2015 (2) TMI 825 - AT - Customs

Tribunal Upholds Confiscation & Penalties for Unauthorized Export of Nuclear Grade Graphite Blocks

Nickunj Shah, Nickunj Eximp Enterprise Pvt Ltd, Piyush Sanghavi Versus Commissioner of Customs (Export) ACC, Mumbai

Nickunj Shah, Nickunj Eximp Enterprise Pvt Ltd, Piyush Sanghavi Versus Commissioner of Customs (Export) ACC, Mumbai - 2015 (316) E.L.T. 291 (Tri. - Mumbai) Issues Involved:1. Confiscation of nuclear grade graphite blocks.2. Imposition of penalties on the appellant firm and its director.3. Requirement of export license for nuclear grade graphite.4. Applicability of Section 113(d) and Section 114 of the Customs Act.5. Validity of appellant's claims of bona fide belief and previous exports.6. Legality of absolute confiscation versus conditional release.Detailed Analysis:1. Confiscation of Nuclear Grade Graphite Blocks:The appellant, M/s Nickunj Eximp Enterprises Pvt. Ltd., attempted to export nuclear grade graphite blocks to Iran and Dubai without the requisite export license, leading to their confiscation under Section 113(d) of the Customs Act, 1962. The graphite blocks were confirmed as nuclear grade by BARC, having purity levels and density meeting the criteria for nuclear grade materials. The export of such materials to Iran is prohibited as per the Foreign Trade Policy and various notifications and guidelines issued by the Department of Atomic Energy and DGFT.2. Imposition of Penalties on the Appellant Firm and Its Director:Penalties of Rs. 30 lakhs each were imposed on the appellant firm and its director, Mr. Nickunj Shah, under Section 114 of the Customs Act. The adjudicating authority justified the penalties based on the value of the goods and the deliberate attempt to export prohibited items. The Tribunal upheld these penalties, noting the significant implications of exporting nuclear grade materials without proper authorization, especially in the context of nuclear terrorism.3. Requirement of Export License for Nuclear Grade Graphite:The Tribunal emphasized that the export of nuclear grade graphite requires a specific license from the Department of Atomic Energy, as stipulated in various public domain documents, including notifications and resolutions. The appellant's argument that they were unaware of this requirement was dismissed, given their previous dealings with nuclear materials and their knowledge of the procedures for exporting such items.4. Applicability of Section 113(d) and Section 114 of the Customs Act:The Tribunal held that the provisions of Section 113(d) were applicable as the goods were brought to the customs area for export without the necessary license, constituting an attempt to export prohibited goods. The penalties under Section 114 were deemed appropriate given the deliberate and malafide conduct of the appellant in attempting to export the goods and creating a web of fictitious transactions to conceal the source of the graphite blocks.5. Validity of Appellant's Claims of Bona Fide Belief and Previous Exports:The appellant's claim of bona fide belief based on previous exports was rejected. The Tribunal noted that there is no estoppel in customs transactions, and previous errors by customs authorities do not justify repeating the same mistakes. The appellant's knowledge of the restrictions and their deliberate attempt to mislead authorities further undermined their claims of bona fide belief.6. Legality of Absolute Confiscation Versus Conditional Release:The Tribunal upheld the absolute confiscation of the goods, emphasizing the adjudicating authority's discretion under Section 125(1) of the Customs Act. Given the prohibited nature of the goods and the international implications, absolute confiscation was deemed appropriate. The Tribunal also noted that the appellant's attempt to export the goods without the necessary license constituted a significant offense.Conclusion:The Tribunal upheld the confiscation of the nuclear grade graphite blocks and the penalties imposed on the appellant firm and its director, Mr. Nickunj Shah, while setting aside the penalty on Mr. Piyush N. Sanghvi, Partner of M/s Parth Enterprises, due to lack of direct involvement in the export attempt. The order emphasized the importance of adhering to export regulations, especially concerning sensitive materials like nuclear grade graphite.