2018 (5) TMI 68 - AT - Customs

Restriction on clearance of imported item - it was alleged that the imported cargo contains Chloride content more than the maximum permissible limit i.e., 1.39% as against the maximum permissible limit of 0.2% - redemption fine - penalty - Held that - there is no contrast to the test reports of both the laboratories and a feeble argument that the two test reports do not match and are contrary to each other stands argued - The rating of both test reports establishes that the goods are not in consonance with the purity standards laid down under FSS Act, 2006. Inasmuch as clearance of the same can cause health hazards to the people of India, the authorities below have rightly denied the clearance of the same and have allowed re-export. Whether such re-export on payment of fine and penalty is justifiable or not? - Held that - the order placed by the assessee was itself in contravention of FSS Act and it cannot be said the goods of inferior quality was sent by the exporter inadvertently. In such a scenario, imposition of redemption fine and penalty is justified - however, the quantum of redemption fine and penalty reduced. Appeal allowed in part.

Summary

Issues:
1. Import of sub-standard Monosodium Glutamate.
2. Confiscation of goods and imposition of penalties.
3. Discrepancy in test reports.
4. Justifiability of re-export, fine, and penalty.

Analysis:
1. The appellant imported Monosodium Glutamate from China, which was found to be sub-standard as per test reports from FSSAI and Food Laboratory, Kolkata. The chloride content exceeded the permissible limit, and the purity was below the prescribed specification under FSS Act, 2006.

2. Proceedings were initiated for confiscation of the goods and imposition of penalties. The Joint Commissioner ordered confiscation with an option for re-export on payment of a redemption fine of ?1,00,000 and imposed a penalty of ?1,00,000 under Section 112 of the Customs Act, 1962. The Commissioner (Appeals) upheld this decision, leading to the present appeal.

3. The discrepancy between the test reports was addressed during the hearing. While NAWaL Laboratories reported high chloride content, the Food Laboratory, Kolkata highlighted the low purity percentage. Both reports indicated non-conformance to purity standards. The denial of clearance and permission for re-export were deemed appropriate due to potential health hazards.

4. The question of justifiability of re-export, fine, and penalty arose. The appellant's sales contract indicated a 98% minimum purity requirement, slightly below the prescribed 98.5%. The order itself was in contravention of the FSS Act. Despite this, considering the minor difference and giving the benefit of doubt, the redemption fine and penalty were reduced to ?25,000 each. The appeal was rejected except for the modification in the quantum of fine and penalty.