COLLECTOR OF CUSTOMS, BOMBAY versus M/S. HARDIK INDUSTRIAL CORPORATION

Citation: [1997] SUPP. 6 S.C.R. 363 · Decided: 10-12-1997 · Supreme Court of India · Bench: S.P. BHARUCHA · Disposal: Appeal(s) allowed

Judgment (excerpt)

COLLECTOR OF CUSTOMS, BOMBAY 
A 
v. 
M/S. HARDIK INDUSTRIAL CORPORATION 
DECEMBER 10, 1997 
B 
. (S.P. BHARUCHA AND AP. MISRA, JJ.] 
Customs Act, 1962-Sections 24,. JOfr-Import of Polyethylene 
scrap-Clearance sought-Customs authority on examination found that · 
goods imported were se1viceable mate1ial-Order of Col/ector--Goods to be C 
assessed as serviceable material by enhancing the valu'~Jmposition of fine 
and penalty-On appeal, Tribunal setting aside order of Collector-Direction 
for mutilation of goods--Held, Tribunal e1Ted in setting aside the order of 
Collector and directing mutilation of goods without going into the merits of 
the case-Offer for mutilation made only after the offence was dis-
covered-Matter remanded to Tlibunal for fresh hewing and disposal on D 
me1its. 
The Respondent-assessee imported polyethylene scrap and sought 
clearance for home consumption. The customs authorities examined the 
goods and found that the goods imported were serviceable material ready E 
for use. The goods were seized and statements were recorded under the 
provisions of Section 108 of the Customs Act, 1962. The Collector of 
Customs found that the respondent had sought to clear serviceable 
material as scrap. The Collector thus passed an order for assessing the 
goods as serviceable material by enhancing the value and to confiscate the 
goods with an option to the respondent to redeem them on payment of a F 
fine and personal penalty. On appeal, the Tribunal set aside the order of 
the Collector and directed that the goods should be mutilated in such a 
manner that they would be used only for recycling and not for any other 
purpose. 
In appeal to this Court, Revenue contended that the Tribunal did 
not go into the merits and relying upon Section 24 of the Customs Act, has 
wiped out that order of the Collector, though the purpose of Section 24 
was not to condone or erase the consequences of an offence that had been 
committed. 
363 
G 
H 
364 
SUPREME COURT REPORTS [1997] SUPP. 6 S.C.R. 
A 
Allowing the appeals, setting aside the order of the Tribunal and 
remanding the matter to the Tribunal, this Court 
HELD : 1. The Tribunal erred in setting aside the Collector's order 
and directing mutilation of goods without discussing the merits of the case. 
The Tribunal did not hold as a fact that the goods were scrap or that the 
B respondent had not sought to clear as scrap what was really serviceable 
material or that the confiscation, redemption fine and penalty were uncalled 
for. Without so finding, the Tribunal could not have set aside the Collector's 
order and directed merely the mutilation of the goods.[366-G-H] 
C 
2. The point of time at which the assessee made the offer of mutila-
tion is relevant. If it was madt! at the very outset, that might have been a 
different matter. It was only upon the examination of the seventh container 
that it was noticed that a part of what it contained was serviceable 
material. Thus the assessee's offer of mutilation was made only after the 
offence had been discovered. [366-E-F] 
D 
CIVIL APP ELLA TE JURISDICTION : Civil Appeal Nos.10411-13 
of 1996. 
From the Judgment and Order dated 20.10.95 of the Customs Excise 
and Gold (Control) Appellate Tribunal, New Delhi in A. No. C- 481/94-A, 
E 327-28/95.A) Against Final Order Nos. 586-588 of 1995- A. 
F 
G 
M.S. Usgaoncar, Additional Solicitor General, Dhruv Mehta and 
V.K. Verma for the Appellants. 
B.M. Singhvi for Brij Blnishan for the Respondent m C.A. No. 
10411-13/96. 
S.S. Misra for Uma Nath Singh Respondent in C.A. No. 432/97. 
I 
The Judgment of the Court was delivered by 
BHARUCHA, J. The Revenue is in appeal from an order passed by 
the Customs, Excise and Gold (Control) Appellate Tribunal. 
The respondent filed, for clearance for home consumption/seven 
bills of entry purporting to relate to polyethylene scrap. By reason of 
H intelligence received that serviceable material was likely to be cleared.by 
COLLECIDR OF CUSTOMS v. HARDIKINDUSTRIAL CORPN. (BHARUCHA, J.) 
365 
the respondent as scrap, the goods covered by the seventh bill of entry were A 
examined by the Customs authorities. It was found that what had been 
imported were plastic rolls of LDPE films of continuous printed jumbo size 
bags, plain carry bags and printed carry bags, all ready for use. The goods 
were seized. Statements were recorded under the provisions of Section 108 
of the Customs Act, 1962, and an order was made on 8th March, 1994 by B 
the

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