The acceptance of goods' classification by a Customs Broker without the importer's authorization violates principles of natural justice, and re-classification based solely on visual examination without expert evidence is unsustainable to prove mis-declaration.

P. ANJANI KUMAR:

Avnish & Company, the appellants, have filed a B/e No.2892264 dated 12.10.2015 for clearance of 199.160 MT of Heavy Melting Scrap, ISRI-206 at a declared CIF value of 240 USD per MT; on examining the goods in the presence of the Customs Broker and Chartered Engineer, Revenue was of the opinion that the consignment contained 69.640 kg of secondary and defective non- alloy steel coils more than 600 mm; the Customs Broker has accepted the examination report and the value suggested by the Revenue. Accordingly, the OIO dated 26.11.2015 was passed imposing redemption fine of Rs.2 Lakhs and penalty of Rs. 60,000. An appeal filed by the appellants did not find favour with Commissioner (Appeals). Hence, this appeal.

Shri Saurabh Kapoor assisted by Ms. Tanya Kumar, learned counsels for the appellants submit that the impugned order is passed contrary to the facts and in contravention of Customs Law and instructions issued by Board; part of the consignment has been re-classified and re-valued on the basis of visual examination even though it was indicated that the goods are not fit to be used as such; nonscientific test was conducted and no report was given to the appellants; the Chartered Engineer, who attended the examination of goods, was not a metallurgical expert; condition, nature and utilization of goods was not taken into consideration; the appellant was not present during inspection and adjudication and therefore, principles of natural justice are violated. They rely on the following cases:

 Eicher Tractors Ltd. – 2000 (11) TMI 139 (SC)

 Worldline Tradex Pvt. Ltd. – 2016 (340) ELT 174 (Del.)

 Jai Mata Di Trading – 2026 (5) TMI 1449- CESTAT Allahabad

 Nishka International – 2024 (9) TMI 254- CESTAT Kolkata

 Rathi Steel and Power Ltd. – 2018 (364) ELT 429 (Tri. All.)

Shri Navneet Singh, learned Authorized Representative for the Revenue, reiterates the findings of the impugned order and submits that the Customs Broker was present during the examination of the goods and as expected, the classification of the goods as per the examination report and therefore, the appeal is liable to be dismissed.

Heard both sides and perused the records of the case. We find that examination of the goods was conducted in the presence of the Customs Broker and the Chartered Engineer. It is also recorded that the Customs Broker has accepted the value and classification arrived by the Department. It is not clear whether the importer has authorized the Customs Broker to represent them in this regard. Revenue also has not produced any such authorization. Under the circumstances, it cannot be considered that the examination was conducted in the presence of the importer and that the importer has accepted the classification and valuation of the impugned goods thereof. We also find that Revenue has not brought forth any provision under Customs Broker License Regulations , authorizes the Customs Broker to represent the importer in this regard. Therefore, we are of the considered opinion that the principles of natural justice are clearly violated.

It is the claim of the appellants that the material was imported for melting purposes and it has been melted. Though, end use of goods is not a criterion for classification, the argument of the appellant, that the part of the goods which were classified to be steel coils were, in fact, of specifications, damaged and could not be used as such, cannot be denied. Department arrived at the quality and quantity of the coils without taking the opinion of a specialist; without causing any market enquiry and without any testing. Under these circumstances, the argument of the Department on the nature of part of the impugned goods, cannot be accepted. Therefore, we find that there is no mis-declaration by the appellants either in respect of classification or in respect of value. Thus, deeming the goods to be liable for confiscation and imposition of fines and penalties are not s