Custom, Excise & Service Tax Tribunal
Commissioner Of Customs (Imports) vs Kalra Exim Pvt.Ltd on 6 September, 2013
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
SOUTH ZONAL BENCH AT CHENNAI
Appeal No.C/40192/2013
[Arising out of Order-in-Appeal No.C.Cus.No.1205/2012 dt. 29.10.2012passed by the Commissioner of Customs (appeals), Chennai]
For approval and signature:
Honble Shri MATHEW JOHN, Technical Member
1. Whether Press Reporters may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982? :
2. Whether it should be released under Rule 27 of the
CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not? :
3. Whether the Member wishes to see the fair copy of
the Order? :
4. Whether Order is to be circulated to the Departmental
Authorities? :
Commissioner of Customs (Imports)
Chennai
Appellant
Versus
Kalra Exim Pvt.Ltd.
Respondent
Appearance:
Shri K.S.V.V.Prasad, JC (AR) Advocate Shri S. Krishnanandh, Advocate For the Appellan CORAM:
Honble Shri Mathew John, Technical Member Date of hearing : 05-07-2013 Date of Pronouncement : 06-09-2013 FINAL ORDER No.40356/2013
1. The respondent filed Bill of Entry No.4219611 dt. 29.7.2011 at Chennai Custom House for clearance of imported goods declared as White Wine, Red Wine, Extra Virgin Olive Oil JJ and Extra Virgin Olive Oil MR imported from their overseas supplier M/s.Morais Rocha, Portugal. In view of CBECs Circular No.58/2001 dt. 25.10.2001 and 03/2011 dt. 6.1.2011,after examination of the subject goods the custom officers referred the goods to Food Safety and Standards Authority of India (FSSAI), Chennai for their clearance under the Food Safety and Standards Act, 2006 and Rules and Regulations made thereunder.
2. The Authorized Officer, FSSAI, Chennai vide letter No. F.No.1/2011/FSSAI/CHN-IMPORT dated 5.10.2011 informed that the goods in question did not meet the labeling requirement under the Food Safety and Standards Act, 2006 and Rules, Regulations 2011 made thereunder and hence samples could not be drawn for further testing. The labeling requirements which were not met for each of the items were specified as under:
1. White Wine i. Date of manufacture and Date of Expiry not labeled (due to which the remaining shelf life of the product could not be ascertained as per the DGFT Notification No.22(RE-2001)/1997-2002 dated 20.7.2001 not labeled.
ii. Ingredients list, not labeled iii. Name and address of the importer, Nutritional facts and Vegetarian symbol not labeled.
2. Red Wine i. Date of Manufacture and Date of Expiry not labeled (Due to which the remaining shelf life of the product could nto be ascertained as per the DGFT Notification No.22 (Re-2001/1997-2002 dated 30.07.2001).
ii. Ingredients list, not labeled.
iii. Name and address of the importer, nutritional facts and vegetarian symbol, not labeled
3. Extra Virgin Olive oil.
i. Two dates were printed on the product but it is not mentioned as Manufacture Date and Expiry Date. Further the labels are in language other than English.
ii. Batch Number not labeled.
iii. The language printed on the label is not in English iv. Name and address of the importer, Nutritional facts, ingredients and vegetarian symbol not labeled.
3. As the subject goods failed to comply with the provisions of Food Safety and Standards Act, 2006 and Rules and the Food Safety Standards Regulations (Packaging and Labeling) Regulation 2011 the goods appeared to be liable to confiscation under section 111(d) of the Customs Act, 1962. The importer appeared to be liable to penal action under section 112 (a) of Customs Act, 1962 for having rendered the goods liable for confiscation. Therefore, a show cause notice was issued proposing confiscation of the said goods and imposition of penalty on the appellant under section 112 (a) of the Customs Act. On adjudication, the entire consignment imported vide Bill of Entry No.4219611 dt. 29.7.2011 was held to be misbranded as per section 3 (zf) (i) (b) of the Food Safety and Standards Act, 2006 and therefore prohibited for importation into India as per Section 25 (i) of the said Act. The said goods valued at Rs.7,79,072/- was confiscated under section 111 (d) of the Customs Act, 1962. Option was given to the importer to redeem the goods on payment of a redemption fine of Rs.10,000/- under section 125 of the Customs Act for the purpose of re-export only. The option was to be exercised within 60 days of receipt of the order. Further, penalty of Rs.5000/- was imposed on the importer under section 112 (a) of the Customs Act, 1962 for having rendered the goods liable to confiscation.
