2008 (8) TMI 238 - HC - Customs

Goods imported were not accompanied by a pre-shipment inspection certificate as required the Foreign Trade Policy 2004-2009 - once it is found that the violation has not resulted in any specified categories of items being imported, the importer cannot be punished for the lapse on the part of the exporter considering that the legal obligation has been cast on the exporter to furnish the documents - Non-compliance thereof may entail an importer to undergo 100% inspection of the entire consignment but that would not tantamount to improper import of goods as required by Section 111

Summary

Issues:
1. Validity of pre-shipment inspection certificate from an unrecognized agency.
2. Confiscation and penalty under Customs Act for violation of EXIM Policy.
3. Confiscation of goods imported in violation of Foreign Trade Policy.
4. Imposition of penalty on importer under Customs Act.

Issue 1: Validity of pre-shipment inspection certificate from an unrecognized agency
The appellant revenue contended that goods imported without a pre-shipment inspection certificate from a recognized agency were liable for confiscation under Section 111(d) of the Customs Act, 1962. The adjudicating authority upheld this, imposing a redemption fine and penalty. However, the Tribunal reversed this decision, stating that the agency was recognized at the time of import, as per Appendix 'V'. The Court emphasized that the exporter is obligated to provide specified documents, and non-compliance may lead to 100% inspection. The importer cannot be penalized for the exporter's lapse if the specified items were not imported.

Issue 2: Confiscation and penalty under Customs Act for violation of EXIM Policy
The Court clarified that Section 111(d) allows confiscation of goods improperly imported, contrary to prohibitions under the Act or other laws. However, in this case, the goods were not prohibited for import, but subject to conditions under the Handbook of Procedures. The importer fulfilled the conditions, and any violation by the exporter does not amount to improper import under Section 111. The Court cited a previous case with a similar ruling.

Issue 3: Confiscation of goods imported in violation of Foreign Trade Policy
The Court highlighted that the Handbook of Procedures mandates specific documents for certain imports, placing the responsibility on the exporter. Failure to provide these documents necessitates 100% inspection. As the importer produced the inspection certificate and no prohibited items were imported, the Court dismissed the notion of improper import under Section 111.

Issue 4: Imposition of penalty on importer under Customs Act
The Court concluded that none of the proposed questions constituted substantial questions of law, as the Tribunal's order had no errors. Citing precedent, the Court dismissed the appeal, affirming the Tribunal's decision. The judgment reiterated the exporter's duty to provide specified documents and the importer's compliance with inspection requirements.