2009 (1) TMI 672 - AT - Customs

Issues Involved:
1. Confiscation of goods under Sections 111(d), 111(m), and 119 of the Customs Act, 1962.
2. Imposition of redemption fine under Section 125 of the Customs Act, 1962.
3. Imposition of penalties under Sections 112(a) and 112(b) of the Customs Act, 1962.
4. Compliance with Public Notices and Circulars issued by DGFT and C.B.E. & C.
5. Validity of the pre-shipment inspection certificate.

Issue-wise Detailed Analysis:

1. Confiscation of Goods under Sections 111(d), 111(m), and 119 of the Customs Act, 1962:
The Commissioner of Customs ordered the confiscation of the imported goods, including the explosive materials, under Sections 111(d), 111(m), and 119 of the Customs Act, 1962. The consignment contained prohibited goods such as arms and ammunition, which were imported without a valid license, disguised as Heavy Melting Scrap (HMS). The presence of bomb scrap, empty cartridge shells, and live cartridges was discovered during inspection, leading to the seizure of the consignment. The Commissioner concluded that the imported goods were "prohibited goods" and liable to confiscation due to non-compliance with the conditions laid down by the DGFT.

2. Imposition of Redemption Fine under Section 125 of the Customs Act, 1962:
The Commissioner provided an option to M/s. Nilesh Steel & Alloys Pvt. Ltd. to redeem the subject goods (excluding the explosive materials) on payment of a fine of Rs. 7,00,000/- in lieu of confiscation under Section 125 of the Customs Act, 1962. This provision allows the importer to reclaim the goods by paying a fine, thus avoiding permanent confiscation.

3. Imposition of Penalties under Sections 112(a) and 112(b) of the Customs Act, 1962:
Penalties were imposed on various parties involved, including M/s. Nilesh Steel & Alloys Pvt. Ltd., M/s. Crescent Exports, their respective directors, M/s. Cosco (India) Shipping Pvt. Ltd., and the CHA. The penalties ranged from Rs. 25,000/- to Rs. 2,00,000/-. These penalties were based on the involvement of these parties in the importation of prohibited goods and their failure to comply with the necessary procedural requirements, thereby rendering themselves liable to penal action under Sections 112(a) and 112(b) of the Customs Act, 1962.

4. Compliance with Public Notices and Circulars issued by DGFT and C.B.E. & C.:
The importers failed to comply with the Public Notices issued by DGFT on 15-10-2004 and 21-10-2004, which required importers of metallic waste and scrap in unshredded, compressed, and loose form to obtain a pre-shipment inspection certificate from specified agencies. The consignment in question was shipped on 2-12-2004, falling under the second category as per the C.B.E. & C. Circular dated 18-10-2004, which mandated the inspection certificate. The inspection certificate provided by M/s. SGS Iran Ltd. was not from an approved agency, and the inspection was limited to visual examination, which was insufficient to detect the presence of explosives.

5. Validity of the Pre-shipment Inspection Certificate:
The inspection certificate issued by M/s. SGS Iran Ltd. was deemed invalid as it was not from a specified certification agency listed in Appendix 28. Moreover, the certificate only covered a visual inspection of accessible portions of the consignment, which failed to detect the significant quantity of explosives found. This invalid certificate contributed to the non-compliance with the DGFT's Public Notices, leading to the confiscation and penalties imposed.

Conclusion:
The Tribunal upheld the order passed by the Commissioner, confirming the confiscation of the imported goods, the imposition of redemption fine, and the penalties on the involved parties. The appellants' failure to comply with the procedural requirements and the presence of prohibited goods justified the actions taken under the Customs Act, 1962. The appeals filed by the appellants were rejected, and the original order was affirmed in its entirety.

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