2024 (11) TMI 739 - AT - Customs

Imported material on the permission issued for a particular unit diverted to other - Contraventions of the provisions of import and export policy for which goods became liable for confiscation under Section 111 and for imposition of penalty on importer - two consignments of old and used cut tiers in 2 . 3 Pcs. (arisen from old/used tyres) for clearance to their Panipat Unit - permission which is in respect of Wada unit OR Panipat unit. HELD THAT - Undisputedly, the goods have been sought to be cleared for Panipat unit. On the basis of the letter issued by Ministry of Environment, Forests and Climate Change in respect of Wada unit as per the import and export policy issued by DGFT, this letter is part and appellant availed permission for Panipat unit, the conditions of DGFT license has been valid for importation of these goods. Accordingly, the goods being not really importable or prohibited and has been rightly held liable for confiscation under Section 111 (d) of the Customs Act, for the above violation penalty imposed on the appellant under Section 112 of the Act. Validity of permission issued in respect of Wada Unit, for the Panipat Unit we find that the concerned Ministry has clarified contrary to the said submission - No error in the impugned orders as the concerned Ministry has in respect of the same consignment has clarified contrary to the stand taken by the appellant in this regard that the permission granted in respect of Wada unit in Maharashtra would be valid for the imports to be made for consumption in Panipat Unit in Haryana. The impugned order has taken note of the above clarification issued by the administrative ministry. While upholding the order in relation to confiscation of the impugned goods and the penalty imposed, we take note of the facts that total value of the goods was Rs.22 lakhs for which redemption fine of Rs.6 lakhs and penalty of Rs.4 lakhs has been imposed. These seem to be on higher side. We reduce the redemption find imposed to Rs.3 lakhs and penalty imposed to Rs.2 lakhs.

Summary

Issues:
1. Import of restricted goods without valid authorization.
2. Violation of import and export policy.
3. Confiscation of goods under Customs Act.
4. Imposition of redemption fine and penalty.
5. Validity of permissions for different units.

Analysis:

1. Import of restricted goods without valid authorization:
The appellant imported old and used cut tires without proper authorization for their Panipat Unit. The goods required permission from the Ministry of Environment, Forests, and Climate Change (MOEF) and special import authorization from the Directorate General of Foreign Trade (DGFT). The appellant failed to produce valid documents for importation, leading to provisional release under P.D.Bond with conditions to produce required licenses and pay penalties. The MOEF permission was specific to the Wada plant in Maharashtra, not Panipat, and any diversion of goods was not permitted. The appellant admitted to diverting goods to Panipat due to stock shortage, breaching the conditions of import.

2. Violation of import and export policy:
The appellant's claim that permissions for different units covered the diversion of goods was found unsustainable. The MOEF permissions were plant-specific, considering factors like pollution levels, and did not allow for diversion to unauthorized units. The appellant failed to provide valid supporting documents despite opportunities, and their plea of repeated permissions from MOEF was deemed untrue. The appellant's actions were considered a breach of trust, leading to the imposition of fines and penalties.

3. Confiscation of goods under Customs Act:
The impugned goods were confiscated under Sections 111(d) and 111(o) of the Customs Act as they were improperly imported without valid authorization. The redemption fine and penalty imposed were justified based on the breach of trust by the importer and the failure to comply with import regulations. The penalties were imposed under Sections 125 and 112(a) of the Act, considering the goods' liability for confiscation.

4. Imposition of redemption fine and penalty:
The redemption fine of Rs.6 lakhs and penalty of Rs.4 lakhs were considered reasonable in view of the circumstances. The appellant's failure to produce valid documents for importation and diversion of goods warranted the fines. The Tribunal upheld the imposition of penalties but reduced the redemption fine to Rs.3 lakhs and the penalty to Rs.2 lakhs, considering the total value of the goods and the circumstances of the case.

5. Validity of permissions for different units:
The Tribunal upheld the order regarding the confiscation of goods and the penalties imposed, noting that the permissions granted for the Wada unit were not valid for imports intended for the Panipat unit. The administrative ministry's clarification supported the decision to hold the appellant liable for violating import regulations. The modifications to the redemption fine and penalty were made based on the value of the goods and the severity of the breach.

In conclusion, the Tribunal partly allowed the appeal by modifying the redemption fine and penalty amounts while upholding the order regarding the confiscation of goods and penalties imposed for the unauthorized importation of restricted goods.