2008 (3) TMI 162 - HC - Customs

Rice exported which buyer refused to accept because it was infested with insects - Accordingly, the goods were sent back to India where they were confiscated because they were in violation of Prevention of Food Adulteration Act - It is possible that at the time of obtaining the certificate, the rice were free of insects but during the course of transit, it may have become infested, hence penalty of 75,000 for rice of Rs. 30 lac, is appropriate fine of 10% of value of goods, is also justified

Summary

Issues:
Challenge of confiscation and penalty imposed on the Appellant for exporting insect-infested basmati rice.

Detailed Analysis:
The Appellant exported basmati rice to Mauritius with an assessable value of Rs. 30,37,799, but the buyer rejected the rice due to insect infestation. Upon return to India, the Customs authorities seized the rice for violating the Prevention of Food Adulteration Act, 1954. A penalty of Rs. 75,000 was imposed on the Appellant, which was contested. The Customs, Excise and Service Tax Appellate Tribunal upheld the confiscation and penalty. The Appellant challenged both decisions, arguing that the rice was insect-free when exported and certified as such by the Directorate of Plant Protection, Quarantine, and Storage, Government of India.

The court noted that although the rice might have been insect-free when certified, it was infested upon return to India. Despite the low penalty amount in comparison to the rice's value, the court deemed the violation serious, refusing to interfere with the penalty. The Appellant also contested a Rs. 3 lakh redemption fine, representing 10% of the goods' value, which the court found reasonable. Ultimately, the court upheld the Tribunal's decision, stating that no substantial question of law arose in the case.

Therefore, the court dismissed the appeal, affirming the confiscation and penalty imposed on the Appellant for importing insect-infested basmati rice in violation of the Prevention of Food Adulteration Act.