2023 (9) TMI 420 - AT - Customs

Absolute Confiscation of goods - levy of penalty u/s 112 of Customs Act, 1962 - failure to comply with the statutory requirement under Legal Metrology (Packaged Commodities) Rules, 2011 - goods sold to industrial users after doing processing - HELD THAT - The Adjudication Authority admits that since goods are meant for industrial consumers, it is exempted from the provisions of the ibid Rules. The Adjudication Authority also admits that the clients to whom the goods imported under previous Bill of Entry sold by the appellant are doing manufacturing activity. However in present import, the benefit is denied to appellant on the ground that appellant failed to submit documentary evidence to prove that goods imported under present Bill of Entry is meant for sale to industrial consumers and for that reason they are not eligible for exemption under Rule 3B of the ibid Rules. The above finding is factually unsustainable. The importer had produced sufficient evidence regarding details of the clients to whom the goods are sold after its import earlier and once the Adjudication Authority is satisfied with the activity carried out by the importer, no further evidence can be produced at the time of import regarding the details of customers to whom the goods are being sold after clearance. From the impugned order it is evident that the proper officer at the time of physical examination of the goods has observed that the goods were in pre-packed condition and also does not bear the required labelling to mean that the imported Coated Paperboard Gloss are not for retail sale. Once the appellant had expressed their willingness to comply with the rules before clearance of the goods by affixing declaration on the packets that not for retail sale , the Lower Authority ought to have extended an opportunity for affixing the same before its release for home consumption. The respondent shall allow the appellant to affix not for retail sale labels on each packet and after confirming the same, shall allow clearance of the goods. Regarding the prayer of the appellant for detention certificate, the issue is not considered by the Adjudication/Appellate Authority. The impugned orders are set aside - appeal allowed.

Summary

Issues involved:
The issues involved in the judgment are related to the compliance with Legal Metrology (Packaged Commodities) Rules, 2011, the confiscation of goods, and the imposition of penalties under the Customs Act, 1962.

Compliance with Legal Metrology Rules:
The appellant imported coated paperboard gloss for industrial users and submitted evidence to prove the goods were not for retail sale. The appellant offered to affix a "not for retail sale" label to meet legal requirements, but this was not considered by the authorities. The judgment cited the Legal Metrology Rules exempting packaged commodities for industrial consumers from certain provisions. The appellant's willingness to comply with labeling requirements before clearance was highlighted. The authorities were directed to allow the labeling and clearance of goods.

Confiscation of Goods and Penalties:
The Adjudication Authority ordered the absolute confiscation of goods and imposed a penalty under the Customs Act, 1962. The appellant challenged this decision, arguing that the goods were not intended for retail sale, and compliance could be met by affixing the necessary labels. The judgment referenced a Supreme Court case emphasizing the strict interpretation of statutes conferring confiscation powers. The Tribunal set aside the impugned orders, directing the respondent to allow labeling and clearance of goods. The appellant's request for a detention certificate and waiver of demurrage charges was also directed to be considered.