Custom, Excise & Service Tax Tribunal
M/S Tasty Nut Industries vs Central Board Of Indirect Taxes And ... on 4 June, 2024
C/20010/2024
CUSTOMS, EXCISE & SERVICE TAX APPELLATE
TRIBUNAL
BANGALORE
REGIONAL BENCH - COURT NO. 1
Customs Appeal No. 20010 of 2024
Customs Additional Evidence Application No.20086 of
2024
Customs Stay Application No.20491 of 2023
(Arising out of Order-in-Appeal No.COC-CUSTM-000-APP-01/2023-24
dated 05.04.2023 passed by the Commissioner of Customs(Appeals),
Cochin)
M/s. Tasty Nut Industries,
KP XI/294, KP Road, Appellant(s)
Kilikolloor,
Kollam - 691004.
VERSUS
The Commissioner of Customs,
Customs House,
Respondent(s)
Willingdon Island, Cochin - 682 009.
APPEARANCE:
Mr. Aditya Venugopalan, Advocate for the Appellant Mr. Neeraj Kumar, Superintendent(AR) for the Respondent CORAM: HON'BLE DR. D.M. MISRA, MEMBER (JUDICIAL) HON'BLE MRS. R. BHAGYA DEVI, MEMBER (TECHNICAL) Final Order No. 20453 /2024 DATE OF HEARING: 11.03.2024 DATE OF DECISION: 04.06.2024 PER : DR. D.M. MISRA This appeal is filed against Order-in-Appeal No.COC- CUSTM-000-APP-01/2023-24 dated 05.04.2023 passed by the Commissioner of Customs (Appeals), Cochin.Page 1 of 7
C/20010/2024
2. Briefly stated the facts of the case are that the appellant had initially exported 400 cartons of Organic Cashew Kernel SWP which was rejected by the overseas buyer due to mismatch of labels, which was returned to the Cochin Port. The appellant filed Bill of Entry No.8524578 dated 03.05.2022 claiming benefit of exemption Notification No.45/2017-Cus dated 30.06.2017 declaring the same as "Organic Cashew Kernel SWP" which was originally exported by shipping bill No.2665360 dated 25.06.2021 and No.4344176 dated 30.09.2021. Since the imported goods required mandatory clearance under Food Safety and Standards Act 2006 and Livestock Importation (Amendment) Act, 2001, the same was sent for 'No Objection Certificate' from Food Safety and Standards Authority of India (FSSAI, for short). However, the FSSAI issued a rejection report dated 15.06.2022 with remarks 'the sample does not conform to the standards as per Food Safety and Standards (Food product standards and food additives) Regulation, 2011. The appellant through their letter dated 03.07.2022 requested for amending the benefit of Notification claimed in the Bill of Entry under Notification No.158/95-Customs dated 14.11.1995 instead of No.45/2017-Customs dated 30.06.2017 as they need to reprocess the cargo, which includes drying, grading and labelling/repacking at their factory, before the same could be re- exported.
3. The adjudicating authority taking into account the fact that the NOC has been denied by FSSAI, hence the import has been made in contravention of provisions of Para 4(A) of the General Notes of import policy of Foreign Trade Policy 2015-20, held that the imported consignment is liable for confiscation under Section 111(d) of the Customs Act, 1962 read with Section 3(3) of Foreign Trade (Development and Regulation) Act, 1992. Consequently, the adjudicating directed confiscation of 4536 kgs. of Organic Cashew Kernel and directed the goods be Page 2 of 7 C/20010/2024 destroyed under supervision of an officer of Customs within 3 weeks at the expenses of the importer.; also imposed penalty of Rs.50,000/- under Section 112(a) of the Customs Act, 1962. Aggrieved by the said order, the appellant filed an appeal before the learned Commissioner(Appeals) who rejected the appeal.
