2011 (6) TMI 260 - AT - Customs

Confiscation of rice and imposition of penalty - Export - penalty imposed on the ground that the appellants tried to export non-Basmati rice under the guise of super long grain Basmati rice - When huge exports are being made by the exporters, they should be careful in verifying the quality - All these exporters are aware that export of non-Basmati rice is prohibited by DGFT in Notification No.93(RE-2007)/2004-2009, dt.1.4.08 - The exports are in huge quantity to the extent 140 MTs with the value of rice being Rs.78,31,564/-Lakhs - It cannot be said that the export of non-Basmati rice was on account of any mistake inasmuch as no factor which led to such mistakes on the part of the exporters, stand explained and such pleas of mistakes are being forwarded by all exporters of rice only as an excuse, after being caught - As such, it has to be held that such export was with malafide design, justifying confiscation of rice and imposition of penalty - Decided against the assessee.

Summary

Issues:
Confiscation of rice under Customs Act, 1962 for exporting non-Basmati rice as Basmati rice, reliance on test report, challenge to the report's validity, justification of penalty and redemption fine.

Confiscation of Rice:
The Commissioner of Customs confiscated 140.400 MTs of rice valued at Rs.78,31,564/-Lakhs and imposed a penalty of Rs.50,000/- on the appellant for attempting to export non-Basmati rice as Basmati rice. The confiscation and penalty were based on the test report indicating a ratio of Basmati rice in the consignment as 26.5:73.5, exceeding the permissible limit for Basmati rice under Grade Specifications.

Reliance on Test Report:
The appellant challenged the validity of the test report, arguing it should not be used for any legal purpose. However, the report was provided by the Chief Chemist at the Customs' request, making it admissible for Customs purposes. The Tribunal agreed that the report's disclaimer was regarding other legal uses, not Customs reliance. Importantly, the appellant did not contest the report before the Commissioner, weakening their argument against its validity.

Justification of Penalty and Confiscation:
The Tribunal dismissed the appellant's claim of errors in mixing grains during agricultural processes, emphasizing exporters' responsibility to ensure product quality. Noting the prohibition on exporting non-Basmati rice and the substantial value of the consignment, the Tribunal found the export to be deliberate with malicious intent. Consequently, the confiscation of rice and imposition of penalty were deemed justified, considering the significant value involved.

Conclusion:
The Tribunal rejected the appeal, upholding the confiscation of rice and penalty imposed by the Commissioner. The decision was based on the deliberate attempt to export non-Basmati rice as Basmati rice, disregarding quality standards and regulatory prohibitions. The Tribunal found no merit in the appellant's arguments and affirmed the Commissioner's order.