Export compliance for basmati rice defeated confiscation and penalty where adverse lab report and retesting refusal were not accepted.

Exported rice was not liable to confiscation or penalty where the DGFT notification dated 05.11.2008, read with Notification No. 57/2009-2014 dated 17.08.2010, was found to be satisfied. The adverse laboratory report was relied on to invoke the Basmati Rice (Export) Grading and Marketing Rules, 1979, but the report had been challenged and retesting before another laboratory was sought and rejected without plausible reasons. An earlier Tribunal decision on the same issue, which was in favour of the assessee, was followed. The confiscation and penalty were therefore held unsustainable and were set aside.

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Issues: Whether the exported rice was liable to confiscation and penalty on the basis of the laboratory report and the alleged non-compliance with the export standards prescribed for basmati rice.

Analysis: The parameters under the DGFT notification dated 05.11.2008, read with Notification No. 57/2009-2014 dated 17.08.2010, were found to have been satisfied. The confiscation and penalty were founded on a negative laboratory report referring to the Basmati Rice (Export) Grading and Marketing Rules, 1979, although the report had been challenged and retesting before another laboratory had been sought but rejected without plausible reasons. The issue had also already been decided in favour of the assessee in an earlier decision of the Tribunal, which was followed.

Conclusion: The confiscation and penalty were unsustainable and were set aside.

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