2019 (11) TMI 733 - AT - Customs

Improper importation - Mis-branded sample or not - prohibited imports - imposition of penalties u/s 112(a) of the Customs Act, 1962 - prohibition from import or not - Section 25 of FSS Act, 2006 - HELD THAT - In the appeals filed by both the appellants, no evidence has been adduced which contradicts the facts that the import consignment were of the goods which did not confirm to the standards laid down under Food Safety Standards Act, 2006. The test report of the samples drawn from the import consignment has categorically mentioned that the samples are unsafe and mis-branded as per the provisions of Section 3 (1) of the FSS Act, 2006. The argument made by the appellant is not legally sustainable as the Customs Act under Section 112A provides that penalty under the Section should not exceed the value of the goods. Since, the import consignment falls under the category of the prohibited goods and it has also been found that the value declared by the importer is not correct. The seizure value of these goods have been taken as market value since as the goods are of prohibited nature, they are certainly to fetch high margin of profit in the domestic market - The Adjudicating Authority has accordingly taken the market value of such goods as prevailing in the local market for imposition of penalty, the amount of the penalty imposed on both the appellants is in accordance with the provisions of Section 112A (i) of Customs Act, 1962 and, therefore, no reason to interfere with the amount of penalty imposed on both the appellants. The deterrent penalty need to be imposed on such importers and their accomplices and thus we do not find any reason to interfere with the amount of penalty imposed by the Adjudicating Authority in the impugned order-in-original - appeal dismissed.

Summary

Issues:
1. Import of dietary supplements not conforming to standards under Food Safety & Standards Act, 2006.
2. Failure to comply with Legal Metrology (Packaged Commodity) Rules, 2011.
3. Violation of Section 25 of the FSS Act, 2006 and Circular No. 3/2011 by CBEC.
4. Imposition of penalties on appellants for improper importation.

Analysis:

Issue 1: Import of dietary supplements not conforming to standards under Food Safety & Standards Act, 2006
The consignment of dietary supplements imported by the appellants was found to be unsafe and misbranded under Section 3(1)(zz)(v) and Section 3(1)(zf) of the FSS Act, 2006, as per the test reports from the FSSAI Laboratory, Ghaziabad. The appellants failed to ensure compliance with the standards laid down by the Act, jeopardizing the health of consumers in the domestic market. The Commissioner's findings highlighted the roles of the appellants in the offense, and no evidence was presented to refute these findings. The penalty imposed on the appellants was deemed appropriate given the nature of the goods and their market value.

Issue 2: Failure to comply with Legal Metrology (Packaged Commodity) Rules, 2011
It was observed during examination that the MRP/RSP and other essential details required by Rule 6 and Rule 10 of the Legal Metrology (Packaged Commodity) Rules, 2011 were not declared on the packages of the imported goods. This non-compliance with the legal metrology rules further compounded the violations related to the importation of the dietary supplements.

Issue 3: Violation of Section 25 of the FSS Act, 2006 and Circular No. 3/2011 by CBEC
The show cause notice issued by the Additional Director Directorate of Revenue Intelligence cited violations of Section 25 of the FSS Act, 2006, Circular No. 3/2011 by CBEC, and Legal Metrology (Packaged Commodity) Rules, 2011. The penalties were proposed under section 112(a) of the Customs Act, 1962 for improper importation of the consignment, which was deemed prohibited for import due to non-compliance with the FSS Act and prescribed procedures.

Issue 4: Imposition of penalties on appellants for improper importation
The learned Commissioner imposed penalties on both appellants equal to the value of the seized goods for their involvement in the improper importation of dietary supplements. While the Inspector and Superintendent were not penalized, penalties were imposed on the appellants based on their roles in the offense. The penalties were upheld on appeal, with the Tribunal emphasizing the need for deterrent penalties on importers and accomplices who endanger public health for profit.

In conclusion, the appeals were dismissed, affirming the penalties imposed on the appellants for their involvement in the improper importation of dietary supplements that did not conform to the standards under the Food Safety & Standards Act, 2006, and for non-compliance with legal metrology rules. The judgment underscores the importance of adhering to regulatory standards in importation processes to safeguard public health and ensure compliance with relevant laws and regulations.