2025 (4) TMI 575 - AT - Customs

Importer under the Customs Act 1962 or not - levy of penalty on the basis of evidence available of construed knowledge - difference of opinion - majority order - Two containers loaded with the medicine had been discharged at the port of Pipavav and were lying unclaimed by the importer. It was also revealed through intelligence that the subject consignments were earlier exported by the Appellant from some other port by availing the benefit of DEPB. - Pipavav is not the notified port to import. HELD THAT - When all these facts are taken up together it is found that the appellant has not been able to conclusively prove that they were not aware of the sending back of the expired drugs by M/s Private Party Oderig. The mere fact that they have not returned the export proceeds to M/s Biologica (UK) Ltd. cannot come to the rescue of the appellants. Since admittedly they were carrying on multiple transactions both with M/s Biologica (UK) Ltd. as well as with M/s Private Party Oderig they may be maintaining a running account for their transactions which has not been properly investigated by the Revenue. So far as the appellant s argument that the value of the consignment should be treated as nil since it pertains expired drugs this can come to their rescue only if the Pipavav Port is designated as a proper port for import of medicines. Since this could not have been imported at Pipavav Port even in the case of normal pharma products the import could not have been cleared on payment of customs duty. In respect of the argument of the appellant about re-importation required to be made within one year the office of Authorised Representative provides the copy of the Notification 135/99-cus dated 27.12.1999 wherein the period for re-importation has been increased from one year to three years. Therefore even this argument of the appellant cannot be legally sustained. Matter to be posted before the regular bench - Appeal allowed in part.

Summary

ISSUES PRESENTED and CONSIDERED

The core legal questions considered in this judgment include:

• Whether the appellant, Genom Biotech Pvt. Ltd. (GBPL), can be treated as an importer of the expired medicines re-imported into India.
• Whether the appellant is liable for any penalties under the Customs Act, 1962, based on the evidence of construed knowledge of the re-importation of expired medicines.
• Whether the appellant's relinquishment of the title to the goods under Section 23 of the Customs Act is valid.
• Whether the imposition of penalties under both Section 112(a) and Section 114A of the Customs Act is justified.
• Whether the goods, having expired, should be valued at nil, and whether the demand for customs duty and DEPB credit recovery is sustainable.
• Whether Notification No. 94/96-Cus, which requires re-importation within one year, is applicable in this case.

ISSUE-WISE DETAILED ANALYSIS

1. Importer Status of GBPL:

• Legal Framework: Section 2(26) of the Customs Act defines an importer as the owner, beneficial owner, or any person holding themselves out as the importer.
• Court's Interpretation: The Tribunal considered whether GBPL could be classified as an importer given their lack of consent and payment for the re-imported goods.
• Key Evidence: GBPL argued they were unaware of the consignment until approached by customs, and they had not ordered the goods.
• Application of Law to Facts: The Tribunal noted that GBPL did not meet the definition of an importer as they neither owned nor consented to the re-importation.
• Conclusion: The majority opinion found that GBPL could not be treated as an importer, as they did not hold themselves out as such.

2. Liability for Penalties:

• Legal Framework: Sections 112(a) and 114A of the Customs Act pertain to penalties for improper importation and misuse of export incentives.
• Court's Interpretation: The Tribunal examined whether GBPL had knowledge of the re-importation and whether they acted to evade duties.
• Key Evidence: Statements from GBPL's directors indicated awareness of the transactions, and initial instructions to clear the goods were given.
• Application of Law to Facts: The Tribunal found that GBPL had knowledge of the goods being re-imported and had initially directed clearance, implying awareness.
• Conclusion: The Tribunal upheld the imposition of penalties but reduced them, acknowledging GBPL's payment of duties and DEPB credits.

3. Relinquishment of Title:

• Legal Framework: Section 23 of the Customs Act allows for relinquishment of title before clearance if no offense under the Act is committed.
• Court's Interpretation: The Tribunal considered whether relinquishment was valid given the alleged offenses.
• Key Evidence: GBPL argued they had relinquished title, but the department contended offenses were committed.
• Application of Law to Facts: The Tribunal found that due to the offenses, relinquishment was not permissible.
• Conclusion: The Tribunal upheld the department's view that relinquishment was invalid.

4. Valuation of Goods and Duty Demand:

• Legal Framework: Customs valuation rules and Notification No. 94/96-Cus regarding re-importation timelines.
• Court's Interpretation: The Tribunal assessed whether expired goods should be valued at nil and the applicability of the notification.
• Key Evidence: The goods were expired, and GBPL argued for nil valuation; the department cited notification timelines.
• Application of Law to Facts: The Tribunal found that despite expiration, Pipavav was not a notified port, and the notification timeline had been extended.
• Conclusion: The Tribunal upheld the duty demand and DEPB credit recovery.

SIGNIFICANT HOLDINGS

• The Tribunal concluded that GBPL could not be treated as an importer under the Customs Act due to lack of ownership and consent.
• Penalties were upheld but reduced, acknowledging GBPL's payment of duties and DEPB credits.
• Relinquishment of title under Section 23 was deemed invalid due to offenses committed.
• The Tribunal upheld the duty demand and DEPB credit recovery, rejecting the argument for nil valuation of expired goods.
• The applicability of Notification No. 94/96-Cus was confirmed, with the re-importation timeline extended to three years.
• The Tribunal emphasized that simultaneous penalties under Sections 112(a) and 114A were not permissible, leading to a reduction in penalties.

The judgment reflects a detailed examination of the legal definitions and obligations under the Customs Act, balancing the facts of the case with statutory interpretations and the evidence presented. The decision to reduce penalties acknowledges the appellant's compliance in paying duties and credits, while reinforcing the legal responsibilities under the Act.