2019 (8) TMI 886 - AT - Customs

Confiscation - Import of Galvanised Iron (GI) Wires and other items - BIS certificate for the item not produced - Since the importer has not produced the BIS certificate for the item, the goods appeared to be in violation of Foreign Trade Policy rendering the goods liable for confiscation under Customs Act, 1962 - Principles of natural justice - HELD THAT - Both the authorities have completely failed to follow the principles of natural justice in passing the orders. The original authority issued the show-cause notice in a hurry on 28/05/2019 and the same was served on the appellant at 5pm on the same day and the appellant was directed to file reply next day before 10 to 12AM and further the copies of the relied upon documents in show-cause notice were not furnished with the show-cause notice and when the appellant filed its letter dt. 29/05/2019 requesting the original authority to issue the copies and sought a week s time for personal hearing and to reply to the show-cause notice, the same was not considered and no personal hearing was granted and original order was passed confiscating the goods and imposition of penalty. The entire procedure followed by the original authority appears to be in gross violation of the principle of natural justice. The appellant is covered by the transitional provisions as contained in Foreign Trade Policy. In this case, the appellant made advance payment on 29/10/2018 and 13/11/2018 as evident from the documents produced on record and imported the goods prior to 18/12/2018 which is the date up to which the goods could be imported without insisting on BIS certificate. Both the authorities have completely ignored the saving clause of the Transition Policy and misinterpreted the exclusion clause in the transitional provisions as provided in the FTP 2015-2010. The impugned order is totally illegal and has been passed arbitrarily without following the basic principles of natural justice and on merit also, the appellant is covered by the transition provision as covered under FTP - the original authority directed to immediately release the goods on payment of appropriate duty - appeal allowed - decided in favor of appellant.

Issues Involved:
1. Violation of principles of natural justice.
2. Requirement of BIS certificate for the imported goods.
3. Applicability of transitional provisions under the Foreign Trade Policy.
4. Legality of the confiscation and imposition of penalty.

Issue-wise Detailed Analysis:

1. Violation of Principles of Natural Justice:
The appellant contended that the impugned order was passed without adhering to the principles of natural justice. The show-cause notice was issued on 28/05/2019 and served at 5 PM, directing the appellant to reply by 10-12 AM the next day. The relied-upon documents were not furnished with the show-cause notice. The appellant requested a week's time and the opportunity for cross-examination, which was denied. The adjudicating authority passed the order without granting a reasonable opportunity for personal hearing, violating the principles of natural justice. The Tribunal emphasized that the rules of natural justice are the minimum standards of fair decision-making and cited the Bombay High Court's decision in Kellogg India Pvt. Ltd. Vs. UOI.

2. Requirement of BIS Certificate for the Imported Goods:
The appellant argued that the imported goods did not fall under the category requiring a BIS certificate. The goods were declared as Galvanised Iron Wire under HSN code 72172020, and there was no evidence to classify them as mild steel wire requiring BIS certification under IS 280:2006. The Tribunal found that the authorities did not provide admissible evidence to support the requirement of a BIS certificate for the imported goods.

3. Applicability of Transitional Provisions under the Foreign Trade Policy:
The appellant claimed that the goods were covered by the transitional provisions of the Foreign Trade Policy. The advance payments were made on 29/10/2018 and 13/11/2018, and the goods were imported before 18/12/2018. The Tribunal agreed that the appellant was covered by the transitional provisions, allowing imports without BIS certification if the shipment was made within the validity period of an irrevocable commercial letter of credit established before the imposition of restrictions.

4. Legality of the Confiscation and Imposition of Penalty:
The Tribunal found that even if the goods required a BIS certificate, the authorities should have allowed redemption of the goods against payment of a fine under Section 125 of the Customs Act. The absolute confiscation was not warranted. The Tribunal set aside the impugned order, directing the original authority to release the goods on payment of appropriate duty.

Additional Observations:
The Tribunal criticized the adjudicating authority's conduct, highlighting the illegal detention of goods not requiring a BIS certificate and the failure to comply with the High Court's order. The Tribunal imposed a fine of ?25,000 on the adjudicating authority for violating the principles of natural justice and harming the appellant's interests.

Conclusion:
The Tribunal allowed the appeal, set aside the impugned order, and directed the release of the goods on payment of appropriate duty. The adjudicating authority was fined for its conduct, and the Tribunal emphasized the importance of adhering to the principles of natural justice and the government's policy of ease of doing business.

← Previous Next →