2021 (4) TMI 1089 - AT - Customs

Confiscation - redemption fine - penalty - import of seafood for the purpose of export and trade - Frozen Pangasius Fillet Untrimmed 100% Non IQF - quality requirements of FSSAI and the FSS Act complied or not - HELD THAT - The appellant while placing purchase order clarified to the vendor that the goods in question should be in compliance with the Indian Standards Food safety Standards (Contaminants, Toxins and Residues) Regulation, 2011 and Indian Food Safety and Standards Authority of India Regulation for microbiological requirements for fish and fishery products and also to meet other safety standards. In order to meet these standards, the vendor supplied the test certificate issued by the Ministry of Agriculture and Rural Development, Social Republic of Vietnam which certified that the goods imported was in compliance with FSSAI. Further, on subsequent laboratory analysis, the said product failed in two out of eighteen quality and safety parameters and as a result of which NOC was not issued by the Food and Safety Standard Authority - findings of both the authorities that the goods are liable for confiscation under Section 111(d) of the Act is not legally justified. The appellant had no intention to violate FSSAI and FSS Act and had no intention to import goods contrary to the prohibition stipulated in the Act or any other law for the time being in force. Hence, the imposition of redemption fine and penalty is not sustainable in law - Appeal allowed - decided in favor of appellant.

Summary

Issues:
- Imposition of redemption fine and penalty on the appellant
- Confiscation of goods under Section 111(d) of the Customs Act
- Compliance with Indian Standards and Food Safety Regulations
- Violation of principles of natural justice
- Legal justifications for confiscation, redemption fine, and penalty

Analysis:
1. Imposition of Redemption Fine and Penalty:
The appeal challenged the order confirming the imposition of redemption fine and penalty on the appellant for the failed import of seafood. The appellant argued that the impugned order lacked legal sustainability, emphasizing the absence of a show-cause notice before imposing fines. The appellant contended that the imported goods did not warrant confiscation under Section 111(d) of the Customs Act, as they were not in violation of any prohibitions. Reference was made to the Health Caps India Ltd. case, where similar penalties were set aside by the Tribunal.

2. Confiscation of Goods under Section 111(d) of the Customs Act:
The Tribunal analyzed Section 111(d) of the Customs Act, which states that goods imported contrary to prohibitions are liable for confiscation. However, it was found that the appellant had taken reasonable care to ensure compliance with safety standards, and any contamination likely occurred during transit or subsequently, beyond their control. The Tribunal concluded that the confiscation under Section 111(d) was not justified in this case, as the import was not in violation of any applicable laws.

3. Compliance with Indian Standards and Food Safety Regulations:
The appellant had requested compliance with Indian food safety standards in the purchase order, supported by a test certificate from the Ministry of Agriculture and Rural Development of Vietnam. Despite subsequent laboratory analysis revealing failures in safety parameters, the Tribunal noted that the appellant had acted in good faith and had met the necessary specifications at the time of export, as evidenced by the certificate.

4. Violation of Principles of Natural Justice:
The appellant raised concerns about the violation of principles of natural justice, arguing that the Order-in-Original was passed without issuing a show-cause notice. The Tribunal considered this argument along with the legal justifications for the redemption fine and penalty, ultimately finding in favor of the appellant based on the lack of culpable mental state and the absence of import violations.

5. Legal Justifications for Confiscation, Redemption Fine, and Penalty:
The Tribunal scrutinized Sections 111(d), 125, and 112(a) of the Customs Act to assess the legal basis for confiscation, redemption fine, and penalty. It determined that the appellant had not contravened any import prohibitions, rendering the confiscation unwarranted. Consequently, the imposition of redemption fine and penalty was deemed unsustainable, leading to the appeal's allowance with consequential relief.

In conclusion, the Tribunal set aside the redemption fine and penalty, ruling in favor of the appellant due to the lack of intention to violate regulations and the absence of import contraventions justifying the penalties imposed.