2017 (2) TMI 295 - HC - Customs

Import of cosmetics - Loomy Tunes Room Air Fresheners - misdeclaration - jurisdiction - power of Competent Authority to pass discretionary order. Held that - no cosmetic, shall be imported into India unless that product is registered under the rules by the licensing authority. Rule 129A dealt with the Form and manner of application for Registration Certificate for importing cosmetics referred to above. Such application shall be made for Registration of cosmetics intended to be imported into India in Form 42 by every importer and shall be accompanied by a fee of 250/- US dollars or its equivalent to Indian rupees for each brand of cosmetics. Under Rule 129(C), the licensing authority was required to issue a Registration Certificate in Form 43 subject to the conditions contained therein. There is no material available on record to vouch for any such Registration Certificate in Form 43 has been obtained by or on behalf of the importer. The goods which are liable to be imported subject to fulfillment of certain conditions, when so imported without fulfilling or satisfying such conditions amount to importing prohibited goods in terms of Section 11 read with Section 125 of the Act. Therefore, we find no merit in the contention canvassed that such of those clandestinely imported cosmetics and toiletries goods should also be permitted to be redeemed by the Commissioner of Customs and failure to do so vitiates the order is without any merit or substance. The Commissioner of Customs has no power to waive the conditions subject to which such cosmetic products can be imported as he is not the Competent Authority but someone else. Hence, the exercise of discretion has been properly carried out by the Commissioner of Customs. There are no valid mitigating factors or compelling circumstances warranting the exercise of discretion to offer payment of redemption fine in lieu of confiscation. Neither are there any special equities calling for such an exercise. Appeal dismissed - decided against appellant.

Issues Involved:
1. Legality of the detention and seizure of goods.
2. Validity of the extension of the period for issuing a show cause notice.
3. Requirement for exhaustion of statutory remedies before approaching the court.
4. Confiscation and imposition of penalties on imported goods.
5. Discretionary power to provide an option for redemption fine in lieu of confiscation.

Detailed Analysis:

1. Legality of the Detention and Seizure of Goods:
The appellant argued that the detention of goods on 28.10.2013 and the subsequent sealing of the container on 11.11.2013 amounted to a seizure. The court clarified that there is a distinction between "detention" and "seizure." Detention does not necessarily lead to confiscation, while seizure encompasses detention and can lead to confiscation. The court held that the examination and sealing of the container on 11.11.2013 were part of the verification process under Section 17 of the Customs Act and did not constitute a seizure. The actual seizure occurred on 03.12.2013 when undeclared goods were discovered concealed in the container.

2. Validity of the Extension of the Period for Issuing a Show Cause Notice:
The appellant contended that the show cause notice should have been issued within six months from the date of detention (28.10.2013 or 11.11.2013). The court found that the six-month period should be reckoned from the date of seizure (03.12.2013). The Commissioner of Customs extended the period for issuing the show cause notice by six months on 02.06.2014, which was within the statutory time limit.

3. Requirement for Exhaustion of Statutory Remedies Before Approaching the Court:
The court noted that the appellant had not availed the appellate remedy under Section 128 of the Customs Act before filing the writ petitions. The court emphasized that the rule requiring exhaustion of statutory remedies is a rule of policy, convenience, and discretion rather than a rule of law. However, in cases of patent illegality, the court can exercise its discretion to entertain the writ petitions.

4. Confiscation and Imposition of Penalties on Imported Goods:
The Additional Commissioner of Customs confiscated the undeclared cosmetics and toiletries found in the container and imposed penalties under Sections 112 and 114 of the Customs Act. The court upheld the confiscation and penalties, noting that the importer had attempted to smuggle undeclared goods. The court found no merit in the contention that the goods should be unconditionally released due to the delay in issuing the show cause notice.

5. Discretionary Power to Provide an Option for Redemption Fine in Lieu of Confiscation:
The appellant argued that the adjudicating authority should have provided an option to pay a redemption fine in lieu of confiscation of the goods. The court explained that Section 125 of the Customs Act vests the adjudicating authority with discretion to offer a redemption fine for prohibited goods but mandates it for other goods. In this case, the imported cosmetics were not registered as required under the Drugs and Cosmetics Rules, 1945, making them prohibited goods. The court held that the Commissioner of Customs exercised his discretion properly by not offering a redemption fine for the undeclared cosmetics and toiletries.

Conclusion:
The court dismissed both appeals, upholding the legality of the detention and seizure of goods, the validity of the extension for issuing a show cause notice, the requirement for exhaustion of statutory remedies, the confiscation and penalties imposed on the imported goods, and the discretionary power exercised by the Commissioner of Customs regarding the redemption fine.

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