2019 (11) TMI 192 - AT - Customs

Whether the appellants have violated the prohibition imposed by DGFT Notification No. 39/RE2007 dated 06.10.2007? - whether, they are liable for penalty and as to whether the Commissioner should have imposed redemption fine on the goods imported by them and cleared provisionally? HELD THAT - The appellants contended that in view of the Stay granted, by the Hon ble High Court of Kerala, on the operation of Notification cited, they have not violated any prohibition and that the agreements for sale of RBD Palm Oil or Palmolein have taken place when the prohibition was not even notified and therefore, in terms of Para 1.5 of the provisions of Foreign Trade Policy, they have not violated any prohibition imposed on the import of impugned goods. The defence of Department is that the Final Order of the Hon ble High Court of Kerala dismissed the Writ Petition filed by the appellants thereby the position existing before the grant of Stay stands and thus it should be held that the appellants have imported impugned goods contrary to the prohibition in place. The Department also contends that the appellants have not submitted any concrete proof that the conditions of Para 1.5 of the FTP have been satisfied so as to be eligible for the imports despite the prohibitions. The appellants have submitted a few disconnected documents which look like sale deeds, contracts, agreements etc., however as pointed out by the Learned Commissioner AR, the documents are full of inadequacies making the authenticity of the documents subject to doubt. It is also not coming forth as to which of these documents pertain to the impugned imports. Moreover, we do not find any conclusive agreements indicating that an irrevocable letter of credit has been opened or has been enforced at the time of shipment. The appellant s argument fails on both counts and we find that they have imported the impugned goods in violation of the prohibition imposed by DGFT Notification cited supra and thus, they have rendered the impugned goods liable for confiscation and rendered themselves liable for penalty. We allow the appeals of Revenue and impose redemption fine of ₹ 70 Lakhs on M/s Parison Foods Pvt. Ltd. and ₹ 50 Lakhs on M/s Parison Agrotech - decided in favor of Revenue.

Issues Involved:
1. Constitutional validity of DGFT Notification No. 39(RE-2007)/2004-2009.
2. Violation of prohibition imposed by the DGFT Notification.
3. Liability for penalty under Section 112(a) of the Customs Act, 1962.
4. Non-imposition of redemption fine in lieu of confiscation.

Issue-wise Detailed Analysis:

1. Constitutional Validity of DGFT Notification No. 39(RE-2007)/2004-2009:
The appellants challenged the constitutional validity of the DGFT Notification, which imposed a condition that palm oil and its fractions could not be imported at the Cochin port. The Hon'ble High Court of Kerala granted an interim stay on the operation of the Notification but eventually dismissed the writ petition. The court's interim orders allowed the appellants to discharge cargo at Cochin port temporarily, but the final dismissal reinstated the Notification's prohibition.

2. Violation of Prohibition Imposed by the DGFT Notification:
The appellants argued that their imports occurred during the interim stay and thus did not violate any prohibition. They claimed their agreements for the sale of palm oil were made before the Notification's enforcement, invoking Para 1.5 of the Foreign Trade Policy (FTP), which allows imports under certain conditions if restrictions are imposed after the commencement of import. However, the court found that the appellants did not provide conclusive evidence of irrevocable letters of credit or concrete proof of agreements predating the Notification. The court held that the appellants imported goods contrary to the DGFT Notification, rendering the goods liable for confiscation.

3. Liability for Penalty under Section 112(a) of the Customs Act, 1962:
The appellants contended that no mens rea (criminal intent) could be imputed as the imports were made during the operation of the interim stay. The court, however, noted that mens rea is not a requisite for imposing a penalty under Section 112(a) of the Customs Act. The appellants had bound themselves to produce a proper order from the High Court or face penalties through the bonds executed at the time of provisional release. The court found the imposition of penalties justified as the appellants violated the prohibition and attempted to misuse legal provisions.

4. Non-imposition of Redemption Fine in Lieu of Confiscation:
The Revenue appealed against the non-imposition of redemption fine, arguing that the goods were liable for confiscation even if not physically available, as they were provisionally released under bond. The court agreed, citing legal precedents that support imposing redemption fines even when goods are not physically available. The court imposed redemption fines of ?70 lakhs on M/s Parison Foods Pvt. Ltd. and ?50 lakhs on M/s Parison Agrotech, considering the circumstances and prolonged litigation.

Conclusion:
The court dismissed the appellants' appeals and upheld the penalties imposed under Section 112(a) of the Customs Act. It allowed the Revenue's appeals, imposing redemption fines on the appellants. The judgment emphasized that interim orders do not nullify the existence of statutory notifications and that penalties can be imposed without proving mens rea under Section 112(a).

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