2025 (1) TMI 231 - AT - Customs

Redemption fine and penalty - compliance with the Legal Metrology (Packaged Commodities) Rules, 2011 - Applicability of Sections 111(d) and 112(a) of the Customs Act, 1962 - HELD THAT - The appellant has not complied with the labelling requirements of the Legal metrology (Packaged Commodities) Rules, 2011. There was a failure on the part of the appellant in not producing the Registration Certificate from the Legal Metrology Department when the imported goods landed. Thus, appellant contravened the provisions of Foreign Trade Policy 2009--2014. This contravention automatically entails the confiscability of the goods under Section 111 (d) of the Customs Act, 1962 as it is an improper , hence the appellant is also liable for penal action under Section 112 (a) of the Act. The Ld. Appellate Authority has also observed that it was only a procedural delay on the part of the appellant as the Registration Certificate was able to be obtained and produced later on i.e., after the arrival of the goods. Having regard to the facts and circumstances of this case as the appellant had applied for registration but could not get the Registration Certificate in time, the ends of justice would meet if redemption fine imposed is further reduced to Rs.30,000/- and also penalty imposed under Section 112 (a) is reduced to Rs.5,000/-. Conclusion - It was only a procedural delay on the part of the appellant as the Registration Certificate was able to be obtained and produced later on i.e., after the arrival of the goods. The appeal is partly allowed.

1. ISSUES PRESENTED and CONSIDERED

The core legal question considered in this judgment is whether the redemption fine and penalty imposed on the appellant, as sustained in the impugned order, are justified. This involves examining the compliance with the Legal Metrology (Packaged Commodities) Rules, 2011, and the application of Sections 111(d) and 112(a) of the Customs Act, 1962.

2. ISSUE-WISE DETAILED ANALYSIS

Issue: Justification of Redemption Fine and Penalty

Relevant Legal Framework and Precedents:

The legal framework primarily involves the Customs Act, 1962, specifically Sections 111(d) and 112(a). Section 111(d) pertains to the confiscation of improperly imported goods that contravene any prohibition imposed by law. Section 112(a) deals with penalties for improper importation. Additionally, the Legal Metrology (Packaged Commodities) Rules, 2011, require specific labeling and registration compliance for imported goods.

Court's Interpretation and Reasoning:

The court interpreted that the failure to comply with the labeling requirements under the Legal Metrology Rules constituted a contravention of the Foreign Trade Policy 2009-2014. This non-compliance rendered the goods liable for confiscation under Section 111(d) and subjected the appellant to penalties under Section 112(a). The court acknowledged the procedural delay in obtaining the Registration Certificate but noted that the appellant eventually complied by producing the certificate post-arrival of the goods.

Key Evidence and Findings:

The key evidence was the lack of labeling on the imported Circular Saw Blades and the absence of a Registration Certificate at the time of importation. The appellant's subsequent acquisition of the certificate was considered but did not negate the initial non-compliance.

Application of Law to Facts:

The court applied Section 111(d) to determine that the goods were improperly imported due to the lack of compliance with labeling laws, thereby justifying confiscation. Section 112(a) was applied to impose penalties for the procedural lapse. However, the court took a lenient view considering the appellant's efforts to comply post-importation.

Treatment of Competing Arguments:

The appellant argued for the waiver of fines and penalties, citing the procedural nature of the delay in obtaining the Registration Certificate. The respondent defended the imposition of fines and penalties based on statutory non-compliance. The court balanced these arguments by acknowledging the procedural delay while still recognizing the statutory breach, leading to a reduction in fines and penalties rather than a complete waiver.

Conclusions:

The court concluded that while the confiscation of goods under Section 111(d) was justified due to non-compliance, the redemption fine and penalty should be further reduced in light of the appellant's eventual compliance and the procedural nature of the delay.

3. SIGNIFICANT HOLDINGS

Preserve Verbatim Quotes of Crucial Legal Reasoning:

"The ends of justice would meet if redemption fine imposed is further reduced to Rs.30,000/- (Rupees Thirty thousand only) and also penalty imposed under Section 112 (a) is reduced to Rs.5,000/- (Rupees Five thousand only)."

Core Principles Established:

The judgment establishes that procedural delays in compliance with statutory requirements may warrant a reduction in penalties but do not negate the applicability of statutory provisions regarding confiscation and penalties for non-compliance.

Final Determinations on Each Issue:

The court upheld the confiscation of goods under Section 111(d) due to non-compliance with labeling requirements. However, it reduced the redemption fine to Rs.30,000 and the penalty under Section 112(a) to Rs.5,000, acknowledging the procedural nature of the delay and the appellant's eventual compliance.

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