2024 (6) TMI 351 - AT - Customs

Non-compliance with FSSAI Regulations - Request for re-export of imported areca nuts - procedures laid down under FSSAI Regulations regarding the testing of samples have not been followed - penalty - HELD THAT - Though the appellants allege that the procedures laid down under FSSAI Regulations regarding the testing of samples have not been followed, the reports as such are not challenged by the appellants. Their only request appears to be that they may be permitted to re-export of goods; they contend that their foreign supplier has accepted to take back the goods as they are of inferior quality. Department contends that the importer has not supplied any documentary proof like affidavit, e-mail, SMS etc. to substantiate their claim; looking into the fact that the appellants have not yet transferred the money for the consignment to the foreign supplier and looking into the conduct of the appellant, which is still under investigation, re-export may not be permitted. The impugned goods have been tested to be unfit for human consumption as per FSSAI standards. Neither the Adjudicating Authority nor the Appellate Authority has given evidence vis- -vis the Sri Lankan Standards. Moreover, it appears that the said conclusion has been arrived at with the presumption that there are no other uses of areca nuts other than for human consumption. It is found that there are certain industrial uses of the areca nuts - it cannot be presumed that the impugned areca nut, if re-exported, would be used only for human consumption in Sri Lanka and elsewhere. It cannot also be presumed that the consignment will be routed back to India. The ends of justice can be met if suitable redemption fine is imposed in lieu of confiscation and if the appellant is suitably penalized while permitting the re-export of the impugned goods. Indian Authorities should not have any objection if the impugned goods are reexported. In case of such an apprehension, an endorsement can be made on the export documents that the goods are permitted to be re-exported as they were found to be unfit for human consumption as per Indian standards - as the goods are of value of Rs.10 Crore imposition of redemption fine of Rs 2 Cr is certainly harsh. A fine of Rs 25.00 Lakhs would be sufficient to meet the ends of justice and the goods can be permitted to be re-exported on payment of redemption fine. In the instant case, the appellants have not been given an opportunity to contest findings of the test reports given by CRCL, New Delhi and National Food Laboratory, Ghaziabad. Their objection seems to be with regard to the observing of procedures in sampling and issuing reports. The appellants do not challenge the report that the goods are not as per BIS standards and are not fit for human consumption. Penalty - HELD THAT - In the instant case, no appeal has been filed in respect of penalty imposed on Shri Prabhjyot Singh Dang, Partner of the appellant. In respect of the penalty imposed on the appellants, the appellants submit that the quantum of penalty has been adjudged arbitrarily. It is found that Adjudicating Authority has imposed a fine of Rs.2 Crores on the appellants. Having regard to the facts and circumstances of the case a deterrent penalty would be sufficient. Therefore, the penalty is reduced to Rs.10 Lakhs. Appeal allowed in part.

Summary

Issues Involved:
1. Compliance with FSSAI Regulations.
2. Request for re-export of imported areca nuts.
3. Validity of test reports and procedural adherence.
4. Imposition of penalties and fines.

Summary:

1. Compliance with FSSAI Regulations:
The appellants argued that the procedure for import of "Food Items" as per the FSSAI Act, 2016 and FSSAI (Import) Regulations, 2018 was not followed. They contended that:
- The visual inspection report was not submitted in Form-1.
- The sample was forwarded to the referral laboratory without intimating the importer.
- The referral laboratory analysis was not given in Form-2 within five days.
- The test report was not provided to the importer, denying them the opportunity to appeal within 15 days.
- The CRCL report was unreliable as CRCL is not a food laboratory registered under FSSAI.
- The report by ANRDF was unreliable due to the lack of expertise of Dr. S. Keshav Bhat, who had confessed in another case.

2. Request for Re-export of Imported Areca Nuts:
The appellants requested permission to re-export the consignments, citing that their foreign supplier was ready to take back the goods. They argued that the goods were of inferior quality and not hazardous. They referenced several cases where re-export was permitted after imposing a minimum redemption fine.

3. Validity of Test Reports and Procedural Adherence:
The Department contended that the samples were tested by accredited laboratories and found to be unfit for human consumption. The appellants were aware of the inferior quality, as evidenced by their submissions during the personal hearing. The Department argued that permitting re-export would pose a risk of the goods being re-routed back to India.

4. Imposition of Penalties and Fines:
The Adjudicating Authority confiscated the goods, citing public health concerns. The appellants argued that they were regular importers and unaware of the sub-standard quality. The Department highlighted past messages indicating the appellants' knowledge of the inferior quality. The Tribunal found that while the appellants could be penalized, not permitting re-export would not serve any purpose. The goods were allowed to be re-exported on payment of a redemption fine of Rs. 25 Lakhs and a penalty of Rs. 10 Lakhs.

Conclusion:
The appeal was partially allowed, modifying the impugned order:
- Absolute confiscation was set aside.
- The appellants were allowed to re-export the goods on payment of a fine of Rs. 25 Lakhs.
- The penalty under Section 112 of the Customs Act, 1962 was reduced to Rs. 10 Lakhs.
- The appellants were required to submit an undertaking that the goods would not be routed back to India.
- An endorsement was to be made in the export documents stating that the goods were unfit for human consumption as per Indian Standards.

(Order pronounced in the open court on 07/06/2024)