Pre-shipment inspection certificate relaxation for metal scrap barred confiscation and penalty where full examination found no contraband.

Where the import control circular relaxed the pre-shipment inspection certificate requirement for covered metal scrap already loaded before the cut-off date, and the goods were subjected to 100% physical examination without any contraband being found, mere non-production of the certificate did not justify confiscation or penalty under the Customs Act, 1962. The circular's relaxed clearance mechanism prevailed on the facts, and the absence of the certificate was treated as insufficient to sustain punitive action against the assessee.

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Issues: Whether imported heavy melting scrap, treated as falling within the category covered by the Board circular, could be confiscated and penalised for non-production of a pre-shipment inspection certificate when the goods had undergone 100% physical examination and no contraband was found.

Analysis: The import was of metal scrap covered by the policy requirement of a pre-shipment inspection certificate under Para 2.32 of the Foreign Trade Policy 2004-09. The Board's Circular No. 56/2004-Cus. carved out a category for scrap already landed or loaded before the relevant cut-off, in which the certificate requirement stood relaxed and clearance could be granted on 100% physical examination. On the facts, the goods had been loaded in September 2004, the Commissioner himself took a lenient view on that basis, and the record showed that 100% examination was carried out without any recovery of contraband. In those circumstances, the absence of the certificate did not justify confiscation under Section 111(d) of the Customs Act, 1962 or the imposition of penalty.

Conclusion: The confiscation and penalty were not sustainable and the issue was decided in favour of the assessee.

Final Conclusion: The impugned order was set aside and the appeal was allowed with consequential relief.

Ratio Decidendi: Where the applicable import control circular relaxes the pre-shipment certificate requirement for a covered category of metal scrap and the goods are fully examined without detection of contraband, mere non-production of the certificate does not warrant confiscation or penalty.

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