2009 (4) TMI 166 - AT - Customs

Confiscation redemption fine - the goods have been abandoned by the appellants and there is no evidence on record to show that there was deliberate or mala fide intention on the part of the appellants to import HMS in violation of provisions of Customs Act order of confiscation, redemption find and penalty set aside.

Summary

Issues:
1. Confiscation of goods under Section 111(d) of the Customs Act, 1962.
2. Compliance with Foreign Trade Policy and Handbook of Procedures.
3. Imposition of penalty under Section 112(a) of the Customs Act, 1962.

Issue 1: Confiscation of goods under Section 111(d) of the Customs Act, 1962.

The case involved an appeal against the order-in-appeal confirming the confiscation of HMS weighing 88300 Kg under Section 111(d) of the Customs Act, 1962. The appellants, engaged in the manufacture of alloy steel casting, imported raw materials from an overseas supplier. Upon receipt, they found the materials did not meet specifications but still used them. Subsequently, when another consignment arrived without necessary documents, the appellants informed the Customs authorities of abandoning the goods. The adjudicating authority confiscated the goods with an option to redeem on payment of a fine and imposed a penalty. The appellants argued that confiscation was not justified as the goods were abandoned before seeking clearance, citing precedents where abandonment before clearance exempted duty payment. The Tribunal, after considering arguments, found no deliberate intention to violate Customs provisions and allowed the appeal, setting aside the impugned order.

Issue 2: Compliance with Foreign Trade Policy and Handbook of Procedures.

The Department contended that the appellants failed to comply with the Foreign Trade Policy and Handbook of Procedures by not producing the required pre-shipment inspection certificate for the imported goods. The importer is mandated to present this certificate at the time of import, which the appellants did not do. The Department argued that this non-compliance made the goods liable to confiscation under Section 111(d) of the Customs Act, 1962. The appellants, on the other hand, claimed that the absence of the certificate was due to the foreign supplier's fault, beyond their control. Despite efforts, they could not obtain the necessary documents. The Tribunal considered these arguments but ultimately focused on the lack of intentional violation by the appellants, leading to the appeal being allowed.

Issue 3: Imposition of penalty under Section 112(a) of the Customs Act, 1962.

The Department sought to impose a penalty under Section 112(a) of the Customs Act, 1962, citing the appellants' failure to comply with Customs provisions regarding the pre-shipment inspection certificate. Section 112(a) allows for penalties in cases where acts or omissions render goods liable to confiscation under Section 111. The Department argued that the appellants' non-compliance warranted penalty imposition. However, the Tribunal, after evaluating both sides' arguments, concluded that there was no evidence of deliberate or mala fide intention on the part of the appellants to import goods in violation of Customs regulations. Consequently, the appeal was allowed, and the impugned order was set aside.

This detailed analysis of the judgment highlights the key issues of confiscation of goods, compliance with trade policies, and penalty imposition under the Customs Act, 1962, providing a comprehensive overview of the case and its legal implications.