2007 (4) TMI 542 - AT - Customs

Tribunal overturns heavy scrap confiscation and penalty due to importer's lack of malafide intent and standards discrepancy.

MANAKSIA LTD. Versus COMMISSIONER OF CENTRAL EXCISE, AHMEDABAD

The Tribunal partially allowed the appeal, setting aside the confiscation of the heavy melting scrap consignment and the penalty imposed. The Tribunal ... Confiscation of goods and penalty - Heavy melting scrap Issues:Import of war material/explosive material mixed with heavy melting scrap, confiscation of the consignment, reduction of fine and penalty, retrospective application of public notice by DGFT, attribution of malafide to the importer.Analysis:The case involved an appeal against the order of the Commissioner (Appeals) regarding the confiscation of a consignment of heavy melting scrap due to the presence of 0.480 MT of war material/explosive mixed in it. The appellant had imported the scrap with a declared weight of 116.500 MT and provided a pre-inspection certificate from M/s. SGS, Tehran Iran. The original authority ordered the absolute confiscation of the war material/explosive and the entire consignment of heavy melting scrap, with a fine of Rs. 60,000 imposed by the Commissioner (Appeals) instead of the original Rs. 2,40,000. Additionally, a penalty of Rs. 60,000 was imposed on the importer, reduced from the original Rs. 1,20,000.The appellant argued that they had taken all reasonable precautions by obtaining an inspection certificate from an international agency and had no reason to doubt its validity. They contended that the foreign supplier's norms for identifying explosive material might differ from Indian customs standards. The appellant also cited a judgment from CESTAT Mumbai in a similar case for support.The Tribunal acknowledged the seriousness of importing war material/explosive material due to security implications but noted that only 480 kgs of objectionable material were found in a large consignment of heavy melting scrap. It was observed that the inspection agency's standards for identifying explosive material might not align with Indian customs norms. The Tribunal found no malafide intent on the part of the appellant and upheld the confiscation of the war material while setting aside the confiscation of the entire consignment and the penalty.The Tribunal ruled that the requirement for registering inspection agencies, as per a public notice by DGFT, should apply prospectively and not retrospectively. Therefore, the confiscation of the consignment and the penalty imposed were deemed unjustified and were set aside based on the circumstances of the case and the lack of malafide intent by the importer. The appeal was partly allowed, resulting in the setting aside of the confiscation of the heavy melting scrap consignment and the penalty imposed.In conclusion, the appeal was disposed of with the confiscation of the consignment and the penalty being set aside based on the considerations of the case and the lack of malafide attributed to the importer.