2015 (10) TMI 204 - AT - Customs

Goods imported having less than 60% shelf life Confiscation, imposition of redemption fines and penalty FSS authorities had declined to issue NOC for import of goods on ground that imported goods did not have shelf life of 60% of original shelf life as required under provisions of FSS Act Vide impugned order, appellate authority has upheld confiscation order of adjudicating authority wherein redemption fine was imposed on goods imported and penalty was imposed on appellant Held that - confiscability of goods is not in doubt Inasmuch as confiscation is sustainable, goods being offending in nature, is liable to imposition of fine under Section 125 and importer liable to penalty under Section 112 However, mitigating factor is that appellant had in their purchase order specifically requested for fresh production so that at time of importation, shelf life norms could be adhered to or complied with In these circumstances, in absence of mens rea and also considering that goods have been exported back, imposition of penalty under Section 112 is not warranted Accordingly, penalty imposed is set aside Also fine imposed upon appellant reduced But for above modification, impugned order is sustained Decided partly in favour of Assesse.

Summary

Issues:
- Imposition of redemption fine and penalty under Customs Act
- Applicability of Food Safety and Standards Act (FSS Act) on imported goods
- Confiscation of goods under Section 111 (m) and Section 111 (d) of Customs Act
- Challenge to the decision of Food Safety and Standards (FSS) authorities
- Misdeclaration of material particulars in the bill of entry
- Reduction of fine and penalty based on mitigating factors

Imposition of Redemption Fine and Penalty:
The appeal challenged the imposition of a redemption fine of Rs. 5.00 lakhs on imported goods and a penalty of Rs. 1.00 lakh on the appellant under Sections 125 and 112(a) of the Customs Act, respectively. The appellant contended that the goods imported were raw materials for making non-alcoholic beverages and not for sale, thus not falling under the purview of the Food Safety and Standards Act (FSS Act). The appellant relied on a Delhi High Court decision regarding similar issues under the FSS Act. The appellant argued against the confiscation and penalties imposed, citing a request for fresh production in the purchase order and subsequent actions taken with the foreign supplier.

Applicability of Food Safety and Standards Act:
The appellant argued that the goods imported were not subject to the FSS Act as they were raw materials for further manufacturing in India. The appellant highlighted the non-applicability of FSS Act regulations to such raw materials based on a Delhi High Court decision. The appellant emphasized that the imposition of penalties and fines under the FSS Act was unwarranted due to the nature of the imported goods and the actions taken with the foreign supplier.

Confiscation of Goods and Misdeclaration:
The FSS authorities had declined to issue a No Objection Certificate (NOC) for the import of goods due to non-compliance with shelf life requirements. The appellant did not challenge this decision, leading to a misdeclaration or non-declaration of material particulars in the bill of entry. The goods were found to be non-compliant with FSS Act norms, leading to potential confiscation under Sections 111 (m) and 111 (d) of the Customs Act. The judgment analyzed the conflicting findings of lower authorities but affirmed the confiscability of the goods due to non-compliance with FSS Act regulations.

Challenge to FSS Authorities' Decision:
The appellant's failure to challenge the decision of the FSS authorities regarding shelf life requirements played a crucial role in determining the confiscation and penalties imposed on the imported goods. The judgment emphasized the importance of complying with FSS Act regulations and the repercussions of not challenging adverse decisions by regulatory authorities.

Reduction of Fine and Penalty:
Despite upholding the confiscation of goods and the imposition of fines, the judgment considered mitigating factors such as the appellant's request for fresh production and subsequent actions taken with the foreign supplier. As a result, the penalty imposed on the appellant was set aside, and the redemption fine was reduced from Rs. 5.00 lakhs to Rs. 80,000 to serve as a deterrent against future violations. The judgment differentiated the present case from previous decisions cited by the appellant, emphasizing the unique circumstances and nature of the imported goods.

In conclusion, the judgment modified the penalties and fines imposed, considering the specific details of the case while upholding the overall decision regarding the confiscation of goods under the Customs Act.