2024 (3) TMI 1185 - AT - Customs

Levy of penalty under Section 114A of the Customs Act and under Section 112A and Section 114AA of the Customs Act, 1962 - nature of imported goods as Dried Garlic or not - contravention of various provisions of the Customs statute as well as the provisions of Destructive Insects and Pests Act, 1914, PFS Order, 1989 and Plant Quarantine (Regulation of Import Into India) Order 2003 - HELD THAT - There is no mis-declaration on the part of the appellant and if at all there was any breach it was a technical breach of importing the goods through LCS not listed in Schedule 1 of the Plant Quarantine (Regulation of Import into India) Order 2003. However, it is found that the department has never objected on this score. The department of its own freewill and accord has not drawn any samples of the goods imported in these different consignments. However, it is a fact that all these imports were part of a single contract and a single letter of credit executed with the exporter of the country of origin. Be as it may, the department only at the time of last imports (out of six) chose to have the matter examined by the Plant Quarantine Authorities, which report undisputedly was not in contravention or violation of the statutory provisions - the test report has emanated almost after a gap of five months and has therefore chosen to disregard the findings under the presumption I therefore hold that a Garlic Bulb can become dry during this period . The delay in such test reporting certainly cannot be attributed to any omission or commission of delinquency on the part of the appellant. All these evidences have been simply ignored without even a thought. Furthermore, a Bulb is understood in local parlance as a short stem with fresh leaves or leaf bases that function as food storage organs during dormancy. It is very well known that Garlic, an agricultural produce, occurs as a bulb. Upon drying it loses moisture content to a large extent, but retains its shape as a bulb. Therefore, the mention of the term Garlic Bulb cannot be considered as determinative of the fact of it being dry or not. For which, if at all it was imperative for the department to get the water contents verified as they sought to dispute the classification declared and re-classified the product under heading 7032000. For this failure on the part of the department the assessee/importer/appellant cannot in any way be held responsible. As for this eligibility to exemption Notification seeking concessional rate of duty for import of the impugned goods from the People s Republic of Bangladesh, it is found that the dispute on this score is completely arbitrary and baseless. It has nowhere been disputed that the goods did not originate and have been imported from Bangladesh. The importer has submitted necessary Government certification as referred above in support of his contention. The impugned goods are squarely covered in terms of Notification No.99/2011 dated 09.11.2011 and therefore exemption from payment of duty is admissible to the appellants in terms of the said Notification. Thus, no case can be made out for imposition of any of the penalties on the appellant - the order of the lower authorities is therefore liable to be set aside - appeal allowed.

Summary

Issues involved:
The issues involved in this case pertain to the classification of imported Garlic as Dried Garlic, duty exemption for import from SAFTA countries, mis-declaration of goods, penalties under the Customs Act, and the nature of the imported goods as determined by the Plant Quarantine authorities.

Classification of Imported Garlic:
The appellant imported consignments of Dried Garlic from Bangladesh, seeking duty exemption under Customs Notification No.99/2011. The appellant claimed that the goods were physically verified as Dried Garlic at the time of importation, supported by test reports confirming the goods as Dried Garlic. The department disputed this classification based on the nature of the Garlic Bulbs imported, alleging mis-declaration and contravention of Customs provisions.

Nature of Imported Goods:
The department contended that the imported Garlic Bulbs were fresh or chilled, classified under a different heading attracting higher duty rates. The appellant argued that the term "Garlic Bulbs" does not align with the classification of Dried Garlic, citing EU Quality Standards definitions for fresh, semi-dry, and dry garlic. The appellant provided commercial invoices, physiosanitary certificates, and Customs officer certificates to support their classification.

Exemption from Duty and Penalties:
The appellant relied on DGFT Policy Circular clarifying the treatment of Dried Garlic under specific moisture content limits for duty classification. The appellant also cited legal precedents supporting the classification of imported garlic based on commercial understanding and moisture content testing. The Tribunal found that the imported goods met the criteria for duty exemption under Notification No.99/2011, dismissing the penalties imposed by lower authorities.

Conclusion:
After considering the arguments and evidence presented, the Tribunal concluded that there was no mis-declaration by the appellant regarding the nature of the imported Garlic. The delay in test reporting and terminology used by Plant Quarantine authorities were not sufficient to prove mis-declaration. The Tribunal highlighted the importance of moisture content testing for classification and upheld the appellant's claim for duty exemption, setting aside the penalties imposed by lower authorities.