2009 (3) TMI 719 - AT - Customs

Confiscation and penalty - Section 119 of the Customs Act - import of used war material - prohibited goods

Summary

Issues: Appeal against confiscation of imported materials, imposition of penalties on importer and Custom House Agent (C.H.A.), validity of Pre-inspection certificates, knowledge of importer about the nature of materials, justification of confiscation, role of inspection agency, evidence of concealment of war materials.

Analysis:
1. Confiscation of Imported Materials and Penalties:
The case involved the import of consignments declared as Heavy Melting Steel Scrap, which were found to contain a significant quantity of used war materials. The original authority confiscated 99.861 M.T. of such materials and imposed penalties on the importer and the Custom House Agent. The Commissioner (Appeals) upheld the confiscation and penalties. The Tribunal noted that the importer had no knowledge of the presence of war materials in the consignments. Despite doubts raised about the inspection agency's procedures and the authenticity of certificates, the Tribunal found no justification for penalties on the importer and the C.H.A. The Tribunal confirmed the confiscation of the war materials but rejected the department's appeal for confiscating the balance material, which was not prohibited for import and lacked evidence of concealment.

2. Validity of Pre-inspection Certificates:
The consignments were accompanied by Pre-inspection certificates from an authorized agency, M/s. Alex Stewart (Assayers) Ltd., as required under the Foreign Trade Policy. The Tribunal acknowledged doubts about the inspection agency's procedures and the authenticity of the certificates. However, it emphasized that the responsibility for proper inspection lay with the Directorate General of Foreign Trade (D.G.F.T.) to take necessary actions against the inspection agency if lapses were identified. The Tribunal did not find grounds to justify penalties based on the alleged invalidity of the certificates.

3. Knowledge of Importer and Concealment of Materials:
The Tribunal considered the submissions of both parties regarding the importer's lack of knowledge about the war materials in the consignments. While the confiscation of the war materials was upheld, the Tribunal did not find evidence of intentional concealment on the part of the importer. The Tribunal emphasized that the importer had suffered significant losses due to the confiscation, indicating a lack of awareness about the nature of the materials. In the absence of proof of concealment, the Tribunal rejected the department's appeal for confiscating the balance material under the Customs Act.

4. Role of Inspection Agency and Justification of Confiscation:
The Tribunal scrutinized the inspection agency's role in issuing the certificates and highlighted doubts about the inspection process and certificate authenticity. While acknowledging the confiscation of the war materials, the Tribunal emphasized that penalties on the importer and the C.H.A. were unwarranted due to the lack of evidence of their involvement in any deliberate wrongdoing. The Tribunal suggested that any failures on the part of the inspection agency should be addressed by the D.G.F.T. through appropriate legal actions, rather than penalizing the importer and the C.H.A. for lapses beyond their control.

In conclusion, the Tribunal rejected the department's appeals, upheld the confiscation of the war materials, and allowed the appeals by the parties, providing consequential relief as per the law. The judgment underscored the importance of evidence, knowledge, and procedural integrity in cases involving the importation of materials, while also emphasizing the need for accountability and appropriate actions against regulatory lapses by inspection agencies.