2016 (10) TMI 331 - AT - Customs

Confiscation of consignment under section 111(d) and (m) of the Customs Act, 1962 - option to pay redemption fine under section 125 of the Customs Act, 1962 - imposition of penalty under section 112(a) of the Customs Act, 1962 - star export house - export of manufactured tyres - license under Advance Authorization Scheme - import of natural rubber etc - mis-declaration of goods imported - testing of consignments - whether here is a case of mis-declaration of goods and malafide intention of importer involved so as to justify the confiscation and imposition of redemption fine and penalty? Held that - where several containers are imported of the same raw material, over a period of time, some discrepancy found in two or three containers, it cannot be said that there is any mala fide or mis-declaration on the part of the importer. Further, the appellant have taken all precautions before the importation and have given proper description of the Goods to be imported in the purchase order. The consignment was also accompanied by test report from a duly authorized laboratory in the country of exporter. No case of mis-declaration - appellant allowed to re-export the goods under dispute - confiscation, redemption fine and penalty set aside - appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Import of natural rubber failing to meet prescribed standards.
2. Confiscation of goods under Customs Act.
3. Imposition of redemption fine and penalty.
4. Mis-declaration allegations against the importer.
5. Legal precedent and interpretations relied upon by both parties.

Analysis:

Issue 1: Import of natural rubber failing to meet prescribed standards
The appellant, a manufacturer of rubber tyres, imported natural rubber from Vietnam. The Rubber Board found that the samples did not conform to the specified standards. The appellant negotiated with the exporter for replacement, and upon replacement, the goods were allowed to be cleared. The Commissioner ordered confiscation of the consignment under the Customs Act due to violation of the Rubber Act and Rules. The appellant sought re-export permission, leading to the imposition of a redemption fine and penalty.

Issue 2: Confiscation of goods under Customs Act
The Commissioner ordered the confiscation of the natural rubber consignment under Sections 111(d) and (m) of the Customs Act, citing violation of the Rubber Act and Rules. A redemption fine of ?12,00,000 was imposed, allowing re-export upon fulfillment of conditions. Additionally, a penalty of ?4,00,000 was levied under Section 112(a) of the Act.

Issue 3: Imposition of redemption fine and penalty
The Commissioner imposed a redemption fine and penalty on the appellant for the violation. The appellant, being aggrieved, appealed to the Tribunal, arguing against the imposition of fines and penalties due to the circumstances of the case and the actions taken by the exporter to rectify the non-conformity.

Issue 4: Mis-declaration allegations against the importer
The appellant contended that there was no deliberate mis-declaration on their part, as they regularly imported natural rubber meeting the prescribed standards. The appellant argued that the error was rectified by the exporter, and reliance was placed on a previous Tribunal ruling where similar circumstances led to the setting aside of fines and penalties.

Issue 5: Legal precedent and interpretations
The appellant relied on a previous Tribunal ruling in a similar case to support their argument that no mis-declaration was intended. The Department, however, cited a Supreme Court ruling emphasizing the liability for confiscation and penalties irrespective of mens rea, highlighting the importance of adherence to import regulations.

In the final judgment, the Tribunal found no evidence of mis-declaration or contumacious conduct on the part of the appellant. Considering the importer's regular importation practices and the corrective actions taken, the order of confiscation, redemption fine, and penalty were set aside. The appellant was granted permission to re-export the goods, emphasizing the importance of proper import documentation and adherence to standards.