2018 (10) TMI 1571 - AT - Customs

Import of restricted item - PRODOTTO NW 775058 (Special Boiling Point Sprit for footwear industry) - importers requested for allowing them to re-export the items as they were not aware that the said import of the goods were restricted - Held that - Para 2.20 of the Foreign Trade Policy allows import of the goods only through State Trading Enterprises. Sub-para c of the same is to the effect that DGFT may, however, grant an authorization to any other person to import or export any of the goods notified for exclusive trading through STEs . As such it is clarified that even the grant of authorization is for import of the goods for exclusive trading through STEs and is not to be given to any other independent importer - import of this Special Boiling Point Spirit was not permissible in terms of the said para 2.20 and is un-authorized. The appellant had made a request for re-export of the same before the Adjudicating Authority, which request stands accepted by the Adjudicating Authority. Redemption fine - Held that - It is a settled law that where the goods are allowed to be re-exported, the redemption find cannot be imposed - redemption fine set aside. Penalty - Held that - It is not the Revenue s case that the appellant had tried to import the restricted items by mis-declaring their description or there was any mala-fide on their part. The value of the goods is only to the extent of 40,000 and the same were imported by the appellant for use in the manufacture of their final product and not for the trading purpose so as to earn profit - penalty not warranted. The redemption fine and penalty set aside and the re-export of the goods allowed - appeal disposed off.

Summary

Issues:
1. Import of restricted item without proper authorization.
2. Imposition of redemption fine and penalty.
3. Correct declaration of goods and justification for penalty imposition.

Analysis:
1. The appellant imported a restricted item, 'PRODOTTO NW 775058', without proper authorization, leading to Customs Duty issues. The Commissioner allowed re-export of the goods subject to a redemption fine and imposed a penalty under Section 112(a)(i) of the Customs Act, 1962. The appellant claimed innocence, stating they were unaware of the restriction and imported the item inadvertently. The advocate argued that the item's value was minimal, intended for their own product manufacturing, not trading, and thus, no penalty should be imposed. The Adjudicating Authority referenced para 2.20 of the Foreign Trade Policy, highlighting the restriction on import through State Trading Enterprises only.

2. The Tribunal noted that para 2.20 of the Foreign Trade Policy permits import through State Trading Enterprises exclusively, and authorization is granted accordingly. The appellant's request for re-export was accepted, but a redemption fine of ?60,000 was imposed, which was deemed excessive compared to the goods' value. Precedent cases were cited to support that imposition of redemption fine post re-export is unjustified. The Tribunal ruled that the redemption fine was unwarranted in this case.

3. Regarding the penalty, the Tribunal found that the appellant correctly declared the goods and their intended use for manufacturing. The value of the goods was minimal, and there was no evidence of mala-fide intent or misstatement. The Tribunal agreed with the appellant's contentions, emphasizing that no penalty should be imposed as there was no attempt to deceive authorities. Ultimately, the Tribunal set aside the redemption fine and penalty, allowing the re-export of the goods. The appeal was disposed of accordingly, with the judgment pronounced on 25/10/2018.