2019 (10) TMI 1159 - AT - Customs

Prohibited goods or not? - import of two models of feature phones, m280 and m380 , batteries, chargers (power adapters) and other mobile accessories - Confiscation on the grounds that the mobile phones imported have been manufactured by a manufacturer other than the one authorized by BIS; and the BIS registration will not apply to the mobile phones imported and the import of mobile phones is without valid BIS registration for their batteries - redemption fine - penalty. HELD THAT - The goods have been confiscated by the Customs under Section 111(d) on the ground that the goods which are prohibited are attempted to be imported, perusal of Section 111(d) of the Customs Act 1962 shows that the said Section is applicable only if the goods which are imported or attempted to be imported or are brought within Indian Customs Water contrary to any prohibition imposed by this Act or any other law for the time being enforce whereas the Customs in the present case has failed to bring anything on record to show that the mobile phones are prohibited for import - Further, the main ground for confiscating the goods are that the address of the manufacture in the BIS Certificate and in the Bill of Entry are not matched. The manufacturing unit in Shenzhen, China has authorized all its customers to effect all banking transactions pertaining to the company to Hong Kong as part of usual business practice followed by all traders in India while importing articles from China. The finding of both the authorities that the names of both companies are different is not tenable in law and both the authorities have not properly examined all the documents produced before them. Further, the appellant has produced the documents pertaining to earlier import by them of the mobile phones and no such objection was raised earlier by the Customs authorities. The respondent has failed to appreciate the business practice followed by all Indian traders while importing articles from China and has unnecessarily detained the goods of the appellant company without any reason. The imposition of penalty on the appellant to the tune of ₹ 10,000/- is also unwarranted in law - Appeal allowed - decided in favor of appellant.

Summary

Issues:
- Confiscation of goods under Section 111(d) of the Customs Act, 1962
- Imposition of penalty under Section 112(a) of the Customs Act, 1962
- Validity of BIS registration for imported goods
- Contradiction between Bill of Entry and BIS Certificate
- Letter of Delegation issued by the manufacturer
- Business practices in import transactions

Confiscation under Section 111(d) of the Customs Act, 1962:
The appellant imported mobile phones and accessories, which were confiscated by the Customs under Section 111(d) on the grounds of unauthorized manufacturing and lack of valid BIS registration. However, the Tribunal observed that Section 111(d) applies only if goods are imported contrary to any prohibition under the law, which was not established in this case. The authorities failed to prove that the imported mobile phones were prohibited. The Tribunal noted that the confiscation was primarily based on the mismatch of manufacturer addresses in the BIS Certificate and Bill of Entry. The Letter of Delegation issued by the manufacturer company, confirming the same entity despite different addresses, was crucial evidence ignored by the authorities. The Tribunal concluded that the confiscation was unjustified, considering the lack of prohibition on imported goods.

Imposition of penalty under Section 112(a) of the Customs Act, 1962:
The appellant was penalized under Section 112(a) for the importation of goods, which can only be imposed if the goods are liable for confiscation under Section 111(d). However, since the confiscation itself was deemed unjustified, the penalty of ?10,000 was also considered unwarranted. The Tribunal found no legal basis for the penalty and set aside this aspect of the impugned order.

Validity of BIS registration for imported goods:
The appellant's counsel argued that the goods were imported in accordance with the law, denying any violations. They presented evidence regarding BIS certification and compliance with import regulations. The Tribunal noted that the appellant had followed all laws related to mobile phone importation, emphasizing that the confiscation under Section 111(d) was legally untenable.

Contradiction between Bill of Entry and BIS Certificate:
The authorities highlighted discrepancies between the manufacturer addresses in the BIS Certificate and Bill of Entry, leading to the confiscation. However, the Tribunal found that the Letter of Delegation clarified the discrepancy, confirming the same entity despite address differences. The failure of the authorities to consider this crucial document led to an incorrect assessment and subsequent confiscation.

Letter of Delegation issued by the manufacturer:
The Letter of Delegation issued by the manufacturer company, establishing the connection between different addresses, was a key piece of evidence ignored by the authorities. This document clarified the discrepancy in addresses and confirmed the legitimacy of the import transaction. The Tribunal emphasized the importance of considering all relevant documents before making confiscation decisions.

Business practices in import transactions:
The Tribunal noted that the appellant had a history of importing similar goods from the same manufacturer without objections from Customs previously. The appellant's counsel highlighted common business practices, such as banking transactions in different locations, which were misunderstood by the authorities. The Tribunal criticized the unnecessary detention of goods by Customs and emphasized the need to understand standard business practices in import transactions.

In conclusion, the Tribunal allowed the appeal, setting aside the impugned order and directing Customs authorities to release the goods to the appellant immediately. The judgment highlighted the importance of proper examination of documents, adherence to legal provisions, and understanding common business practices in import transactions.