2017 (1) TMI 426 - AT - Central Excise

100% EOU - Absolute confiscation - import and use of potassium permanganate - manufacture of hulled sesame seeds and sortex natural seeds for export - Held that - appellant uses potassium permanganate for the legitimate purpose of manufacturing and exporting food products. Its use as a disinfectant is not in question though its potential for perverse use may have awakened the Central Government, belatedly, to the need for control on its import and usage. Surely, it is nobody s case that potassium permanganate has no legal use and that it is prohibited for import. In these circumstances, absolute confiscation is not only overkill but also beyond the sanction of law. Appellant has been compliant with the legal requirement once they were made aware of the prescription. There is no allegation of misuse of material imported and subjected to the present proceedings. The application for issue of certificate has also not been denied. Goods allowed to be redeemed on payment of redemption fine - penalty set aside - appeal allowed - decided in favor of appellant.

Issues involved:
1. Import of potassium permanganate without required certification.
2. Confiscation of unconsumed potassium permanganate.
3. Allegations of contravening the law and imposition of fines and penalties.

Issue 1: Import of potassium permanganate without required certification
The appellant, an export-oriented unit, imported potassium permanganate for use as a disinfectant in the manufacturing process of food products. The import was cleared by customs authorities without the necessary certification from the Narcotics Commissioner of India. The appellant argued that they were unaware of the new regulation requiring certification, as it was introduced after the placement of the order. The Tribunal noted that there was no evidence of mala fides in the import and that the customs authorities themselves cleared the goods without hindrance. The Tribunal found it improper for the lower authorities to make conclusive findings before the certification application was processed.

Issue 2: Confiscation of unconsumed potassium permanganate
After an investigation, a portion of the imported potassium permanganate was seized by the Directorate of Revenue Intelligence. The lower authorities confiscated the seized goods under the Customs Act, 1962, without providing an option to redeem and imposed fines and penalties. The Tribunal acknowledged the legitimate use of potassium permanganate by the appellant and the absence of evidence of misuse. It noted that the appellant had applied for the necessary certification, which was neither granted nor denied by the Narcotics Commissioner. The Tribunal held that absolute confiscation was excessive and ordered the release of the confiscated goods upon payment of a fine within a specified period.

Issue 3: Allegations of contravening the law and imposition of fines and penalties
The appellant contended that they had no intention of contravening the law and had filed the bill of entry in good faith. They argued that the customs authorities themselves were unaware of the new certification requirement. The Tribunal observed that the appellant had complied with the legal requirements once they became aware of the regulation. It found that the penalty imposed by the lower authority was unwarranted, considering the technical nature of the breach and the lack of evidence of misuse. The Tribunal upheld the confiscation of the seized goods but set aside the penalty imposed, citing the equitable application of the Customs Act, 1962.

In conclusion, the Tribunal upheld the confiscation of the seized goods but allowed their release upon payment of a fine. It recognized the appellant's compliance once informed of the certification requirement and deemed the penalty imposed as disproportionate to the technical nature of the breach.

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