2013 (9) TMI 319 - AT - Customs

Issue regarding pre-deposit in stay application - Misdeclartion of goods - import of drugs - Prednisolone BP/USP/IP - Confiscation of goods u/s 111(d) and 111(m) - Penalty u/s 112(a) whether the goods were liable to confiscation and the appellants were liable to penalty - Held that - the goods were imported without a valid permission - they were liable to confiscation under the provisions of Section 111(d) - There was a clear omission on the part of the importer which had rendered the goods liable to confiscation - the assesse cannot be escaped the penal consequences u/s 112(a) and he cannot abdicate his responsibility to the indenting agent - mens rea was not required for imposition of penalty u/s 112(a) - Once the activity of importation was complete, the goods become chargeable to Customs duty - The liability to confiscation of goods arises when imported goods violate the provisions contained in clause (a) to (p) of Section 111 relying upon UOI v. Security & Finance (P) Ltd 1975 (10) TMI 30 - SUPREME COURT OF INDIA . The ld. Counsel appearing on behalf of the applicant submitted that the lower appellate authority had rejected their appeal filed against the Order-in-Original passed by the Addl. Commissioner of Customs. Since the goods have been absolutely confiscated and no clearance of goods were given to them they were not required to pay any duty at all and therefore the duty paid by them is sufficient to be treated as pre-deposit. - Held that - the applicant had filed application before the Asstt. Commissioner of Customs claiming refund of customs duty paid by them against the impugned Bill of Entry. Their refund claim was rejected by the Asstt. Commissioner of Customs. The order passed by the Asstt. Commissioner rejecting the refund claim is not part of present appeal. Therefore, at this stage, the contention of the applicant that the amount which was rejected by the Asstt. Commissioner can be treated as a pre-deposit in the present appeal against imposition of penalty is not acceptable. Waiver of pre deposit Assesse could not make prima facie case in his favor Rs. 50,0000 was ordered to be pre deposited - stay granted partly.

Summary

Issues Involved:
1. Refund Claim Rejection on Grounds of Time Bar
2. Classification of Duty Payment as Pre-deposit
3. Liability to Penalty for Import of Spurious Drugs
4. Liability to Pay Duty on Absolutely Confiscated Goods
5. Requirement of Pre-deposit for Stay of Penalty

Issue-wise Detailed Analysis:

1. Refund Claim Rejection on Grounds of Time Bar:
The refund claim was rejected because it was filed after the six-month period stipulated under Section 27(1) of the Customs Act, 1962. The appellant's contention that the duty paid should be considered as a pre-deposit was found incorrect. The duty was paid following the assessment of the bill of entry under the second appraisement method as per Section 17(4) of the Customs Act. The Tribunal upheld the rejection of the refund claim on the grounds of being time-barred, emphasizing adherence to statutory time limits.

2. Classification of Duty Payment as Pre-deposit:
The appellant argued that the duty paid should be treated as a pre-deposit and not as actual duty. However, the Tribunal clarified that the duty was assessed and paid under the proper head following the second appraisement method. Therefore, the payment made was indeed duty and not a pre-deposit. The Tribunal rejected the appellant's argument, affirming that the provisions of Section 27(1) applied in determining eligibility for a refund.

3. Liability to Penalty for Import of Spurious Drugs:
The appellant challenged the imposition of a penalty, claiming no knowledge of the spurious nature of the drugs. The Tribunal noted that the appellant failed to obtain a No Objection Certificate (NOC) from the Drug Controller and imported the drugs without the required site registration, rendering the goods "spurious" and "prohibited" under Section 10(bb) of the Drugs and Cosmetics Act, 1940. The Tribunal held that the appellant's omission to ensure compliance with import regulations made them liable for penalty under Section 112(a) of the Customs Act. The penalty imposed was deemed appropriate given the circumstances.

4. Liability to Pay Duty on Absolutely Confiscated Goods:
The Tribunal examined whether the appellant was liable to pay duty on goods that were absolutely confiscated. Referring to precedents, the Tribunal concluded that the liability to pay duty arises once goods are imported into the country, irrespective of subsequent confiscation. The Tribunal cited the Apex Court's rulings in UOI v. Security & Finance (P) Ltd. and Garden Silk Mills Ltd. to support its decision. The duty liability was affirmed as valid and independent of the confiscation of goods.

5. Requirement of Pre-deposit for Stay of Penalty:
There was a difference of opinion between the Members on whether the duty already paid sufficed for waiving the pre-deposit requirement for the penalty. The majority decision required the appellant to make a pre-deposit of Rs. 50,000/- towards the penalty for the stay of recovery during the appeal. The decision emphasized that the duty paid could not be treated as a pre-deposit for the penalty, and compliance with the pre-deposit requirement was necessary.

Conclusion:
The Tribunal directed the appellant to pre-deposit Rs. 50,000/- within four weeks towards the penalty, with the balance penalty recovery stayed during the appeal. The rejection of the refund claim was upheld as time-barred, and the appellant was held liable for both duty and penalty despite the absolute confiscation of goods. The Tribunal emphasized strict adherence to statutory provisions and precedents in its judgment.