2020 (7) TMI 453 - AT - Customs

Imposition of penalty u/s 112(a) of Customs Act, 1962 - import of LED battern fixture, LED panel light, LED flood light etc. - prohibited goods or not - the BIS number embossed on the driver did not tally with the registration number given in the BIS certificate - Absolute Confiscation - HELD THAT - The registration number has two parts. One, the 8-digit number and also I.S. no.R-41036226 is 8-digit number, with regard to the driver imported by the appellant which is under dispute. The second part, which is the I.S. no. gives the description of the product type number. In case of driver, the product type number i.e., IS No.15885 is PART 2/SEC 13 2012. On the drivers instead of embossing the said Indian Standard number, the Indian Standard number of LED lights happened to be embossed. The Indian Standard number of LED lights is IS 10322 PART 5/SEC 2 2012. The Commissioner (Appeals) in para 5 has noted that the second part of the BIS number embossed on the driver does not tally. On perusal of the facts as brought out from the records, it is seen that the Indian Standard number only has been embossed erroneously on the driver. The I.S. no. of the LED panel has been embossed on the driver. It is not the case that the I.S. no. of entirely different product is endorsed. Driver is part of the LED panel lights and the lights cannot be used without the corresponding driver - there are no merit in the clarification given by the manufacturers stating that it was an error while embossing I.S. no. on the drivers. For this reason, the confiscation of the driver alone cannot sustain. The order passed by the authority below is therefore set aside. There is no requirement to state specifically that the appellant has to pay duty when these goods are cleared for home consumption. The misdescription of the BIS number is an error committed by the manufacturer - Penalty set aside - appeal allowed.

Summary

Issues:
1. Confiscation of goods due to wrong BIS number embossed on imported drivers.
2. Penalty imposed under section 112(a) of Customs Act, 1962.
3. Appeal against the order passed by the original authority.

Analysis:
1. The appellant imported goods declared as LED battern fixture, LED panel light, LED flood light, among others. The dispute arose when the BIS registration number embossed on the LED panel light driver did not match the BIS certificate produced, leading to confiscation of the goods. The appellant argued that the error in the BIS number was unintentional, as the driver's BIS number was mistakenly embossed with the LED light's number. The Indian representative for LED lights and drivers were different entities, complicating the BIS registration process. The appellant requested to rectify the BIS number as per customs regulations, but the request was disregarded. The authorities upheld the confiscation, citing the mismatch in BIS numbers, and imposed a penalty of ?1 lakh under the Customs Act, 1962.

2. The appellant contended that the drivers were integral to the LED panel lights and could not function independently. The BIS certificate showed the error in embossing the driver's BIS number, which was acknowledged by the manufacturer. The manufacturer's letter clarified the discrepancy and took responsibility for the incorrect embossing. The appellant argued that the confiscation of the drivers alone was unjustified due to a mere labeling error. The appellate tribunal found merit in the manufacturer's clarification, ruling that the confiscation of the drivers was unwarranted. Consequently, the penalty of ?1 lakh was set aside, and the order was modified in favor of the appellant.

3. The tribunal emphasized that the misdescription of the BIS number was a manufacturer's error and not the importer's fault. As the LED panel lights and drivers were interdependent components, the labeling mistake did not warrant confiscation or penalty. The tribunal highlighted that the manufacturer's clarification post-importation was valid, despite being issued by a foreign entity. Ultimately, the tribunal allowed the appeal, setting aside the confiscation and penalty, and directed the authorities to clear the goods for home consumption without additional duties. The judgment underscored the importance of considering manufacturing errors in import disputes to ensure fair treatment for importers.