2022 (11) TMI 511 - AT - Customs

Confiscation of imported goods - penalty - allegation is that the waste paper contains more than 1% non-paper material - HELD THAT - It is undisputed fact that the inspection of entire goods have not been undertaken. The percentage of non-paper material arrived at on eye estimation that too not of the entire goods but a small and part quantity of one container. There is no certificate or report from expert even on the eye estimation basis - the percentage of non-paper material was arrived at on assumption and presumption basis for this reason itself the goods were not liable for confiscation. The department could not find any material evidence to allege that in case import contains more than 1%, the appellant have any involvement or understanding with the supplier. On the basis of these documents, it is clear that the appellant cannot be made responsible if any lapse committed by the supplier. The appellant have already abandoned the goods. Considering all these facts, it is clear that the appellant is not responsible for any misdeed, if any, committed by the supplier therefore, the appellant is not liable for any penalty. Accordingly, the penalty imposed under Section 112 (i) of the Customs Act, 1962 is set aside. Appeal allowed - decided in favor of appellant.

Summary

Issues: Appeal against penalty upheld by Adjudicating authority for importing waste paper with more than 1% non-paper material.

Analysis:
1. Confiscation of Goods and Penalty Imposition: The appellant imported waste paper material with alleged non-paper material exceeding 1%, leading to seizure and show cause notice proposing confiscation, redemption fine, and penalty. The adjudicating authority ordered confiscation under Customs Act, 1962, with an option for re-export after redemption and imposed a penalty of Rs.2 lacs. The appellant contested the penalty imposition, citing abandonment of goods and lack of involvement in the supplier's lapse. The Commissioner (Appeals) upheld the penalty, prompting the appeal.

2. Appellant's Submission: The appellant's counsel argued that the non-paper material percentage was determined through eye estimation on a small quantity without comprehensive inspection, making it questionable. The appellant, relying on various judgments, emphasized the lack of substantiated allegations during proper inspection and their non-involvement in the supplier's potential lapse. The counsel contended that penalties should not apply in such cases.

3. Revenue's Stand: The revenue representative reiterated the impugned order's findings, highlighting the appellant's lack of cooperation during the panchnama proceedings, which they could not dispute.

4. Tribunal's Decision: After considering submissions and evidence, the Tribunal found that the non-paper material percentage determination lacked comprehensive inspection and expert validation. The documents submitted by the appellant, including contracts, certificates, and reports, explicitly stated the non-paper material should not exceed 1%. The Tribunal noted the appellant's abandonment of goods and concluded they were not responsible for the supplier's potential lapse. Consequently, the penalty imposed under Section 112 (i) of the Customs Act, 1962, was set aside, and the appeal was allowed.

This judgment highlights the importance of thorough inspection, evidence substantiation, and supplier agreements in determining liability for penalties in customs cases involving imported goods with specified material composition requirements.