2021 (1) TMI 118 - AT - Customs

Absolute Confiscation - penalty - Skimmed Milk Powder - imports under Duty Free Import Authorisation - prohibited goods or not - non-production of BIS Certificate at the time of assessment - HELD THAT - It is not disputed that the department did not ask for redemption fine and rather went for complete confiscation of the goods under the guise of prohibited goods, which is not correct as per discussions already made. The Hon ble Supreme Court in the matter of COMMISSIONER OF CUSTOMS VERSUS M/S. ATUL AUTOMATIONS PVT. LTD., AND PARAG DOMESTIC APPLIANCES 2019 (1) TMI 1324 - SUPREME COURT has specifically laid down that there exist a fundamental distinction between what is prohibited and what is restricted. In the present case also the absence of BIS certificate can t made the skimmed milk power as prohibited goods and since the goods in question are not prohibited therefore its complete confiscation is not warranted - It is not disputed that the appellants/importer did not possess the required BIS certificate, but that itself would not make it prohibited goods. The authorities could have given opportunity to the appellants for its redemption. As the same was not offered to the appellants now they can t ask for it, as no new case can be made at this stage. The goods in issue are not prohibited goods under the Customs Act, 1962 or under the provisions of Foreign Trade Policy and under any other law. Learned Counsel for the Appellant rightly submitted that if the department is so much concerned, then in the meantime it could have got the skimmed milk powder tested at the cost of the appellants in order to verify whether it meet the standards or not but nothing of the sort has been done. The learned counsel has specifically submitted that as per domestic laws the goods were sent to FSSAI for mandatory tests in terms of the provisions of The Food Safety and Standards Act, 2006. The FSSAI clearance was given by the authorities and it can very well be said that that the appellants have complied with the mandatory food safety standard under the Food safety standards Act, 2006 under the domestic law. The technical specification of the impugned goods clearly falls under the FSSAI regulation as per the direction issued under Section 16(8) of the Food Safety Standards Act, 2006 regarding operationalisation of amended regulation regarding revised standards for milk and milk products etc., which includes essential parameters such as Milk fat (%), Milk Protein, Titrable acidity, Total ash content etc. Undisputedly FSSAI standards and BIS standards are complementary to each other and are not contrary. The impugned goods in question are neither liable for confiscation nor for any penalty under the Customs Act - Appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Whether skimmed milk powder imported under the DFIA Scheme can be confiscated for non-production of BIS Certificate at the time of assessment?

Analysis:
The Appeal challenged the order for confiscation and penalty upheld by the Commissioner of Customs. The dispute revolved around the classification of skimmed milk powder as prohibited goods due to the absence of a BIS Certificate. The Adjudicating Authority considered the goods as prohibited and ordered confiscation and penalty. The Appellant argued that the goods were freely importable under the DFIA scheme and not prohibited. The department contended that the goods were imported in violation of EXIM policy, rendering them prohibited. The Tribunal granted early hearing due to the perishable nature of the goods.

The Appellant's counsel argued that skimmed milk powder was freely importable under the ITC (HS) classification and eligible for DFIA benefits. They emphasized that the absence of a BIS certificate did not make the goods prohibited. The department's representative insisted on the mandatory requirement of a BIS certificate under the EXIM policy. They contended that the goods fell under prohibited goods as per IS 14542 standards.

The Tribunal analyzed the definition of "prohibited goods" under the Customs Act, emphasizing that goods must be subject to prohibition under the law to be classified as such. It noted that skimmed milk powder was freely importable under the DFIA scheme and not prohibited. The Tribunal cited relevant case law to support the distinction between prohibited and restricted goods. It highlighted that the absence of a BIS certificate did not automatically render the goods prohibited.

The Tribunal agreed with the Appellant's arguments, citing a previous ruling that goods imported under the DFIA were not liable for confiscation for lack of an import permit. It noted that the BIS license obligation was on the exporter, not the importer. The Tribunal emphasized that the goods complied with FSSAI standards under domestic law, indicating adherence to mandatory food safety standards. It concluded that the goods were neither liable for confiscation nor penalty under the Customs Act, allowing the Appeal with consequential relief.

In conclusion, the Tribunal ruled in favor of the Appellant, determining that the skimmed milk powder imported under the DFIA scheme was not subject to confiscation or penalty for non-production of a BIS Certificate, as it was not classified as prohibited goods under the Customs Act or any other law. The judgment provided detailed analysis of the legal provisions, case law, and factual circumstances to support its decision.