2016 (1) TMI 834 - AT - Customs

Export of Basmati Rice - length and breadth, of the grain - AGMARK standards - prohibited items or not - appellant had exported goods claiming the benefit of the Notification No 55(RE-2008)/2004-2009 - Held that - The grain they have exported undoubtedly satisfies the same as per the test report. However, we find force in the argument of the Learned Authorised Representative for the Revenue that these specification of Nature of Restrictions is applicable to the goods which is described under column 4 of the Notification, which against Sr. No 45AA specifies Basmati Rice including Pusa Basmati 1121 . It, therefore, undoubtedly means that the goods allowed to be exported under this Notification has to be Basmati Rice. We find that the original Adjudicating Authority has gone into the great detail whether the impugned goods are Basmati Rice or not. AGMARK standards - DGFT policy circular has clearly indicted that the same may be done - the goods are described in the Customs Notifications (Supra) as Basmati Rice , and therefore Customs Authorities are fully justified to verify the impugned goods are Basmati Rice or not. We, therefore, find no illegality in the orders of the lower authorities in the said respect. Confiscation of goods already exported - Held that - There is a difference between confiscation and liable to confiscation. It is settled law that the goods which are liable to confiscation can be ordered for to be confiscated, and fine in lieu of confiscation can be imposed. We also find that the amount of redemption fine in the instant case is only ₹ 3 lacs whereas value of the goods is ₹ 30,96,207/- which is considerate and appropriate. - Decided against the the appellants.

Summary

Issues Involved:
1. Eligibility for the benefit of Notification No. 55 (RE-2008)/2004-2009 as amended by Notification 57/2009-2014.
2. Confiscation and redemption fine.
3. Imposition of penalty under Section 114AA of the Customs Act.

Detailed Analysis:

1. Eligibility for the Benefit of Notification No. 55 (RE-2008)/2004-2009 as Amended by Notification 57/2009-2014:
The appellant claimed the benefit of Notification No. 55 (RE-2008)/2004-2009 for exporting Basmati Rice, which was later amended by Notification 57/2009-2014. The core issue revolved around whether the exported rice met the specified conditions. The Notification required the grain of rice to be more than 7 mm in length and have a length-to-breadth ratio of more than 3.6, which was later relaxed to 6.61 mm and 3.5, respectively. The appellant argued that the exported rice satisfied these conditions based on the test report. However, the Revenue contended that the rice must first qualify as Basmati Rice before meeting the specified conditions. The Commissioner (Appeals) and the Adjudicating Authority concluded, based on AGMARK specifications and test results, that the exported rice did not qualify as Basmati Rice and hence denied the benefit of the Notification.

2. Confiscation and Redemption Fine:
The goods were exported under the claimed benefit of the Notification, and samples were drawn for testing. The appellant argued that since the goods were exported and assessments finalized, confiscation and redemption fines were unjustified. The Revenue maintained that the goods were liable for confiscation based on the test results, which indicated non-compliance with the Notification's conditions. The Tribunal upheld the confiscation and redemption fine, noting that the goods were cleared pending test results as a facilitation measure and that the subsequent action based on test results was lawful. The imposed redemption fine of Rs. 3 lakhs was deemed considerate and appropriate given the goods' value of Rs. 30,96,207.

3. Imposition of Penalty under Section 114AA of the Customs Act:
The appellant contended that the penalty under Section 114AA, which targets fraudulent exporters, was not applicable in their case. The Revenue argued for the penalty, citing the appellant's attempt to export Non-Basmati Rice under the guise of Basmati Rice. The Tribunal found merit in the appellant's argument, noting that Section 114AA was not intended for such cases. Consequently, the Tribunal set aside the second order of the Commissioner (Appeals) that remanded the matter for deciding separate penalties under Sections 114(1) and 114AA, while upholding the original order and the first order in appeal.

Conclusion:
The Tribunal dismissed Appeal No. C/10039/2015 and allowed Appeal No. C/10117/2015, thereby upholding the confiscation and redemption fine but setting aside the imposition of a separate penalty under Section 114AA.