Custom, Excise & Service Tax Tribunal
Bora Agro Foods vs Nhava Sheva V on 24 August, 2016
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
WEST ZONAL BENCH AT MUMBAI
APPEAL NO: C/86228/2015
[Arising out of Order-in-Appeal No: 173(Adj/Import)/2015-JNCH/Appeal-II dated 7th May 2015 passed by the Commissioner of Customs (Appeals-II), Mumbai-II.]
For approval and signature:
Honble Shri C J Mathew, Member (Technical)
1.
Whether Press Reporters may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?
:
No
2.
Whether it should be released under Rule 27 of CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?
:
No
3.
Whether Their Lordships wish to see the fair copy of the Order?
:
Seen
4.
Whether Order is to be circulated to the Departmental authorities?
:
Yes
Bora Agro Foods
Appellant
Vs
Commissioner of Customs
Nhava Sheva V
Respondent
Appearance:
Shri S.P. Mathew, Advocate for the appellant Shri V.R. Reddy, Asstt. Commissioner (AR) for the respondent CORAM:
Honble Shri C J Mathew, Member (Technical) Date of hearing: 24/08/2016 Date of decision: 20/12/2016 ORDER NO: ____________________________ The appellant, M/s Bora Agro Foods, is a 100% export oriented unit issued with Letter of Permission (LoP) prescribed in the Foreign Trade Policy and use potassium permanganate as disinfectant of the water used in manufacture of hulled sesame seeds and sortex natural seeds which are exported. The said chemical is permitted for import in the approval accorded by Development Commissioner, the competent licencing authority under the Foreign Trade Policy.
2. Appellant placed an order for 20 metric tons, vide contract dated 13th December 2012, and the imports were cleared upon assessment of bill of entry no. 216022 dated 17th May 2013. It appears that this clearance had been improperly granted by customs authorities as the Government of India had, by notification dated 26th March 2013, notified NDPS (RCS) Order, 2013 which, in paragraph 11(1) read with Schedule C therein, permitted import of potassium permanganate only upon furnishing no objection certificate from the Narcotics Commissioner of India.
3. Appellant had utilised most of the imports when they were subjected to investigation by the Directorate of Revenue Intelligence and unconsumed potassium permanganate weighing 8710.36 kgs were seized on 25th July 2013. Though appellant had applied to the Narcotics Commissioner of India on 10th July 2013 for the certificate, that was, as yet, not forthcoming when the adjudicating authority confiscated the seized goods under section 111 (d) of Customs Act, 1962 without according option to redeem and ordered payment of fine of ` 6,00,000/- on goods not available for confiscation while imposing penalty of ` 3,00,000/- on appellant under section 112 (a) of Customs Act, 1962. In the impugned order-in-appeal no. 173 (Adj/Import)/ 2015-JNCH/Appeal-II dated 7th May 2015, Commissioner of Customs (Appeals-II), Mumbai-II concurred with the order of lower authority but for the fine of Rs 6,00,000 on the goods not available which was set aside. Appellant seeks the setting aside of the portion upheld in the impugned order.
4. Appellant contends that they had no intention of contravening any law and that they had filed the bill of entry in the bona fide belief that goods were freely importable; it is also their contention that this is evident in the clearance accorded by customs authorities. They further submit that the impugned order had incorrectly charged them with failure to comply with law on the ground that ignorance of law is no excuse because the customs authorities were, themselves, in a similar state of ignorance. Learned Counsel for appellant also contended that absolute confiscation of goods was not warranted as a later consignment was cleared on production of no objection certificate.
5. Learned Authorized Representative reiterated the findings in the impugned order.
6. The appellant is a export oriented unit whose imports are not restricted by the provisions of the Foreign Trade Policy to the extent that such goods are allowed to be imported for use in the list approved by the Development Commissioner. Doubtlessly, the goods under import are required to be accorded a certification by the Narcotics Commissioner of India before they can be cleared and appellant did not, then or later, secure the certificate. Their claim to be unaware of the law does not appear to be far-fetched as the requirement of certification was prescribed barely a few months before the import and well after placement of the order. That this pre-requisite was not within the domain knowledge of public authorities, let alone private entities, is apparent from the clearance accorded by customs authorities without let or hindrance. There does not appear to be any mala fides in the import of the item.
7. They had, however, applied for the necessary certificate to which the Narcotics Commissioner has, for reasons best known to that office, neither accorded nor denied. It was patently improper on the part of the two lower authorities to render conclusive findings while the application for certification had not been disposed off.
8. It is not in dispute that appellant uses potassium permanganate for the legitimate purpose of manufacturing and exporting food products. Its use as a disinfectant is not in question though its potential for perverse use may have awakened the Central Government, belatedly, to the need for control on its import and usage. Surely, it is nobodys case that potassium permanganate has no legal use and that it is prohibited for import. In these circumstances, absolute confiscation is not only overkill but also beyond the sanction of law.
9. That the appellant is a permitted user of potassium permanganate is apparent in the certificate accorded by Narcotics Commissioner to a subsequent consignment. Certification is, undoubtedly, a means of controlling the usage of the substance within the country but the issuance to the appellant is ample evidence that no suspicion is attached to utilisation by the appellant. Appellant is a export oriented unit operating under bond and whose utilisation of imported material is subject to verification of records through the annual review. The intent of the certification could easily have been complied with by ascertainment from the prescribed records available with the appellant. Such an exercise has not been undertaken and it is reasonable to presume that, had there been any evidence of diversion, such evidence would have been adverted to in the investigations.
10. Appellant has been compliant with the legal requirement once they were made aware of the prescription. There is no allegation of misuse of material imported and subjected to the present proceedings. The application for issue of certificate has also not been denied.
11. Notwithstanding the above, there has been a contravention and the law must take its course. Accordingly, the confiscation of seized goods is upheld and the material already consumed is held as liable to confiscation.
12. The goods so confiscated are allowed to be released on payment of fine of ` 50,000/- within four weeks of issue of this order. As the proper officer of customs was also not privy to the changed regulation, invoking of section 112 of Customs Act, 1962 against appellant is not equitable. The breach is mere technicality. Penalty imposed by lower authority is set aside.
(Pronounced in Court on 20/12/2016) (C J Mathew) Member (Technical) */as 7 2