4. Aggrieved by the said order, the appellant filed a writ petition before Kerala High Court bearing W.P.(C) No.14690 of 2023 and by order dated 24.05.2023, the learned Single Judge of the Hon'ble High Court not entertained the Writ petition. Aggrieved by that order, appellant filed Writ Appeal WA No.1035 of 2023 before the Division Bench of the Hon'ble High Court which was also disposed of vide order dated 07.07.2023 dismissing the appeal without considering it on merit. Later they filed appeal before this Tribunal on 02.11.2023. Also, they have approached the Hon'ble High Court for provisional release of the goods. The Hon'ble High Court disposed of the writ petition with an observation to take a decision on the application for provisional release of the goods by the Tribunal. Thereafter, the matter was heard by this Bench on 03.01.2024 and after condoning the delay and allowing the early hearing application of the Appeal on 11.01.2024, the Revenue was directed to allow an opportunity to the appellants for visual inspection of the goods lying with the Customs and allow to draw samples to ascertain the present condition of the said goods. The appellant accordingly drew samples of the goods lying with Customs, got tested and after receiving the test report dated 09.02.2024 filed an affidavit along with test certificate.
5. The learned advocate for the appellant has submitted that the appellant was permitted by the customs to draw samples of their goods in question on 30.01.2024 which were later sent for testing to F.Q. Lab and Research Centre Private Limited, a food laboratory accredited by the National Accreditation Board for Page 3 of 7 C/20010/2024 Testing and Calibration Laboratories (NABL) and recognised/notified by the FSSAI to conduct food testing and analysis under Section 43 of the FSSA, 2006. He has submitted that on chemical testing of the sample of 370 grams of Organic Cashew Kernels, it revealed that the conditions such as Rancidity, a condition caused by aerial oxidation of unsaturated fats were absent in the impounded goods and other parameters such as the presence of Testa (Cashew Nut Husk), foreign matter, extraneous vegetable matter, moisture, free fatty acids (Oleic acid), peroxide value etc. are well within the values prescribed under Item 2.3.47.7 of Chapter 2.3 of the FSSAI Compendium. Further he has said that the test also revealed that the goods are free foreign smell, insect damage, acid insoluble ash (sand, soil, or foreign materials) or aflatoxins (family of poisonous carcinogenic toxins produced by fungi). He further submitted that biological testing conducted by the laboratory revealed that microorganisms such as E coli O157 (food and waterborne pathogen), Salmonella (bacteria causing diarrheal illnesses), Listerla Monocytogenes (capable of causing listeria), Vibrio cholerae (capable of causing cholera) are absent, rendering the goods safe for human consumption. It is his contention that the case of the Revenue throughout the adjudication / appellate proceedings was that the goods did not conform to the FSSAI Regulations for the home consumption and it was never the case of the Department or the test report of FSSAI that the goods are 'unfit for human consumption'; the goods are clearly within the limits prescribed by FSSAI and the remedy available to cure the rising oxidation levels, if any, is curable by subjecting the Organic Cashew Kernels to dry heat in an oven (subjecting the goods to temperatures of 70-80 degree Celsius for about 8-10 hours) in a specialised 'Borma Dryer'. The said activity is also recognised by the Cashew Export Promotion Council of India Laboratory and Research Institute which aids to reduce the oxidation / peroxide content and moisture content by Page 4 of 7 C/20010/2024 less than 5%. True copy of the letter dated 08.08.2022 issued by the Senior Scientist, of the said Institute is placed on record. He has vehemently argued that from the test report dt. 09.02.2024, it is clear that the goods complied with the FSSAI Regulations and are undoubtedly fit for human consumption. Therefore, they have prayed that the Appellant may be allowed to re-export the consignments after subjecting the concerned goods to dry heating.
6. Learned AR for the Revenue reiterated the findings of the learned Commissioner(Appeals).
7. Heard both sides and perused the records.
8. The short issue involved in the present appeal is: whether the appellant can be allowed to reexport 4536 kgs. of Organic Cashew Kernel SWP imported against Bill of Entry No.8524578 dated 03.05.2022.
