2020 (12) TMI 964 - AT - Customs

Confiscation of goods - imposition of redemption fine and penalty - absence of valid PSI certificate - import of Tin Waste and Scrap (Light Melting Scrap) - misdeclaration of goods - appellant further submits that there was neither any knowledge nor reason to believe on the part of the appellant herein w.r.t. the alleged mis-declaration of the goods so imported - HELD THAT - It is apparent that the goods declared as Tin Waste and Scrap (Light Melting Scrap) were on verification by the qualified Chartered Engineer certified as Tin Plated Steel Scrap since steel predominates by weight. The appellant had not asked for any re-test or alike at the relevant point of time. On the contrary under letter dated 24.01.2013 (page no. 23 of the appeal memorandum) the appellant/ importer had waived his right of show cause notice and/or hearing at the stage of adjudication and hence, the contention on behalf of the appellant before me that the certificate was issued by the Chartered Engineer on visual examination, cannot come to rescue of the appellant with regard to the proper description of the goods. It is also not in dispute that for importation of steel scrap, Pre Shipment Inspection Certificate was mandatory in terms of the Foreign Trade Policy, 2009-14. The subsequent communication from the Overseas Supplier together with PSI Certificates cannot come to the aid of the appellant w.r.t. the confiscation of the goods under Section 111(d) of the Customs Act, 1962 since there was restriction under Foreign Trade Policy, 2009-14 in importation of steel scrap. The importation was permitted only against Pre Shipment Inspection Certificates and it is settled position of law that conditions for import, if not fulfilled, the importation is not permitted - In the present case, at the time of importation of the goods, admittedly, Pre Shipment Inspection Certificates were not available and the goods were wrongly described as scrap of tin instead of scrap of steel. The appellant could not even produce such certificates prior to adjudication and as such, the order of confiscation of the imported goods are proper and correct under Section 111(d) of the Customs Act, 1962 and thus upheld. Imposition of penalty - Section 112 of the Customs Act, 1962 - HELD THAT - There is nothing on record to suggest any prior knowledge or reason to believe about the confiscable nature of the imported goods under Section 111 of the Customs Act, 1962. Moreover, the goods imported in January, 2013 by the appellant have already lost its market value of ₹ 21,73,643.25(as declared) and the appellant /importer has already suffered substantial loss and injury for no fault on his part. The law requires existence of mens rea and maintenance of balance of convenience prior to imposition of penalty upon any person. In the present case, neither there is any existence of ingredient of section 112 of the Customs Act, 1962 nor any mens rea and hence, the imposition of penalty upon the appellant is bad in law and liable to be quashed. The order of confiscation of the imported goods under section 111(d) of the Customs Act, 1962 upheld - penalty imposed upon the appellant under Section 112 of the Customs Act, 1962 - appeal allowed in part.

Summary

Issues:
1. Validity of confiscation of goods and imposition of fine and penalty in absence of valid PSI certificate.

Analysis:
The appellant contested the confiscation of goods and imposition of penalties based on the absence of a valid Pre Shipment Inspection (PSI) certificate during importation. The goods were initially declared as Tin Waste and Scrap but were later identified as Tin Plated Steel Scrap upon inspection by a Chartered Engineer. The appellant argued that they were unaware of the misdeclaration by the foreign supplier and had no reason to suspect it. Despite subsequent communication from the Overseas Supplier admitting the mistake and providing PSI certificates, the authorities upheld the confiscation citing non-compliance with the Foreign Trade Policy, which mandated PSI certificates for steel scrap imports.

The tribunal noted that the goods were indeed wrongly described during importation, and the lack of PSI certificates rendered the importation unauthorized under the Customs Act. The appellant's waiver of the right to a show cause notice further weakened their case. The tribunal emphasized that non-compliance with import conditions, such as the absence of necessary certificates, rendered the goods as "Prohibited Goods" under Section 2(33) of the Customs Act, justifying confiscation under Section 111(d).

Regarding the penalty imposed under Section 112 of the Customs Act, the tribunal found fault with the Adjudication Order for not providing specific findings or citing relevant clauses. Section 112 allows penalties for acts leading to confiscation or dealing with confiscable goods knowingly. The tribunal highlighted the lack of evidence implicating the appellant in the misdeclaration, emphasizing the absence of mens rea or prior knowledge. As the appellant had already suffered significant financial losses, the tribunal deemed the penalty imposition unjustified and quashed it.

In conclusion, the tribunal upheld the confiscation of goods under Section 111(d) due to non-compliance with import regulations but set aside the penalty imposed under Section 112, ruling in favor of the appellant. The appeals were partly allowed, providing relief to the appellant in the matter.