2017 (3) TMI 443 - AT - Customs

Jurisdiction - import of goods without Import Export Code (IEC) - whether the adjudicating authority is empowered to examine the matter and come to a conclusion that the contravention is not sufficiently of grave import as to warrant confiscation and with its consequent detriment in terms of section 125 and section 112 of CA, 1962? - Held that - An IEC does not purport to be a licence to import goods. It can be acquired by a simple procedure and is generally applied for by regular importers. A causal importer may not be sufficiently aware of the requirement that code is to be procured - The adjudicating authority has taken note of the circumstances and has taken the stand that this is a remediable lapse. Even if the goods were confiscated, it was open to the adjudicating authority to allow redemption on nominal fine and to impose nominal penalty. In the absence of any special commercial advantage derived from import without a code, fine and penalty is not likely to be anything other than nominal - appeal rejected - decided against Revenue.

Summary

Issues:
1. Importation without Import-Export Code (IEC) as required by Foreign Trade Policy.
2. Discretion of adjudicating authority to drop proceedings under Customs Act.
3. Confiscation of goods for contravention of import requirements.
4. Interpretation of provisions under Customs Act regarding confiscation and penalties.

Analysis:
1. The case involved M/s Marigold Productions Pvt Ltd importing 'film camera and shooting equipment' without the necessary Import-Export Code (IEC) as mandated by the Foreign Trade Policy. The goods were valued at &8377;1,07,78,656, and the issue was whether the absence of the IEC warranted confiscation of the goods under the law.

2. The Commissioner of Customs (Import) Air Cargo Complex, Mumbai, in the order-in-original, dropped the proceedings against the importer, citing no mala fides and the importer's undertaking to acquire the IEC before exporting the goods. The Revenue, dissatisfied with this decision, contended that the adjudicating authority lacked the discretion to drop proceedings under sections 111 and 112 of the Customs Act, 1962.

3. The Tribunal noted that while the importer did not possess the required IEC, there was no evidence of intent to evade duty or any attempt to suppress facts. The question arose whether the contravention was grave enough to warrant confiscation of the goods under sections 111 and 112 of the Customs Act.

4. Section 124 of the Customs Act mandates a notice and hearing before ordering confiscation, implying a defense opportunity for the importer. The Tribunal emphasized that the absence of an IEC does not automatically lead to confiscation, especially when the contravention is not serious and can be remedied. The adjudicating authority's decision to allow redemption on nominal fine and penalty was deemed appropriate in this context.

5. The Tribunal concluded that the absence of an IEC, in this case, did not justify confiscation of the goods, especially considering the importer's defense and the lack of significant commercial advantage gained. Therefore, the appeal by the Revenue was rejected, upholding the decision of the adjudicating authority.