Pre-shipment certificate requirement cannot apply retrospectively to already shipped metal scrap; confiscation and penalty set aside.

Imported metal scrap was held to fall outside a later-introduced pre-shipment inspection certificate requirement where the goods had already been shipped before that condition came into force. The circular guidance treated such consignments as suitable for 100% physical examination if they had landed in India and left the port of origin on or before the relevant cut-off date. As the scrap was physically examined and found to be metal scrap, confiscation and penalty were not sustainable and were set aside.

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Issues: Whether imported metal scrap could be confiscated and penalised for production of a pre-shipment inspection certificate when the certificate requirement was introduced after the goods had already been shipped.

Analysis: The requirement of a pre-shipment inspection certificate was introduced only in October 2004 by Public Notice No. 16/2004-09. The goods in question had been exported before that date. The Board's Circular No. 56/2004-Cus. dated 18-10-2004 provided that where scrap had already landed in India and left its port of origin on or before 25-10-2004 and had not yet been cleared, the proper course was 100% physical examination. The goods were physically examined and found to be metal scrap. As the certificate requirement came into force after the import, the goods were not liable to be covered by such certificate.

Conclusion: The confiscation and penalty were not sustainable and were set aside in favour of the assessee.

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