to redeem the goods. It appears from the impugned order that the penalty aspect was not examined on merits by the Commissioner (Appeals).
5. For the reasons aforesaid, we are of the view that, now that the party has declined to take the benefit of mutilation of goods, Id. Commissioner (Appeals) should consider and decide on the question whether they are liable for a penalty under Section 112(a) of the Customs Act for misdeclaration of description and value of the goods and, if so, to what extent. Accordingly, after setting aside the order of mutilation, we direct the lower appellate authority to decide on the aforesaid issue and pass a speaking order after giving the party a reasonable opportunity of being heard. The case law placed before us by SDR also may be considered by Id. Commissioner (Appeals).
(Operative part of the order was pronounced in open Court on 23-1-2007)