2024 (12) TMI 965 - AT - Customs

Absolute confiscation/Redemption of Goods under the provisions of Section 111(d), 111(f), 111(l) and 111(m) of the Customs Act, 1962 - levy of penalty under Section 112(a)(i) and Section 114AA of the Act - prohibited goods or not - Mis-declaration of the quality, quantity and the valuation of the goods - Penalty under Section 112(a)(i) 114AA of the Act. Whether any prohibition is imposed under any other law for the time being in force. Chapter 1(a) of CTA, 1975 provides that all goods imported shall also be subjected to domestic law, rules, orders, regulations, technical specifications, environmental and safety laws, as applicable to domestically produced goods? - HELD THAT - Section 17 of the BIS Act prohibits the manufacture, import, distribute, sell, hire, lease, store or exhibit for sale any goods or articles without standard mark. Section 16 of BIS Act empowers the Central Government to notify by an order published in the Official Gazette, the goods or articles etc. to conform a standard by use of the Standard Marks in public interest or for protection of human, animal or plant, health, safety of the environment or prevention of unfair trade practices or national security. In exercise of the power under Section 14, the Central Government issued the order dated 19.11.2009 in respect of the Pneumatic Tyres and Tubes of Automatic Vehicles (Quality Control) Order, 2009, which came into force on 13.05.2011. In terms of the aforesaid provisions, it is absolutely clear that no person can manufacture, import, store for sale, sell or distribute the pneumatic tyres, which do not bear the standard mark of the Bureau. The proviso enumerates the exception in respect of the pneumatic tyres manufactured in India for export or the pneumatic tyres imported by OEM for fitment on vehicles or aftersales, which are meant for exports. The appellant do not fall in either of the two exceptions carved out in the proviso and, therefore, it was mandatory that the pneumatic tyres imported by them should bear the BIS markings. The goods (tyres) imported by the appellant without any BIS markings being in violation of the statutory provisions are not permissible to be imported and hence they are liable for confiscation under Section 111 of the Act. Whether the tyres imported by the appellant fall under the category of prohibited goods as defined under Section 2(33) of the Act? - HELD THAT - The term prohibited goods has been the subject matter of interpretation in several decisions. In the case of Aban Exim Pvt. Ltd., the import of identical goods was treated as import of prohibited goods - The principle of law as has been settled in the catena of decisions is that if there is any prohibition on the import or export of any goods under the Act, or any other law, for the time being in force, it would be considered as prohibited goods but excluding the goods in respect of which the conditions, subject to which the goods are imported or exported, have been complied with. In the facts of the present case, it is an admitted position that the goods imported were not having the BIS markings, whereas the legal position, as discussed above, has categorically imposed such a condition and, therefore, the goods imported in violation of the said condition had rendered the goods in the category of prohibited goods , which are liable for confiscation under the Act. Mis-declaration of the quality, quantity and the valuation of the goods - HELD THAT - The appellant sought justification by referring to a fake email stating that the foreign supplier had dispatched excess quantity of tyres by mistake, which is difficult for us to accept as no prudent businessman would supply excess amount of goods without charging for the same. Thus the allegation of mis-declaration stands proved - it is found from the contents of the show cause notice that the value of the imported tyres could not be determined under Rule 4 to Rule 8 of the Customs Valuation Rules, 2007 and consequently, resort was taken under Rule 9 and the value ascertained by the Chartered Engineer on the basis of the Circular and the investigation was taken to be the market value at the time of import. We also find from the order of the Adjudicating Authority, where it has been categorically noted that the appellant had accepted the violation in his statement dated 17.08.2019. In the circumstances, nothing further survives to be challenged so far as the valuation arrived at by the Chartered Engineer. Penalty under Section 112(a)(i) 114AA of the Act - HELD THAT - Though the appellant was aware of mis-declaration made in the B/Es and the prohibited nature of the goods, yet he signed false declaration and filed B/Es for the purposes of making the profit of Rs.75,000/- to Rs.1,00,000/- per container from the Noticee No.2. He has further tried to divert the issue of mis-declared quantity of tyres by producing a forged email - Considering the conduct of the appellant, there are no error in the orders of the Authorities below in confirming the penalty on the appellant under the provisions of Section 112(a)(i) and 114AA of the Act. Absolute Confiscation/Redemption of Goods - HELD THAT - The Commissioner (Appeals) in the present case held that releasing the goods on payment of redemption fine to the appellant may lead to risk of public life and promote smuggling. The main objective of the import policy regarding tyres was to maintain quality control ensuring safety of human lives and vehicles and hence, it would not be proper to release the goods on payment of redemption fine. The Commissioner (Appeals) also noted that the goods imported without BIS Standard Markings are prohibited goods and it would not be prudent to release the goods on payment of redemption fine as the appellant is a trader and the goods once released can end-up in the hands of the un-authorised person, which may lead to the risk of safety of passengers travelling by such vehicles. There are no error in the observations and the conclusions arrived at by the Commissioner (Appeals). There are no reason to interfere with the impugned order and hence, the same is affirmed - The appeal, is accordingly dismissed.

