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6) Since there is no mens-rea no penalty can be imposed in terms of Supreme Court's decision in the case of Akbar Badrudin Jiwani v. CC as reported in AIR 1990 at Page 1579. Hence the penalty of Rs. 2 lakhs is not justified.

4. The learned SDR contended that the adjudicating authority has clearly brought out the violations committed by the importer and therefore requested the bench to uphold the OIO.

5. We have gone through the records of the case carefully. As per the Import Policy, import of metal scrap in shredded form will be permitted through all ports/ICDs/CFSs/LCSs without any pre-shipment inspection certificate. As far as the impugned goods are concerned, there is no indication that they are shredded. Therefore, it is very clear that they cannot be imported through all ports in the light of the Govt's policy and Ministry's Circular No. 56/2004 dated 18.10.2004. As per this Circular, when the metal scrap is in unshredded, compressed or loose form, the same would be permitted for import and clearance only at the designated Customs Stations. Since, Hyderabad ICD is not one of the specified Customs Ports, the import and clearance at Hyderabad ICD is restricted in terms of the above mentioned circular. The appellant contends that the above Circular is in violation of Para 2.32 of the Foreign Trade Policy and Hand Book of Procedures Vol-I 2004 wherein there is no condition that the clearance also should be only through the specified ports. We find that in the DGFT Public Notice 16/2004 dated 15.10.2004, no mention has been made about the "clearance". There is only a stipulation that "import" of metallic waste and scrap in unshredded, compressed and loose form shall be permitted through the specified ports only. But the Ministry's Circular 56/2004 talks about clearance also. The Circular and the Public Notice were issued in the wake of some explosion at the premises of the scrap importer at Ghaziabad resulting in the death of 10 persons. In view of the above position, restriction was imposed on the import of scrap in un-shredded form. The omission of the word "clearance" in the Public Notice appears to be unintentional. In other words, the intention of the Govt is that even the clearance should be restricted only to the specified ports. If any other interpretation is made, the very purpose of the Ministry's Circular would be defeated. In the light of the Circular and the Public Notice we hold that the import and clearance of scrap in unshredded form is limited to the specified ports. There is no indication that the impugned goods are in shredded form. In these circumstances, their clearance at ICD Hyderabad is clearly in violation of the Ministry's Circular and DGFT's Public Notice. Therefore, the finding that the goods are liable for confiscation under 111(d) is sustainable. Further, the adjudicating authority has come to the conclusion that the description of the goods as given in the Bill of Entry and other documents is different from what has been imported. This conclusion of the adjudicating authority is based on the re-examination of the goods and the definition of ISRI code "Tread". We do not want to go deep in to this matter in the absence of technical opinion. However the fact remains that the goods are in unshredded form and they should have been cleared only through Nhava Sheva where it was imported. But, there is no malafide on the part of the appellants. It is also seen that the appellants did not have previous experience of the import of similar goods and were ignorant of the import policy. Moreover all their declarations are based on the documents supplied by the exporter. In these circumstances, even though imposition of penalty under Section 112(a) is justified in view of the confiscation of the offending goods, the quantum should be decided keeping in view the fact that there is no malafide. Therefore, we feel that the penalty on the importer should be limited to Rs. 20,000/- only. Taking into account the facts and circumstances of the case, the redemption fine under Section 125 of the Customs Act 1962 is reduced to Rs. 2 lakhs form Rs. 8 lakhs.