2011 (2) TMI 259 - AT - Customs

Confiscation - Penalty - Circular No. 32/RA/99-2000 dated 17-9-1999 issued by the DGFT - The garlic was imported from Pakistan and was declared to be dried garlic for the purpose of clearance under OGL. Fresh garlic was not freely importable unlike dried garlic - it was open to the customs authorities to get a sample tested for its moisture content. Having not done so, they are not justified in rejecting the declared description of the goods - The garlic imported by the appellant cannot be confiscated on the basis of test results or expert opinion on samples of garlic imported by others - Decided in favour of the assessee

Summary

Issues:
1. Confiscation of consignment of garlic under Customs Act.
2. Imposition of penalty under Customs Act.
3. Interpretation of dried garlic vs. fresh garlic.
4. Requirement of testing for moisture content of imported goods.
5. Reliance on expert opinions and test reports in customs cases.

Analysis:
1. The appeal was filed against the Commissioner's order confiscating a consignment of garlic imported by the appellant under Section 111(d) of the Customs Act and imposing a penalty of Rs. 24,25,000 under Section 112(a) of the Act. The appellant had not produced a specific import license for the garlic declared as 'dried garlic' and sought clearance under OGL. The customs authorities suspected the declaration and provisionally released the consignment against a bond. The Commissioner held the goods liable for confiscation and imposed a penalty based on the water content of the garlic, which was deemed to be fresh garlic requiring a specific license for importation.

2. The case was remanded by the Supreme Court for fresh decision. The appellant argued that the water content of the garlic was never tested, and without a laboratory test, it was not justifiable to reject the declared description of dried garlic. The Revenue claimed that the garlic contained sufficient water to be classified as fresh garlic based on HSN Explanatory Notes and expert opinions. The appellant referenced a previous case where garlic was classified as fresh based on a test report confirming high moisture content.

3. The Tribunal found in favor of the appellant, stating that the confiscation was based on a theoretical basis rather than actual moisture content testing. It was established that garlic with moisture content over 10% should be considered fresh garlic, while up to 10% is dried garlic for ITC (HS) purposes. As no moisture content test was conducted on the imported garlic, the declared description should not have been rejected. Expert opinions and test reports on other samples were deemed irrelevant to the case at hand.

4. The Tribunal highlighted the necessity of testing moisture content to differentiate between fresh and dried garlic. The customs authorities were criticized for not conducting such tests before confiscating the consignment. The absence of reliable examination or test reports on the actual goods imported led to the decision in favor of the appellant, setting aside the confiscation order and granting relief.

5. The judgment emphasized the importance of factual testing over theoretical assumptions in customs cases involving the classification of goods. Expert opinions and test reports on unrelated samples were deemed insufficient to justify confiscation without proper testing of the specific goods in question. The decision was based on the lack of concrete evidence regarding the moisture content of the imported garlic, leading to the allowance of the appeal and providing consequential reliefs to the appellant.