Pre-shipment inspection compliance by 100% physical examination bars confiscation and penalty for missing certificate

Imported goods that arrived before the cut-off date were not liable to confiscation or penalty merely because a pre-shipment inspection certificate was absent, where the consignment had already undergone 100% physical examination under the applicable customs circular and public notice. The operative policy permitted compliance through either production of the certificate or full physical examination, and satisfaction of the latter was treated as sufficient compliance. On that basis, confiscation and penal action were held unsustainable, and the Revenue's challenge failed.

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Issues: Whether imported goods arriving before 25-10-2004 were liable to confiscation or penal action for absence of a Pre-shipment Inspection Certificate when they had been subjected to 100% physical examination under the applicable customs circular and public notice.

Analysis: The goods had arrived before the cut-off date and, though no Pre-shipment Inspection Certificate accompanied them, they were subjected to 100% physical examination in terms of Customs Circular No. 56/2004 dated 18-10-2004. Public Notice No. 51/2004-09 dated 31-1-2005 permitted compliance either by producing a Pre-shipment Inspection Certificate or by subjecting the consignment to 100% physical examination. Since the second option had been exercised, the absence of the certificate did not justify confiscation or imposition of penalty.

Conclusion: The issue was decided in favour of the assessee. The Revenue's appeals were not sustainable and were dismissed.

Ratio Decidendi: Where the applicable trade policy and customs instructions permit compliance either through a pre-shipment inspection certificate or through 100% physical examination, satisfaction of the latter requirement precludes confiscation or penal consequences for want of the certificate.

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