9. The undisputed facts are that the appellant had initially exported two lots of 200 cartons each of Organic Cashew Kernel SWP against Shipping Bill No.2665360 dated 25.06.2021 through Tuticorin Port and Shipping Bill No.4344176 dated 30.09.20221 through Cochin Port. The foreign buyer at the destination port, due to mismatching of labels on few cartons, rejected ad returned the consignment to the appellant which arrived at the Cochin Port. On examination of the goods, the Shed Officer confirmed the identity of the re-imported goods as those exported and were to be cleared subject to the approval of Authorised Officer (Cochin Port) for FSSAI. On completion of inspection by the Authorised Officer for FSSAI, out of 8072 kgs. of reimported goods, 200 cartons consisting of 4536 kgs. was declared as unfit for home consumption as per provisions of Food Safety & Standards (Food Product Standards & Food Additives) Page 5 of 7 C/20010/2024 Regulation, 2011 vide report dated 13.07.2022. The appellant thereafter requested the Department seeking amendment claiming benefit of Notification No.158/1995-Cus. dated 14.11.1995 so as to process it and re-export the same.
10. The learned advocate for the appellant has submitted that since the goods could not be consumed in India, they identified a buyer in Middle East countries and looking for re-export of the said quantity of Organic Cashew Kernel SWP after carrying out a simple process of dry heating.
11. We find that the appellant had earlier exported the total consignment of 400 cartons which were returned by the overseas buyer and when the re-imported, they filed Bill of Entry to take the goods for home consumption, by claiming the benefit of Notification No.45/2017. The test report for 200 cartons by FSSAI disclosed that it is not conforming to the safety standards prescribed under the Food Safety & Standards (Food Product Standards & Food Additives) Regulation, 2011. The appellant consequently requested to allow them to re-export the goods after minor processing viz. dry heating in the Customs premises to an overseas buyer. The Adjudicating Officer rejected the same observing that the appellant had contravened the provisions of Foreign Trade Policy and therefore goods are liable for confiscation and consequently confiscated the said goods and directed its destruction and imposed penalty.
12. We do not find substance in the finding of authorities below which rests on the reasoning that the appellant initially claimed the benefit of Notification No.45/2017, later when it was found that out of 400 cartons, 200 cartons do not conform the FSSAI standards and hence cannot be cleared for home consumption, requested amendment to Bill of Entry seeking benefit of Notification No.158/95. Cus dated 14.11.1995 for re- export of the goods after making necessary re-processing like Page 6 of 7 C/20010/2024 dry heating. The contention of the appellant is that the Authorised Officer of FSSAI has not declared the reimported goods as unfit for human consumption; but only observed as not conforming to the standards of Food Safety & Standards (Food Product Standards & Food Additives) Regulation, 2011. They have referred to the latest report dated 09.02.2024 of the F Q Lab and Research Centre (P) Ltd., where it is certified that "Sample conforms to limit as per 2.3.47.7 of Chapter 2.3 of FSSAI Compendium FP & FA Regulation w.r.to above tested parameters." Thus, the goods lying in the Customs warehouse cannot be said to be unfit for human consumption and since the appellant intend to reexport the said goods to overseas buyer; therefore there is no justification in not acceding to such request in absence of any specific violations of the Foreign Trade Policy and provisions of law for such re-export. In these circumstances, the impugned orders directing confiscation and destruction of goods and penalty are set aside and the Department is directed to allow the appellant to carry out the process of dry heating in the premises of the Customs and re- export the goods at the earliest, but not later than a month from the date of receipt of this order.
13. Appeal is disposed of accordingly. Miscellaneous Applications filed are also disposed.
(Order pronounced in Open Court on 04.06.2024) (D.M. MISRA) MEMBER (JUDICIAL) (R. BHAGYA DEVI) MEMBER (TECHNICAL) Raja...
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