2013 (9) TMI 251 - AT - Customs

Imported Goods Labeling Non-Compliance Ruling Upheld, Confiscation Order Reinstated

Commissioner of Customs (Imports) Chennai Versus Kalra Exim Pvt. Ltd.

The Tribunal concluded that the imported goods did not comply with labeling requirements under the Food Safety and Standards Act, 2006, leading to ... Import of goods (wine) - food safety - Labelling Requirement - Conditons Before Releasing the Goods - Assessee filed Bill of Entry was filed on 29-07-2011 - The Authorized Officer informed that the goods in question did not meet the labeling requirement under the Food Safety and Standards Act, 2006 and Rules, Regulations 2011 made thereunder and hence samples could not be drawn for further testing - The labeling requirements which were not met for each of the items – Held that:- The Food Safety Standards Regulations (Packaging and Labeling) Regulation 2011 notified on 01-08-2011 - But even prior to notification of the regulations administrative instructions were in force – Following M/S. AVENUE IMPEX Versus THE COMMISSIONER OF CUSTOMS [2014 (5) TMI 483 - MADRAS HIGH COURT]. One of the non-rectifiable defects was the requirement of labeling Best before date - This may not have applied for wines in view of the circular dated 20-05-11 - But even for applying the provisions of the circular dt 20-05-11, there was a need for a label showing alcoholic content which appears to have been not present - Labeling of ingredient list was also classified as a non-rectifiable defect. Assessee would have to comply with a number of conditions like providing details to comply with the local laws, at the time of the re-packing and the re-labeling of the said goods, in the customs bonded area, and goods to be subjected to necessary tests to make sure that the goods in question are fit for human consumption, before release of goods - The order of Commissioner (Appeal) was set aside - the matter was restored to the adjudicating authority - the time limit for re-export of goods was extended - Decided in favour of Assesse. Issues Involved:1. Compliance with labeling requirements under the Food Safety and Standards Act, 2006.2. Confiscation and penalty under the Customs Act, 1962.3. Rectification of labeling defects.4. Applicability of administrative instructions and guidelines.5. Legal sustainability of the Commissioner (Appeals) order.Issue-wise Detailed Analysis:1. Compliance with Labeling Requirements under the Food Safety and Standards Act, 2006:The respondent filed Bill of Entry No.4219611 for clearance of imported goods, including White Wine, Red Wine, Extra Virgin Olive Oil JJ, and Extra Virgin Olive Oil MR. The customs officers referred the goods to the Food Safety and Standards Authority of India (FSSAI) for clearance under the Food Safety and Standards Act, 2006. The FSSAI, Chennai, informed that the goods did not meet the labeling requirements under the Act and the 2011 Regulations, specifying the deficiencies for each item, such as the absence of the date of manufacture, date of expiry, ingredients list, name and address of the importer, nutritional facts, and vegetarian symbol.2. Confiscation and Penalty under the Customs Act, 1962:Due to non-compliance with the provisions of the Food Safety and Standards Act, 2006, the goods were deemed liable for confiscation under section 111(d) of the Customs Act, 1962. A show cause notice was issued, and the goods were held to be misbranded and prohibited for importation under section 25(i) of the Act. The goods, valued at Rs.7,79,072/-, were confiscated, with an option given to the importer to redeem the goods on payment of a redemption fine of Rs.10,000/- for re-export only. Additionally, a penalty of Rs.5000/- was imposed under section 112(a) of the Customs Act, 1962.3. Rectification of Labeling Defects:The Commissioner (Appeals) considered the facts and submissions, noting that the FSSAI authorities failed to consider the proviso to Regulation 2.2.2.10(iv) and their guidelines regarding the rectification of labeling defects. The Commissioner (Appeals) directed the lower authority to allow the appellant to rectify the labeling defects under customs supervision. The appeal was allowed, with instructions to follow the procedure and release the goods if they passed the FSSAI test.4. Applicability of Administrative Instructions and Guidelines:The Revenue argued that the Commissioner (Appeals) relied on a clarification issued on 23.3.2012, which should not apply retrospectively to goods imported on 29.7.2011. They cited the decision of the Madras High Court in a similar matter, emphasizing that administrative instructions do not have retrospective effect. The respondent countered that the shelf life requirement does not apply to wines, as clarified by an FSSAI letter dated 20-05-11, and that the labeling defects were curable in the customs bonded warehouse.5. Legal Sustainability of the Commissioner (Appeals) Order:The Tribunal noted that the Bill of Entry was filed on 29-07-2011, and the Food Safety Standards Regulations (Packaging and Labeling) Regulation 2011 were notified on 01-08-2011. However, administrative instructions were in force prior to the notification. The Tribunal referred to the Madras High Court's decision in Avenue Impex, which classified labeling defects into rectifiable and non-rectifiable. It was found that the labeling of ingredient lists was a non-rectifiable defect. Consequently, the Tribunal set aside the order of the Commissioner (Appeals) and restored the order of the adjudicating authority, extending the time limit for re-export of goods till 31-10-2013.Conclusion:The Tribunal concluded that the goods did not meet the labeling requirements, rendering them liable for confiscation. The Commissioner (Appeals) order allowing rectification of labeling defects was set aside, and the original adjudication order was restored, with an extended deadline for re-export.