2016 (1) TMI 1143 - AT - Customs

Confiscation of goods with an option to pay redemption fine and redeem the goods - imposition of penalty Prohibited goods - wide band zinc coated steel - permission to import subject to fulfillment of certain conditions - galvanized steel sheets - Bureau of Indian Standards - conformity of the imports with standards prescribed for domestic industry - Held that - there is no conceivable threat to public safety by allowing the goods into the country. The goods, though violative of the Foreign Trade Policy, are not prohibited for import. All that is required to render them compliant is the BIS mark or possession of prescribed certification. Such goods have been allowed to be imported on exemption granted by the Bureau. Therefore, the contravention could have been overcome by certification of the manufacturer abroad or by obtaining of exemption. The advantage vis- -vis similar importers or manufacturers in India is merely the benefit of cost. In the normal process of adjudication of offences, confiscation for contraventions is visited with imposition of fines that seek to negate the unfair cost advantage subject to there being no potential harm to the safety and security of the citizenry, the economy or the State. Confiscation and redemption, thereby, legitimize the contravention in imports and render the goods to be licit. It confers legitimacy even where, and particularly when, the statutorily prescribed approving agencies are not empowered to approve retrospectively. Imposition of conditions, such as re-export, does not sit well with such regularization through the adjudication process. Failure on the part of the importer to exercise the option of redemption would place the burden of disposal on the Central Government which cannot re-export the goods and would have to sell only within India subject to the restrictions in the Order supra; there is no justification to accord a harsher treatment after redemption of the goods. Allowing redemption subject to re-export is not warranted, is unnecessary and is not logically sound. Impugned order is modified to the extent of setting aside the condition of re-export upon redemption. Appeal is accordingly disposed off by allowing redemption on payment of fine without any conditions whatsoever.

Summary

Issues:
1. Confiscation of imported goods for non-conformity with Bureau of Indian Standards.
2. Imposition of penalty under section 112 of Customs Act, 1962.
3. Compliance with quality standards and regulations for imported goods.
4. Conditions attached to redemption of confiscated goods.

Issue 1: The appeal was filed against the confiscation of imported wide band zinc-coated steel by M/s Oetikar India Pvt. Ltd. for not conforming to standards prescribed by the Bureau of Indian Standards. The lower authorities found that the goods were liable for confiscation as they did not carry the required IS mark, rendering them in contravention of the Foreign Trade Policy.

Issue 2: The original authority imposed a penalty under section 112 of the Customs Act, 1962, while allowing redemption of the goods on payment of a fine of &8377; 30,000 subject to re-export. The first appellate authority affirmed this decision.

Issue 3: The dispute centered around the requirement for imported galvanized steel sheets to conform to standards prescribed by the Bureau of Indian Standards. The appellant argued that the goods met stringent quality specifications applicable in Europe and elsewhere, and the standards were not intended for the manufacture of automotive parts, which the imported goods were used for. The regulatory environment under the Bureau of Indian Standards Act, 1986, and the Steel and Steel Products Order were crucial in determining compliance with quality standards.

Issue 4: The Tribunal modified the impugned order, setting aside the condition of re-export upon redemption of the confiscated goods. It was held that imposing conditions, such as re-export, while granting the option to redeem confiscated goods was unnecessary and not logically sound. The Tribunal referred to previous judgments emphasizing that the option to redeem confiscated goods cannot be burdened with additional conditions unless there is a threat to public safety.

In conclusion, the appeal was disposed of by allowing redemption on payment of the fine without any additional conditions, highlighting the importance of compliance with quality standards for imported goods and the limitations on imposing conditions for redemption of confiscated goods.