Laboratory test reports upheld duty on aluminium foils, while penalty on a subordinate employee was set aside for lack of abetment.

Repeated laboratory testing by approved labs established that the imported aluminium foils were 7 micron or above, so safeguard duty under Notification No. 71/2009-Cus was upheld. The BIS tolerance norm was treated as a quality standard, not the test for duty-triggering thickness, and the challenge based on variation in reports and cross-examination failed. Penalties on the importer and its Managing Director were sustained because the duty liability stood confirmed. Penalty on the Authorised Signatory was set aside, as he was a salaried employee acting under directions without proof of personal gain or abetment.

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Issues: (i) whether the imported aluminium foils were of thickness of 7 micron or above so as to attract safeguard duty under Notification No. 71/2009-Cus dated 10.06.2009; (ii) whether the penalties sustained against the appellant company and its Managing Director were justified; and (iii) whether the penalty imposed on the Authorised Signatory was sustainable.

Issue (i): whether the imported aluminium foils were of thickness of 7 micron or above so as to attract safeguard duty under Notification No. 71/2009-Cus dated 10.06.2009.

Analysis: The samples were drawn in the prescribed manner and tested repeatedly by approved laboratories, including on the importer's request. All the reports indicated a thickness of 7 micron or above. The plea based on variation between reports and on the BIS tolerance standard was not accepted, as the tolerance norm was treated as a quality standard and not as a basis for determining the duty-triggering thickness. The request relating to cross-examination was also not found sufficient to dislodge the test results.

Conclusion: The imported goods were held to be of thickness of 7 micron or above and safeguard duty was upheld against the appellant company.

Issue (ii): whether the penalties sustained against the appellant company and its Managing Director were justified.

Analysis: Since the duty liability was upheld on the basis of the laboratory reports and there was no sufficient ground to interfere with the findings of the lower authorities, the reduced penalty sustained against the Managing Director was also found to be justified. No separate infirmity was found in the penalty imposed on the appellant company.

Conclusion: The penalties sustained against the appellant company and its Managing Director were upheld.

Issue (iii): whether the penalty imposed on the Authorised Signatory was sustainable.

Analysis: The Authorised Signatory was treated as a salaried employee acting under the directions of the Managing Director, with no finding of personal gain or established abetment in the offence. On that footing, continuation of penalty against him was found unjustified.

Conclusion: The penalty on the Authorised Signatory was set aside.

Final Conclusion: The appeal succeeded only to the extent of the Authorised Signatory, while the duty demand and the penalties on the appellant company and its Managing Director were maintained.

Ratio Decidendi: Repeated test reports from approved laboratories can be relied upon to determine duty-liability classification, and penalty on a subordinate employee requires proof of personal role or abetment rather than mere employment.

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