Summary

Issues Involved:

1. Mandatory BIS Certification for Imported Tyres
2. Classification of Imported Tyres as Prohibited Goods
3. Misdeclaration of Goods
4. Imposition of Penalties under Sections 112(a)(i) and 114AA of the Customs Act
5. Absolute Confiscation vs. Redemption of Goods

Issue-wise Detailed Analysis:

1. Mandatory BIS Certification for Imported Tyres:

The primary issue addressed was whether the imported tyres required BIS certification. The judgment emphasized that the tyres imported by the appellant lacked the mandatory BIS certification, which is a violation of Section 17 of the Bureau of Indian Standards (BIS) Act. The Act prohibits the import of goods without a standard mark unless they are exempted. The relevant legal provisions, including the Pneumatic Tyres and Tubes for Automotive Vehicles (Quality Control) Order, 2009, mandate that tyres must bear the BIS standard mark unless they fall under specific exemptions, which the appellant did not qualify for. The tribunal concluded that the absence of BIS markings on the imported tyres constituted a violation, rendering the goods liable for confiscation.

2. Classification of Imported Tyres as Prohibited Goods:

The tribunal examined whether the imported tyres could be classified as "prohibited goods" under Section 2(33) of the Customs Act, 1962. It was determined that goods imported in violation of statutory conditions, such as lacking BIS certification, fall under the category of prohibited goods. The judgment referenced previous decisions, including those by the Supreme Court, which clarified that "prohibited goods" include those subject to any prohibition under the Act or any other law. The tribunal affirmed that the tyres, being imported without adhering to mandatory BIS standards, were indeed "prohibited goods" and thus liable for absolute confiscation under Section 111 of the Customs Act.

3. Misdeclaration of Goods:

The tribunal addressed the issue of misdeclaration concerning the quality, quantity, and valuation of the imported tyres. It was found that the appellant declared the goods as "Off the Road Tyres," whereas they were actually "Passenger Car Radial Tyres." Additionally, there was a significant discrepancy in the declared and actual quantities of tyres. The tribunal rejected the appellant's justification of an alleged mistake by the foreign supplier, citing the improbability of such an error in commercial transactions. The misdeclaration was deemed intentional, aimed at evading customs duty, thus justifying the confiscation and penalties imposed.

4. Imposition of Penalties under Sections 112(a)(i) and 114AA of the Customs Act:

Penalties were imposed on the appellant under Sections 112(a)(i) and 114AA of the Customs Act for misdeclaration and attempting to evade customs duty. The tribunal upheld these penalties, noting the appellant's conduct in obtaining Importer Exporter Code (IEC) and facilitating the importation process despite being aware of the misdeclaration. The tribunal referenced legal precedents establishing that mens rea, or intent, is not a prerequisite for imposing penalties under the Customs Act. The penalties were deemed appropriate given the appellant's actions and the potential risk to public safety.

5. Absolute Confiscation vs. Redemption of Goods:

The appellant sought the release of the confiscated goods for home consumption or re-export upon payment of redemption fine. However, the tribunal upheld the decision for absolute confiscation, citing the potential risk to public safety and the objectives of the import policy to ensure quality control. The tribunal referenced the High Court's observations in similar cases, emphasizing that releasing goods without BIS certification could jeopardize public safety. The discretion to allow redemption under Section 125 of the Customs Act was not exercised, as the goods were classified as prohibited and the release could lead to unauthorized use, posing safety risks.

In conclusion, the tribunal dismissed the appeal, affirming the absolute confiscation of the goods and the penalties imposed, highlighting the importance of compliance with statutory requirements for imports.