2016 (10) TMI 723 - AT - Customs

Import of goods post registration expiry: CESTAT Mumbai reduces fines

The Appellate Tribunal CESTAT MUMBAI addressed the import of goods beyond the validity period of a registration certificate. Despite the appellant's ... Confiscation for breach of statutory registration - requirement of Central Bureau of Narcotics registration for import of controlled consignments - absence of mala fide and unintentional breach as mitigating circumstance - reduction of redemption fine and personal penalty in exercise of appellate discretion - proposition of re-export as alternative reliefConfiscation for breach of statutory registration - requirement of Central Bureau of Narcotics registration for import of controlled consignments - Whether the imported consignment was liable to be confiscated for import without valid CBN registration - HELD THAT: - The Tribunal records the undisputed fact that the CBN registration produced was valid only up to 23.3.2014 while the goods were imported on 28.3.2014. The Court found that the vital statutory condition for import-valid CBN registration-was not complied with at the time of import. Although the contract with the foreign supplier ran until 31.3.2014 and the supplier shipped in terms of that contract, the importer knew of the earlier expiry and did not act to prevent shipment. The absence of mala fide on the part of the supplier or importer is noted, but that factual mitigation does not negate the statutory non-compliance which rendered the consignment liable to confiscation under the Customs law. The Tribunal therefore upholds the finding of liability for confiscation while considering mitigation only for penalty and redemption fine. [Paras 5]Liability for confiscation upheld because import took place after expiry of CBN registration.Absence of mala fide and unintentional breach as mitigating circumstance - reduction of redemption fine and personal penalty in exercise of appellate discretion - proposition of re-export as alternative relief - Whether the redemption fine and personal penalty should be reduced in view of the facts that the breach was unintentional and there was no mala fide - HELD THAT: - The Tribunal accepted that the error was not motivated by mala fide and that the supplier acted under contract; the importer had, however, permitted shipment despite knowledge of the earlier expiry. Balancing the absence of mala fide against the statutory breach, the Tribunal exercised its appellate discretion to moderate the financial consequences. It distinguished earlier authorities relied upon by the appellant on the ground that in those cases the error lay with the foreign shipper, whereas here the importer failed to prevent the shipment despite knowledge of the registration expiry. Given this factual matrix and the appellant's proposal to re-export, the Tribunal found mitigation appropriate and reduced the redemption fine and the personal penalty. [Paras 5]Redemption fine and personal penalty reduced as a matter of discretion in view of unintentional breach and absence of mala fide; re-export proposal considered but Tribunal granted reduction of monetary consequences.Final Conclusion: The appeal is partly allowed: the finding of confiscation for import without valid CBN registration is upheld, but the Tribunal, noting the absence of mala fide and the factual circumstances, exercises discretion to reduce the redemption fine and the personal penalty, and accordingly moderates the financial consequences. Issues:