4. Aggrieved by the order, the respondents filed appeal with the Commissioner (Appeals). The Commissioner (Appeals) ordered as under :-
I have carefully gone through the facts of the case and submissions made by the appellant. This is a case of non- drawal of sample from the imported goods viz, red wine, white wine and Extra virgin olive oil by the FSSAI authorities on the ground that the goods did not meet the labeling requirements under FSS Act 2006. The FSSAI authorities observed that in respect of wine the date of manufacture and date of expiry was not there, ingredient list is not there and name and address of the importer, Nutritional facts and vegetarian symbol was not there. In this regard the said authorities failed to consider the proviso to Regulation 2.2.2.10 (iv) and their own guidelines dated 23.03.2012 regarding clarification on the minimum labeling requirements and rectification of labeling defects. Moreover, as pointed out by the appellant the issue was moved by the Distillers Association of Maharashtra and Confederation of Indian Alcoholic Association of Beverages Companies and Importers before the Hon'ble High Court of Bombay is still pending, the FSSAI authorities should have taken a lenient view.
Regarding the Extra virgin Olive oil the FSSAI authorities observed that the two date mentioned on the packages did not indicate manufacture or expiry dates and the language mentioned therein is other than English. Batch number, name and address of the importer, Nutritional facts and vegetarian symbol are not there. The appellant contended that except for the name and address of the importer all other details were available and they produced the complete test report translated in English.
The deficiency in labeling requirements pointed out by the FSSAI authorities are minor defects rectifiable by their own Ad-hoc guidelines dated 20.05.2011 in F.No.1/2008/Import safety/FSSAI and guideline dated 23.03.2012. The lower authority is directed to allow the appellant to rectify the labeling defects under the customs supervision. Regarding the drawal of sample I find the Hon'ble High Court of Madras in W.P. 16191 & 16192 of 2010 passed an order dated 03.08.2012 directing the FSSAI authorities to draw samples and proceed with other requirements With rectified labeling.
In view of the above discussions and facts stated therein, I set aside the order of the lower authority and direct him to follow the above procedure. On completion of the above procedure and if the goods passes the test by the FSSAI, the same may be released in accordance witty) law.
The appeal is allowed in the above manner.
5. Revenue has filed appeal for setting aside the above order of Commissioner (Appeal) and restoring the adjudication order. Arguing for Revenue, Ld. AR submits that the order of Commissioner (Appeals) is not legally sustainable because he relied on clarification issued on 23.3.2012 to decide contravention of law in respect of goods imported on 29.7.2011. At the time of import, imported goods were contravening the provisions of law then in force and therefore the goods were liable to confiscation. So he submits that the order is legally not correct and prays that it should be set aside and the original order should be restored. He relies on the decision of the Hon.Madras High Court in a similar matter of import of white oats imported during June 2011, by Avenue Impex Vs. CC in CMA No.1088/2012 dt.8.10.2012. Especially, he relies on para 35 of the order which reads as under :-
35. Though it is contended by the learned counsel for the 1st respondent/importer that the subsequent guidelines have been issued by the FSSAI dated 23rd Jan 2012, dispensing with such a requirement, in the considered opinion of this Court, the said notification only has prospective effect and it is settled position of law that administrative instructions do not have retrospective effect.
6. Opposing the prayer, the Ld. Advocate for the respondent submits that two of the items imported are wine. In the case of these products, shelf life is not an issue. In fact, it has been specifically clarified by FSSAI by letter dated 20-05-11 that the shelf life requirement will not apply for wines. The said letter is reproduced below:
Dated: 20th May, 2011 Subject: Ad-hoc Guidelines related to Imported Food Clearance Process by FSSAI's Authorized Officers- Reg.
The undersigned is directed to refer the above mentioned subject and to convey herewith the following instructions for compliance till further orders,
1. The exemption provided in PM, 1954 regarding declaration of best before date of consumption, is applicable only in case of wines (generally containing alcohol between 11-16% V/V), Liquors (generally containing alcohol 42.8% VPI) and other alcoholic beverages (containing 10% or more alcohol by volume), wherein the quantity of alcohol itself acts as preservative-. However, the above exemption will not be applicable in case of wines labelled as Non-alcoholic/ De-alcoholised wine and declaration of best before date for consumption shall be applicable in such circumstances.
2. Clearance of Imported alcoholic beverages may be considered as per usual procedure subject to the condition that minor labelling defects viz. Name and address of importer, Veg./Non-Veg. Symbols and Best before/Expiry date, may be rectified in the custom's warehouse under supervision of customs department and the custom department shall ensure the labelling requirements prior to release of such consignments, This relaxation will be applicable for two months from date of issue of this letter or notification of FSSAI's Rules/Regulations, whichever is earlier.
This issues with the approval of CEO, FSSAI.
7. The Counsel submits that the various other defects pointed out are of a curable nature because all the required details were furnished in the import documents and all what was needed was to label the goods with the details while the goods were in the customs bonded warehouse. The Commissioner (Appeal) has allowed only such labeling and not actual clearance which is to take place only after concurrence from FSAAI authorities. According to him the Commissioner (Appeals) has not transgressed the authority of FSSAI and no harm will be caused to public in India by allowing the importer to do the labeling and thereafter asking the FSSAI to draw sample and test and release for home consumption if found suitable. He therefore prays that order of Commissioner (Appeals) is legal and proper and it should be upheld.
8. He further points out that the decision of the Madras High Court was in the context of white oats which has a short shelf life as compared to wine and olive oil. In the case of wine, it becomes better as it becomes older. So he submits that the order of Madras High Court in the case of Avenue Impex (Supra) is not applicable to the facts of this case.
9. Further he points out that the clarification 1/2008/import safety/FSSAI dated 20-05-2011 as reproduced in para 5 above and points out that the validity of the circular has been extended from time to time.
10. He relies on the order dated 03/08/2012 of Hon. Madras High Court in the case of Mahaveer Polychem and another Vs. UOI W.P. Nos. 16191 and 16912 of 2012. Para 31 of the order reads as under:
31. At the time same time, an interim order that would make the Act and the Regulations work, even while permitting the petitioners to carry on their business within the frame work of law, can be passed. Therefore, the miscellaneous petitions are disposed of, rejecting the prayer for interim stay and interim injunction, but directing the second respondent to accept the petitioners as having complied with the labeling requirements in the form of stickers. The second respondent shall draw samples and proceed with the other requirements, subject to the final orders to be passed in the writ petitions. The Central Government is directed to file a counter at the earliest or at least take steps to ensure that all writ petitions challenging the validity of the Act and the Regulations are brought to the notice of the Honourable Supreme Court.
11. I have considered submissions on both sides. I find that the Bill of Entry was filed on 29-07-2011. The Food Safety Standards Regulations (Packaging and Labeling) Regulation 2011 notified on 01-08-2011. But even prior to notification of the regulations administrative instructions were in force as observed by the Hon Madras High Court in the case of Avenue Impex (Supra). Para 8 of the order is re-produced below:-
8. The Director General of Health Services has sent a letter dated 30th Oct, 2002, to all Food (Health Authorities, all Port Health Officers/Airport Health Officer, all Customs Officers and all Central Food Laboratories and Public Analyst Laboratories with regard to the analysis of imported food products. It is stated among other things in the said letter that PHOs /APHOs and Customs Officers are requested to check the labels of imported foods as per the provisions of the PFA Act and the Rules as made thereunder before the samples of such products are sent to the laboratories. As per clause (3), it is stated as follows :-
(iii) The Port health Officers/Airport Health Officers and Custom Officer are requested to examine the labels of all the imported food products in their level itself. In case the deficiency on the label is not rectifiable, such products should not be allowed to be imported into India. The labeling requirements which are not rectifiable if the information relating to the following are not given on the label :-
a. Name of the Manufacturer b. List of ingredients in descending order of composition by weight/volume c. The name and address of the manufacturer d. The Date of Manufacture e. Best Before Date, or Expiry Date f. Batch No. or Code No. g. Net Weight or Volume h. If the imported product is not meeting with the labeling requirement given above, samples of such product shall not be sent to the laboratories for analysis.
12. The above instructions classified defects into rectifiable defects and others. One of the non-rectifiable defects is the requirement of labeling Best before date. This may not have applied for wines in view of the circular dated 20-05-11. But even for applying the provisions of the circular dt 20-05-11, there was a need for a label showing alcoholic content which appears to have been not present. Labeling of ingredient list was also classified as a non-rectifiable defect. In such a situation the decision of the Hon Madras High Court in the case of Avenue Impex (supra) is to applied. The decision in the case of Mahaveer Polychem and another Vs. UOI W.P. Nos. 16191 and 16912 of 2012 is by a Single judge and the decision in the case of Avenue Impex is a decision of the Division Bench. So the latter has to be followed in this proceeding.
13. So I set aside the order of Commissioner (Appeal) and restore the order of the adjudicating authority. However, the time limit for re-export of goods is extended till 31-10-2013 if the goods are still available with the customs department.
(Pronounced in open court on 06/09/2013) (MATHEW JOHN) TECHNICAL MEMBER gs 11