2022 (9) TMI 397 - AT - Customs

Absolute Confiscation - import of certain refrigerant gases in cylinders as well as empty cans used for packing such gases for re-filling purpose - prohibited goods or not - Imported goods are covered under the Gas Cylinders Rules or not - validity of confiscation for want of licence - HELD THAT - The appellant, as could be seen from its reply to the Show Cause Notice as well as the arguments extracted in the orders of lower authorities, had taken technical contentions to plead that R134a gas stands excluded from the definition of compressed gas , which has not at all been considered by any of the lower authorities. When such technical arguments are being advanced, the concerned authority should examine the issue in the light of such technical arguments, but the same having not been done, both the orders of the lower authorities become non-speaking orders. Further, to add to the agony of the appellant, both the appellant as well as the Revenue had approached the authority under the Petroleum and Explosives Safety Organization (PESO) seeking clarification, but surprisingly, the said authority has issued an incomplete communication, to refer to Rule 2(xxiii) of the Rules ibid., and much worse is the communication issued by the Public Information Officer/Assistant Commissioner of the Customs House, Chennai. Both the authority under PESO as well as the Public Information Officer/Assistant Commissioner of Customs have replied to the application under the RTI Act in a slipshod manner, which is not in accordance with the requirement of the RTI Act. The order of confiscation / demand is one aspect, but before that, it is for the Adjudicating Authority to establish first that the goods in question were prohibited and hence, the order of absolute confiscation also lacks merit - matter remanded back to the file of the Adjudicating Authority, who shall pass a de novo Adjudication Order after hearing the appellant, after meeting the arguments of the appellant and after affording reasonable opportunities to the appellant. Appeal allowed by way of remand.

Summary

Issues:
1. Requirement of licence for importing empty cans
2. Confiscation of goods under Customs Act, 1962
3. Applicability of Gas Cylinders Rules, 2016

Analysis:
1. The appellant imported empty cans for packing refrigerant gases without a licence, leading to a Show Cause Notice proposing confiscation and penalty. The Adjudicating Authority held that a mandatory licence was required, resulting in confiscation and penalty. The appellant contended that the goods did not fall under the Gas Cylinders Rules, emphasizing the nature of the gas and lack of prohibition. The First Appellate Authority upheld the decision, leading to the current appeal.

2. The appellant argued that the gas used did not meet the criteria of a compressed gas under the Rules, challenging the confiscation and penalty. The Revenue contended that the gas, when compressed, became a liquefied gas falling under the definition of compressed gas in the Rules. Various documents and safety data sheets were referenced to support this argument.

3. Rule 29(1) mandates a licence for importing gas cylinders filled with compressed gas. The crucial issue was whether the impugned goods required a licence under the Gas Cylinders Rules. The appellant's technical contentions regarding the nature of the gas were not adequately considered by the lower authorities, rendering their orders deficient. The involvement of PESO and Customs authorities in issuing incomplete and inadequate communications further complicated the matter.

4. The Adjudicating Authority's conclusions lacked a factual basis, and the order of confiscation lacked merit without establishing the goods as prohibited. Consequently, the orders of the lower authorities were set aside, and the matter was remanded for a fresh adjudication after affording the appellant a fair hearing and addressing their technical arguments.

This judgment highlights the importance of thorough consideration of technical contentions, proper communication by authorities, and the necessity to establish prohibition before ordering confiscation. The decision to remand the matter emphasizes the need for a fair and comprehensive adjudication process.