2009 (6) TMI 740 - AT - Customs

Customs Tribunal Upholds Confiscation Decision with Reduced Penalties for Export Oriented Unit

The Tribunal upheld the confiscation of goods by the Commissioner of Customs under the Customs Act, 1962, due to the appellant's contravention of the ... Confiscation, redemption fine and penalty Issues:1. Confiscation of goods by the Commissioner of Customs under the Customs Act, 1962.2. Justification of redemption fine and penalty imposed on the appellant.3. Contravention of provisions of the Drugs and Cosmetics Act, 1945 by the appellant.4. Consideration of demurrage suffered by the appellant in determining the redemption fine and penalty.Confiscation of Goods:The appellant, a 100% Export Oriented Unit (EOU) engaged in manufacturing medicines, imported chemicals under LOP issued by the Government of India. The Drug Control Authority rejected the release of three out of five consignments due to non-compliance issues such as missing manufacturer details, lack of labels, and discrepancies in chemical names. Consequently, the Commissioner of Customs confiscated the goods under Section 112 of the Customs Act, 1962, allowing redemption on payment of a fine and penalty for re-exportation only. The Tribunal found the confiscation justified under Section 111(d) of the Customs Act, 1962, due to contravention of the Drugs and Cosmetics Act, 1945.Redemption Fine and Penalty:The appellant argued that the objections raised by the Drug Control Authority were of a technical nature and that they had already incurred significant demurrage expenses. The appellant contended that the redemption fine and penalties were unwarranted, advocating for re-export without additional financial penalties. The Tribunal acknowledged the excessive nature of the original fine and penalty amounts, considering the appellant's status as an EOU, lack of evidence of intentional irregularity, and the demurrage costs incurred. Consequently, the Tribunal reduced the redemption fine and penalty to Rs. 50,000 and Rs. 20,000, respectively, emphasizing the appellant's compliance efforts and the financial burden already borne.Contravention of Provisions:The Tribunal recognized that the appellant had contravened Section 10(a) of the Drugs and Cosmetics Act, 1945, and corresponding rules. Despite justifying the confiscation of goods, the Tribunal agreed with the appellant's argument regarding the excessive nature of the redemption fine and penalty. The Tribunal's decision to reduce the financial burden imposed on the appellant was influenced by the circumstances of the case, including the lack of evidence implicating the appellant in intentional wrongdoing and the substantial demurrage costs incurred during the process.Consideration of Demurrage:In assessing the appropriate redemption fine and penalty, the Tribunal took into account the appellant's status as an EOU, the absence of evidence linking the appellant to intentional irregularities, and the significant demurrage expenses totaling approximately Rs. 11 Lakhs. The Tribunal recognized the appellant's cooperation in remitting foreign exchange as requested by Customs Authorities and the lack of prior instances of non-compliance. Considering these factors, the Tribunal reduced the redemption fine and penalty to Rs. 50,000 and Rs. 20,000, respectively, to alleviate the financial burden on the appellant while upholding the confiscation of goods under the relevant legal provisions.