2017 (3) TMI 1135 - AT - Central Excise

Confiscation - penalty - Allegation in the impugned order was that the imports had not been accompanied by a valid pre-shipment inspection certificate issued by the agencies - Held that - The practical impossibility of obtaining a pre-shipment inspection certificate owing to the absence of the specific agency in the country of export would render this requirement lex non-cogit ad impossibilia. If such was the intention of the government, a ban would have been imposed on imports from all countries for which specified agency is not enumerated. That does not appear to be so. Considering this factual matrix the confiscation of the goods and the imposition of fine thereon would appear to be unjustified so to insofar as the penalties are concerned - appeal allowed - decided in favor of appellant-importer.

Summary

Issues:
Challenge to penalty imposed on appellants for violation of Customs Act, 1962 and Foreign Trade Policy regarding pre-shipment inspection certificate.

Analysis:
1. The appellants contested the penalty imposed by the Commissioner of Customs (Appeals) for allowing loading of goods without a valid pre-shipment inspection certificate. The penalties were initially high but reduced by the first appellate authority. The appellants argued that the responsibility for obtaining the certificate lies with the importer, not the shipping lines.

2. The appellants relied on various legal precedents, including decisions from the High Court of Calcutta, Tribunal in Mumbai, High Court in Chennai, and Supreme Court, to support their case. The requirement for a pre-shipment inspection certificate for importing iron and steel melting scrap was emphasized, and failure to produce it could lead to confiscation of goods.

3. The Tribunal noted that the obligation to obtain the pre-shipment certificate rests with the importer, and the shipping companies have no direct role in this process as per the Foreign Trade Policy. The penalties imposed on the shipping companies were set aside as they were merely an extension of the proceedings against the importer without legal basis.

4. The judgment highlighted that the Customs Act primarily focuses on unloading cargo and proper declarations within Indian Customs waters. Since there was no contravention of these provisions by the shipping companies, invoking section 112 against them was deemed unauthorized. The penalties on the shipping companies were overturned.

5. Regarding the importer, the issue was non-production of the prescribed pre-shipment certificate from a specified agency. The Tribunal acknowledged the practical difficulties faced by importers in obtaining such certificates, especially from countries where no specified agency exists. The confiscation of goods and imposition of fines on the importer were considered unjustified.

6. Ultimately, the Tribunal allowed all appeals, emphasizing the impracticality of enforcing the pre-shipment inspection certificate requirement in cases where the specified agency is unavailable. The judgment highlighted the need for a practical approach in interpreting and implementing trade policies to avoid unjust penalties and confiscations.