2013 (11) TMI 1430 - AT - Customs

Appellate Tribunal reduces penalties for unauthorized import of heavy melting scrap, emphasizes import policies

The Appellate Tribunal CESTAT New Delhi addressed an appeal concerning the unauthorized import of heavy melting scrap through an unauthorized port, ... Confiscation of goods - Imposition of redemption fine - Import through designated ports - Customs Circular No.56/2004 dated 18.10.2004 - Held that:- import and clearance of metal scrap in unshredded compressed and loose form would be permitted through designated ports only - ICD, Garhi-Harsaru is not one of the designated ports through which such scrap can be imported. CBEC vide Circular No.56/2004/-Cus dt.18.10.2004 clarified the import and clearances of metal scrap in unshredded form would be permitted only at the designated ports. Circular was issued in view of threat of national security and there is possibility of import of arms, ammunition, bombs/explosives in the consignment of unshredded scrap. Since on examination, it is found that the appellant has imported unshredded heavy melting scrap through ICD, Garh-Harsaru, which is not designated port, it clearly comes out that there is violation of provision of foreign trade policy read with section 11 of the Customs Act, 1962 making the goods liable to confiscation under section 111(d) - Penalty reduced - Decided partly in favour of assessee. Issues:Violation of Import and Export Policy regarding the import of heavy melting scrap through an unauthorized port leading to confiscation and penalties.Analysis:The main issue in this appeal revolves around the import of heavy melting scrap through an unauthorized port, ICD Garhi-Harsaru, by the appellant. The goods were found to be unshredded heavy melting scrap, not complying with the provisions of the Import and Export Policy 2004-2009. The policy specified designated ports for such imports, and ICD Garhi-Harsaru was not among them. This violation led to the imposition of penalties under section 112(a) of the Customs Act, confiscation of the scrap under section 111(d), and an option for redemption on payment of a fine under section 125 of the Customs Act.The appellant argued that the import through the unauthorized port was a mistake and that customs authorities could have allowed transfer to the designated port for clearance. However, the Tribunal noted that the Customs Circular No.56/2004 clearly mandated that unshredded metal scrap imports must occur only through designated ports. The circular aimed to prevent security threats like arms and explosives being smuggled in unshredded scrap. The violation of this circular and the Import and Export Policy rendered the goods liable to confiscation under the Customs Act.The Tribunal also considered the disproportionate penalties imposed in comparison to similar cases. While a lower value of goods in a different case resulted in lesser penalties, the appellant faced significantly higher penalties. Recognizing the harshness and disproportionality of the penalties, the Tribunal decided to reduce the penalty and redemption fine to Rs.1.80 lakhs and Rs.1 lakh, respectively, in the interest of justice.In conclusion, the Tribunal partly upheld the original order while accepting the appeal with modifications to reduce the penalties. The judgment highlights the importance of adhering to import policies and designated ports to prevent security risks and emphasizes the need for proportionate penalties in such cases.Judgment Summary:The Appellate Tribunal CESTAT New Delhi, comprising Mrs. Archana Wadhwa and Mr. Manmohan Singh, JJ., addressed the appeal filed against the Commissioner's decision regarding the unauthorized import of heavy melting scrap. The violation of Import and Export Policy by importing unshredded scrap through an unauthorized port led to confiscation and disproportionate penalties. The Tribunal upheld the order but reduced the penalties to ensure fairness and justice in the case.