2006 (2) TMI 571 - AT - Customs

Summary

Issues Involved:
Import of Heavy Melting Scrap (HMS) with war-related materials, requirement of certificate from accredited certifying agency, absolute confiscation of war-related materials, penalty imposition, reliance on certificates from non-accredited agency, confusion regarding recognized certifying agency, redemption fine, penalty amount determination.

Detailed Analysis:

1. Import of Heavy Melting Scrap (HMS) with War-Related Materials:
The appellant imported HMS in December 2004 and filed a bill of entry for clearance, accompanied by a certificate from the supplier stating the absence of war-related materials. However, upon examination, war-related materials were found in the consignment, leading to a show cause notice for confiscation and penalty under the Customs Act.

2. Requirement of Certificate from Accredited Certifying Agency:
During the relevant period, it was mandatory to produce a certificate from an accredited agency as per the EXIM policy to confirm the absence of war-related materials in the imported HMS. The appellant failed to provide such a certificate from a recognized agency, leading to the non-compliance with the law.

3. Absolute Confiscation of War-Related Materials and Penalty Imposition:
The adjudicating authority upheld the absolute confiscation of the war-related materials due to the failure to produce the required certificate from an accredited agency. A penalty of Rs. 5,000 was imposed on the appellant for this violation.

4. Reliance on Certificates from Non-Accredited Agency and Confusion Regarding Recognized Certifying Agency:
The appellant mistakenly relied on a certificate from SGS, Mozambique, which was not an accredited agency under the EXIM policy. Although SGS is a recognized certifying agency, the branch in Mozambique was not authorized to issue certificates for inspection. This confusion led to the misdirection by the appellant, resulting in the seizure of the other HMS.

5. Redemption Fine and Penalty Amount Determination:
Considering the appellant's bona fide belief and confusion regarding the certifying agency, the Tribunal reduced the redemption fine to Rs. 1,50,000 and imposed a penalty of Rs. 50,000, deeming it sufficient to meet the ends of justice.

Conclusion:
The appeal was allowed with the absolute confiscation of war-related materials upheld, a penalty of Rs. 5,000 imposed for non-compliance, and a reduced redemption fine of Rs. 1,50,000 along with a penalty of Rs. 50,000 for the misdirection in relying on certificates from a non-accredited agency.