2016 (5) TMI 650 - AT - Customs

Imposition of redemption fine and penalty - Section 112 of the Customs Act, 1962 - Import of 19,595 kgs of California Inshell Almonds - sample does not conform to the standards laid down under Regulation No. 2.3.47(5) of Food Safety and Standards Regulations, 2011 - NOC was refused on analysis by FSSAI - Appellant stated that the sample was tested and was found fit by an authorized testing agency in USA, namely, USDA and the second test was got done from another lab, i.e. FSA Lab in USA. Held that - there is no malafide intention on the part of the appellant. It is a matter of fact that two laboratories in the country of export found that the goods under export were in good condition. It is also a matter of fact that a period of more than two months had expired from the date of shipping to the date of sending the sample for testing and as such, during this period, the goods suffered damage and no malafide is attributable to the appellants. Therefore, the redemption fine and penalty are set aside. - Decided in favour of appellant with consequential benefit

Summary

Issues:
1. Imposition of redemption fine and penalty under Section 112 of the Customs Act, 1962 for failure to meet food safety standards.
2. Refusal of No Objection Certificate (NOC) by Food Safety & Standards Authority of India (FSSAI) due to the presence of insect fragments, mould, and fungal growth in imported almonds.
3. Discrepancy between test reports from the USA and the test conducted by FSSAI.
4. Appeal against the order of the Commissioner of Customs for confiscation and imposition of fines.

Analysis:
Issue 1:
The Appellate Tribunal CESTAT Allahabad heard an appeal against the imposition of a redemption fine of Rs. 10.00 lakhs and a penalty of Rs. 5.00 lakhs under Section 112 of the Customs Act, 1962. The appellant, M/s SSA International Ltd., imported California Inshell Almonds, which failed to meet food safety standards as per the Food Safety & Standard Regulations, 2011. The Commissioner held the goods liable for confiscation and imposed fines, citing non-compliance with safety regulations.

Issue 2:
The refusal of the NOC by FSSAI was based on the presence of insect fragments, mould, and fungal growth in the imported almonds. Despite the appellant's request for retesting by other certified agencies, the request was rejected. The appellant argued that the goods were tested and found fit by laboratories in the USA, highlighting a discrepancy between the test reports from different sources.

Issue 3:
The appellant contended that there was no malafide intention, emphasizing that the damage to the goods could have occurred during the transportation period of over two months. Citing previous tribunal rulings in similar cases, the appellant sought relief from the redemption fine and penalty, asserting that no malafide actions were involved in the importation process.

Issue 4:
After considering the facts and contentions, the Tribunal held that there was no malafide intention on the part of the appellant. It noted that the goods were found to be in good condition by laboratories in the USA and acknowledged the damage that could have occurred during the transportation period. Consequently, the Tribunal allowed the appeal, setting aside the redemption fine and penalty imposed on the appellant. The appellant was granted consequential benefits in accordance with the law.

In conclusion, the Tribunal's decision focused on the lack of malafide intention by the appellant, the discrepancy in test reports, and the damage caused to the goods during transportation, leading to the setting aside of the redemption fine and penalty.