Designated-port restriction for unshredded scrap upheld, but excessive redemption fine and penalty were reduced.

Import of unshredded heavy melting scrap through a non-designated port violated the import policy and the customs circular limiting clearance to designated ports, so the goods were liable to confiscation under the Foreign Trade Policy read with section 11 of the Customs Act and section 111(d). The restriction was treated as security-based, aimed at preventing hazardous material from entering through unshredded scrap consignments, and confiscability was upheld. However, the redemption fine and penalty were found harsh and disproportionate in light of the nature of the lapse, the goods' value, and comparable cases, so the monetary sanctions were reduced, granting partial relief to the importer.

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Issues: (i) whether import of unshredded heavy melting scrap through a non-designated port violated the import policy and attracted confiscation under the Customs law; (ii) whether the redemption fine and penalty were excessive and liable to be reduced.

Issue (i): whether import of unshredded heavy melting scrap through a non-designated port violated the import policy and attracted confiscation under the Customs law.

Analysis: The import policy and the customs circular permitted import and clearance of unshredded metallic scrap only through designated ports. ICD, Garhi-Harsaru was not one of the designated ports. The restriction was linked to security concerns, including the need to prevent import of arms, ammunition, explosives, or other hazardous material in unshredded scrap consignments. Import through a non-designated port therefore amounted to violation of the foreign trade policy read with section 11 of the Customs Act, making the goods liable to confiscation under section 111(d).

Conclusion: The violation and confiscability were upheld against the assessee.

Issue (ii): whether the redemption fine and penalty were excessive and liable to be reduced.

Analysis: The goods were valued at a lower amount than the aggregate redemption fine and penalty imposed. In a comparable matter involving similar facts, substantially lower fine and penalty had been imposed. Considering the nature of the lapse and the overall circumstances, the original monetary sanctions were found to be harsh and disproportionate.

Conclusion: The redemption fine and penalty were reduced in favour of the assessee.

Final Conclusion: The confiscation was sustained, but the monetary liabilities were substantially moderated, resulting in partial relief to the assessee.

Ratio Decidendi: Import of unshredded metal scrap through a port not designated under the import policy and customs circular constitutes a policy violation rendering the goods liable to confiscation, while penalty and redemption fine must remain proportionate to the nature and gravity of the breach.

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