CESTAT Bangalore overturns penalties for import contravention, emphasizes need to verify prohibited imports

The Appellate Tribunal CESTAT Bangalore overturned the decision of the Commissioner of Central Excise & Customs, Visakhapatnam, finding that the penalties imposed on the importer for alleged mis-declaration and import contravention were not legally sustainable. The Tribunal granted a waiver of pre-deposit of the penalty and stayed the recovery pending the appeal decision, emphasizing that the assessing officer must consider if the import is prohibited before imposing penalties on a cleared consignment.

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The Appellate Tribunal CESTAT Bangalore, consisting of Shri M.V. Ravindran and P. Karthikeyan, JJ., heard an appeal from an importer who had imported a consignment of crude Palmolein under Chapter sub-heading 15119090, assessed at a concessional rate under Notification No. 21/02 Cus. Following testing by the public health officer and Chemical Examiner of Customs House Laboratory Vishakhapatnam, the Assistant Commissioner reclassified the consignment under CSH 15111000, demanding differential duty of Rs. 1,33,97,727/- plus interest. The Commissioner (Appeals) upheld this decision, prompting the importer to appeal to the Tribunal.

Subsequently, the Commissioner of Central Excise & Customs, Visakhapatnam issued a show cause notice proposing confiscation and penalties for alleged mis-declaration and import contravention. The Commissioner found the goods liable for confiscation under Sections 111(d) & (m) of the Customs Act, imposing a penalty of Rs. 30,00,000/- and a fine of Rs. 1,00,00,000/-.

During the application for stay, the appellants argued that the Commissioner exceeded his jurisdiction by imposing penalties on a consignment already cleared under Section 47 of the Customs Act. After hearing arguments from both sides, the Tribunal found that "the out of charge order under Section 47 of the Act follows appropriate classification of the goods and its liability to duty," and that the assessing officer must consider if the import is prohibited. The Tribunal concluded that the impugned order was not legally sustainable, granting a waiver of pre-deposit of the penalty and staying recovery pending the appeal decision. The judgement was pronounced and dictated in open court.

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