2021 (10) TMI 1187 - AT - Customs

Imposition of Redemption Fine and Penalty - import of Copper Sulphate Pentahydrate Industrial grade (powder) - insecticide goods or not - requirement of importing the goods from designated ports as per the Ministry of Agriculture and Farmers Welfare Notification dt. 22/12/2017, which is violated in this case - HELD THAT - The Revenue has nowhere doubted the bona fides of the appellant. There is a Bill of Entry wherein the goods is described, there are other documents like contract with foreign supplier, Bill of Lading, etc. which when examined/considered, could throw light in deciding what was imported, but nothing is placed on record - The revenue therefore could not have proceeded without carrying out this exercise since it is the direction of Hon ble High court. Strangely and without placing anything on record, the Order-in-Original has proceeded to confiscate and offer redemption fine only for the reasons that the appellant had violated the port restriction. Port restrictions would apply if the cargo imported is per se insecticide. Levy of penalty u/s 112(a) of Customs Act - HELD THAT - Penalty under Section 112(a) could be fastened only if the facts point out to the possible commission or omission as described therein, but when there is miserable failure in considering/examining as what was actually imported, to jump the gun alleging port restrictions is clearly arbitrary and unjustified. Appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Imposition of redemption fine under Section 125 and penalty under Section 112(a) of the Customs Act, 1962.

Analysis:
The case involved the appellant importing "Copper Sulphate Pentahydrate Industrial grade (powder)" from Taiwan, which the Revenue claimed was an insecticide requiring import only through designated ports. The Order-in-Original confiscated the goods but allowed redemption on payment of fine under Section 125 and imposed a penalty under Section 112(a) of the Customs Act. The appellant contended that the goods were not an insecticide but used in its manufacture, with registration obtained under the relevant ministry. The appellant cited a High Court judgment regarding port restrictions on insecticides to support its case, which the Revenue did not accept.

The Tribunal noted that the Revenue did not doubt the appellant's bona fides and highlighted a High Court order directing examination of whether the imported goods were an insecticide. The lower authorities did not follow this direction and relied on a different case's conclusions. The Tribunal emphasized the need to establish what was imported before applying port restrictions, as the essence of the High Court's direction was to provide proper facts. The Tribunal found the imposition of redemption fine and penalty unjustified due to the failure to ascertain what was actually imported, as port restrictions should only apply to insecticides.

Regarding the penalty under Section 112(a), the Tribunal emphasized that it should only be imposed if the facts indicate a possible violation. Since there was a failure to determine what was imported, alleging port restrictions prematurely was deemed arbitrary and unjustified. Relying on the High Court's ruling that port restrictions based on Insecticide Rules were unsustainable, the Tribunal concluded that the redemption fine and penalty were unwarranted. Following the doctrine of precedence, the Tribunal set aside the impugned order concerning the redemption fine and penalty, allowing the appeal on those grounds.

In conclusion, the Tribunal found that the imposition of redemption fine and penalty by the Revenue was unjustified due to the failure to establish what was imported, leading to arbitrary application of port restrictions and penalties. The Tribunal's decision was based on the High Court's directive to consider the nature of the imported goods before imposing such sanctions, emphasizing the importance of factual clarity in customs cases.