2017 (2) TMI 293 - AT - Customs

Benefit of N/N. 94/96-Cus dated 16.12.1996 - Section 111(m) of the Customs Act, 1962 - denial on the ground that the re-imported goods is not the same goods which were exported by the appellant - Held that - the description of goods has not been mis-declared. Documents clearly described the nature of imported goods as non-standard quality drugs and thus the import of the rejected goods cannot be considered to be prohibited in the country attracting Section 111(d) especially when the said goods have been declared to be so. The description of goods given in the Bill of Entry is not incorrect. The Order-in-Original only contested a part of the description where it is claimed that it is re-import of exported goods. If the goods are not re-imported, Section 111(m) is attracted. However, the goods contain two stickers and one of them matches in batch number with the export goods. The other also differs marginally and could be, possibly, a result of clerical error - invocation of Section 111(m) of the Customs Act, 1962 not correct. Penalties set aside - appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Discrepancies in re-imported goods compared to export documents.
2. Denial of benefit of Notification No. 94/96-Cus.
3. Confiscation and destruction of goods under Customs Act, 1962.
4. Imposition of penalty under Section 112(a) of the Customs Act, 1962.

Analysis:
1. The appellant had re-imported pharmaceutical products rejected by the buyer due to quality issues. Discrepancies were found in the marks and numbers of the re-imported consignment compared to the export document. The Additional Commissioner held that the imported goods were not the same as claimed by the importer, leading to the denial of benefits under Notification No. 94/96-Cus. The goods were confiscated under Sections 111(d), 111(m), and 111(o) of the Customs Act, 1962, with an imposed penalty of ?47 lakhs.

2. The appellant argued that the discrepancies were due to a foreign supplier's error in placing a second sticker with the wrong batch number on the drums, while the original batch numbers were still present. The appellant referenced a Customs Public Notice prescribing procedures for re-import of non-standard quality drugs. The appellant accepted the destruction order but contested the excessive penalty.

3. The judge analyzed Sections 111(d), 111(m), and 111(o) of the Customs Act, 1962. It was noted that the goods' description was not mis-declared, as they were accurately described as non-standard quality drugs. The judge found that the import of rejected goods was not prohibited under Section 111(d) since the goods were declared as non-standard quality. The judge concluded that Section 111(m) was not applicable due to the marginal discrepancy in batch numbers, likely a clerical error, and insufficient evidence to invoke it.

4. Consequently, the penalty imposed was set aside, and the appeal was allowed. The judgment was pronounced on 16.01.2017 by the Tribunal.