2014 (12) TMI 860 - AT - Customs

Penalty u/s 112 - Confiscation of goods - High toxic goods - Commissioner upheld redemption fine and penalty - Held that - No merit in the observation of the Commissioner (Appeals). Merely because there was a checking clause by quality surveyor, the same does not lead to indicate any malafide on the part of the importer. Further, we have to keep in mind that quality inspection and certification is done at the exporter s end and the importer in India has no hand in the same. Further, it is also on record that waste paper was also in the nature of road sweeping as also toxic plastic substance. In the absence of any evidence on record to reveal that the appellant was a party to the presence of such plastic contents in the consignment of waste paper, the Revenues finding are based upon assumption and presumptions for which the appellant cannot be penalized. Inasmuch as the appellant is not interested in clearance of the goods, we set aside the penalty imposed upon him by modifying that part of the impugned order only - Decided in favour of assessee.

Summary

Issues:
- Penalty imposed under Section 112 of the Customs Act, 1962 for importing toxic plastic waste along with waste paper.

Analysis:
1. The appellant, a paper manufacturing unit, imported waste paper from the USA. Upon examination, a portion of the consignment was found to be toxic plastic waste. The authorities initiated proceedings for confiscation and imposed a penalty of Rs. 7 lakhs. The original adjudicating authority confiscated the plastic contents and allowed redemption of the waste paper on a fine. The Commissioner (Appeals) upheld this decision, leading to the present appeal against the penalty.

2. The appellant argued that they had ordered waste paper, and there was no evidence linking them to the toxic plastic content in the consignment. They contended that as they were not involved in the import of plastic materials, they should not be penalized. Additionally, being a paper manufacturing unit, they had no use for the plastic waste.

3. The Revenue referred to a clause in the Sale Contract between the appellant and the foreign supplier regarding quality inspection. The Commissioner (Appeals) inferred from this clause that the appellant had the means to inspect the goods beforehand and should have detected the presence of toxic plastic waste. However, the Tribunal disagreed with this interpretation, stating that the presence of a quality surveyor clause did not imply malafide intent on the part of the importer.

4. The Tribunal noted that quality inspection and certification are typically done at the exporter's end, and the importer may not have direct involvement in this process. Moreover, there was no evidence implicating the appellant in the inclusion of toxic plastic waste in the waste paper consignment. Therefore, the Tribunal concluded that the Revenue's findings were based on assumptions and presumptions, leading to the appellant's unjust penalty.

5. Ultimately, the Tribunal set aside the penalty imposed on the appellant, noting their lack of interest in clearing the goods containing toxic plastic waste. The appeal was allowed to that extent, providing consequential relief to the appellant.