2009 (8) TMI 1019 - AT - Customs

Summary

Issues:
1. Imposition of penalty under Section 112 of the Customs Act on the appellant.
2. Waiver of pre-deposit and stay of recovery sought by the appellant.
3. Allegation of breach of Section 5(i) of the Prevention of Food Adulteration Act and provisions of the Prevention of Food Adulteration Rules.
4. Denial of natural justice by not providing copies of the test report and an opportunity to be heard on merits.
5. Reliability of the test report from the Central Food Laboratory (CFL) detecting melamine in the imported goods.
6. Submission of test reports from Singapore by the appellant to rebut the CFL's report.
7. Imposition of maximum penalty equal to the value of the goods under Section 112 of the Act.

Analysis:
1. The Commissioner imposed a penalty of Rs. 30,63,872/- under Section 112 of the Customs Act on the appellant in connection with the absolute confiscation of goods covered by a bill of entry. The penalty was imposed due to the presence of melamine in the imported goods, which were declared as "assorted chocolate confectionery" valued at the same amount.

2. The appellant sought waiver of pre-deposit and stay of recovery concerning the penalty amount. The Tribunal directed the appellant to pre-deposit Rs. 5,00,000/- under Section 129E of the Customs Act towards the penalty and allowed them to be heard on merits after compliance with this direction.

3. The show-cause notice alleged a breach of Section 5(i) of the Prevention of Food Adulteration Act and the Prevention of Food Adulteration Rules due to the presence of melamine in the goods, leading to the proposal for absolute confiscation.

4. The appellant raised the issue of denial of natural justice, claiming they were not provided with copies of the test report and were not given an opportunity to be heard on merits, which was reiterated by their counsel.

5. The reliability of the test report from the Central Food Laboratory (CFL) was emphasized, stating that the CFL's report indicated the goods were contaminated with melamine and unfit for human consumption, leading to the imposition of penalty and confiscation.

6. The appellant mentioned the availability of test reports from Singapore to challenge the CFL's report. However, the Tribunal found the CFL's report reliable, and no substantial evidence was presented to discredit it or prove the relevance and reliability of the Singapore reports.

7. The Commissioner imposed the maximum penalty under Section 112 of the Act, equal to the value of the goods, amounting to Rs. 30,63,872/-. The Tribunal directed the appellant to pre-deposit Rs. 5,00,000/- towards the penalty and scheduled further proceedings after compliance.