2015 (2) TMI 868 - AT - Customs

Confiscation of Hydrogenated Vegetable oil - Non compliance with the provisions of Prevention of Food Adulteration Act, 1954 - Imposition of redemption fine and penalty - Held that - The liability of the goods to confiscation is not disputed inasmuch as the goods under importation did not meet with the requirements of PFA Act and consequently became prohibited goods under Section 2 (33) of the Customs Act and became liable to confiscation under Section 111 9d). The total value of the goods imported is ₹ 93.3 lakhs. The fine of ₹ 7.5 lakhs imposed works out to 8% of the value of the goods. Normally fine is imposed to take way the profit margin. In the present case when the goods are ordered to be re-exported, the question of sale of the goods and making a profit would not arise and therefore, the redemption fine of ₹ 7.5 lakhs imposed is on the higher side. Considering the demurrage and other charges incurred by the appellant, I reduce the fine from ₹ 7.5 lakhs to ₹ 3.75 lakhs. As regards the penalty of ₹ 50,000/-, imposed under section 112(a), no mens rea required to be established for imposition of such penalty and the penalty imposed cannot be said to be harsh or unreasonable. Therefore, I do not interfere with the penalty imposed. To sum up, the redemption fine is reduced to ₹ 3.75 lakhs. But for the above modification, the impugned order is upheld. - Decided partly in favour of assessee.

Summary

Issues:
1. Confiscation of imported goods under Customs Act, 1962 for non-compliance with Prevention of Food Adulteration Act, 1954.
2. Imposition of redemption fine and penalty on the importer.

Analysis:
1. The appeal challenged the Order-in-Original confiscating "Hydrogenated Vegetable oil" for not meeting the provisions of the Prevention of Food Adulteration Act, 1954. The Commissioner permitted redemption for re-export on payment of a fine and imposed a penalty. The appellant accepted the confiscation but argued against the redemption fine and penalty, claiming no intention to violate the law.

2. The Tribunal acknowledged the liability of goods for confiscation due to non-compliance with the PFA Act, making them prohibited under the Customs Act. The fine of Rs. 7.5 lakhs, constituting 8% of the goods' value, was deemed excessive as no profit would be made on re-export. Hence, the fine was reduced to Rs. 3.75 lakhs. The penalty of Rs. 50,000 under Section 112(a) was upheld, as no mens rea was required for its imposition, and it was not considered unreasonable. The Tribunal partially allowed the appeal by modifying the redemption fine but upheld the rest of the order.

This comprehensive analysis of the judgment addresses the issues of confiscation, redemption fine, and penalty, providing a detailed overview of the legal reasoning and outcome of the case.