2019 (5) TMI 166 - AT - Customs

Mis-declaration of imported goods - Agar Agar Strips - procedural lapse in collecting samples - it was alleged that sample of agar agar does not confirm as Food Ingredient - HELD THAT - The first CFTRI test report dated 18.09.2010 had opined that the sample did not conform as food ingredient under the provisions of PFA Act, 1954, only for technical reasons like batch number was not mentioned, date of manufacture and expiry was not mentioned. This lapse / discrepancy certainly cannot be attributed to the importer-appellant but only to the officers who forwarded the samples for test. Possibly, if these details had also been made incorporated in the test request, the CFTRI may well have reiterated the report dated 15.07.2010 of the University of Madras that the sample was Agar-Agar only with no pathogenic microorganisms upon culture on different media. The second sample for retest was obviously sent after prolonged delay as a result of which the CFTRI rightly pointed out that the goods were nearing their expiry period. It is also interesting to note that even when CFTRI in their initial report dt. 18.09.2010 had flagged the non-mention of batch number and non-mentioning the dates of manufacture and expiry of goods, while sending the samples for retest, the department again goofed up, this time by not mentioning the name of the manufacturer. This is definitely a tragedy for which the department will have to bear the cross, especially when there is no dispute that the appellant-importer had given all these details at the time of import. It can be concluded that the report dt. 15.07.2010 of University of Madras has to be taken as the correct report since only that report has discussed the actual nature and condition of the imported goods. Viewed in this light, impugned goods cannot be then assailed as not conforming to the Food Safety and Standards (Packaging and Labelling) Regulations, 2011. Valuation - enhancement of value based on NIDB data - HELD THAT - The order of enhancement of value by the original authority in his order dt. 23.05.2012 based on NIDB data also cannot be sustained in view of the plethora of decisions by higher appellate forums including those by this Tribunal - reliance placed in the case of Vijaya International Impex, Vs CC (Seaport-Import) Chennai 2017 (6) TMI 991 - CESTAT CHENNAI . The part of the LAA upholding the order by the original authority of confiscation of impugned goods under Section 111 (m) ibid cannot be sustained and is therefore set aside. In consequence, the imposition of redemption fine of ₹ 25,000/-under Section 125 ibid is also set aside - The penalty of ₹ 10,000/- imposed on CMT under Section 112 (a) ibid on the charge of having rendered the goods liable to confiscation under Section 111 (d) and (m) ibid will also have no legs to stand upon and hence that part of the impugned order of LAA upholding such penalty is also set aside. Appeal allowed.

Summary

Issues Involved:
1. Validity of enhancement of declared value of goods.
2. Confiscation of goods under Section 111 (d) and (m) of the Customs Act, 1962.
3. Imposition of redemption fine and penalties.
4. Validity of test reports and procedural delays.
5. Refund claims for duty paid and forwarding charges for testing.

Detailed Analysis:

1. Validity of Enhancement of Declared Value of Goods:
The appellant contested the enhancement of the declared value from ?82.87-86.13/Kg CIF to ?432.67/Kg CIF. The Tribunal found that the enhancement was based on NIDB data, which has been consistently rejected by higher appellate forums, including the Tribunal itself in various cases like Aakash Enterprises Vs CC New Delhi 2017 (358) ELT 987 (Tri.-Del.), Vijaya International Impex, Vs CC (Seaport-Import) Chennai 2018 (359) ELT 270 (Tri.-Chennai), and Sarda Energy and Minerals Ltd. Vs CCE Raipur - 2018 (359) ELT 262 (Tri.-Del.). The Tribunal set aside the enhancement of value and the consequential confiscation under Section 111 (m) of the Customs Act, 1962.

2. Confiscation of Goods under Section 111 (d) and (m) of the Customs Act, 1962:
The goods were initially confiscated under Section 111 (d) for not conforming to the Food Safety and Standards (Packaging and Labelling) Regulations, 2011. However, the Tribunal found that the procedural delays and errors by the department, including sending samples for re-test without proper details, led to the goods nearing their expiry. The Tribunal held that the report dated 15.07.2010 from the University of Madras, which confirmed that the sample was Agar-Agar with no pathogenic microorganisms, should be considered the correct report. Consequently, the confiscation under Section 111 (d) and (m) was set aside.

3. Imposition of Redemption Fine and Penalties:
The original adjudicating authority imposed penalties under Sections 112 (a), 114A, and 114AA of the Customs Act, 1962, along with a redemption fine. The Tribunal, however, set aside these penalties and fines, stating that the enhancement of value and the grounds for confiscation were not sustainable. The penalties on the partners, A.K.S. Mohammed Farook and A.K.S. Haroon Rasheed, were also set aside.

4. Validity of Test Reports and Procedural Delays:
The Tribunal criticized the department for procedural delays and errors, including the prolonged delay in sending samples for re-test and not including necessary details like batch number and dates of manufacture and expiry. The Tribunal found that these procedural lapses by the department led to the goods nearing their expiry, and thus, the department must bear the responsibility for the resulting situation.

5. Refund Claims for Duty Paid and Forwarding Charges for Testing:
The Tribunal did not interfere with the Commissioner (Appeals)'s observations regarding the refund of duty paid and the ?3000/- paid towards forwarding charges for testing. The Tribunal directed the lower authority to verify the facts regarding the forwarding charges and refund the amount if it had not been spent.

Conclusion:
The Tribunal allowed the appeals, setting aside the enhancement of declared value, confiscation of goods, and imposition of penalties and fines. The Tribunal upheld the report from the University of Madras as the correct test report and criticized the department for procedural delays and errors. The Tribunal also directed the lower authority to verify and refund the forwarding charges if applicable.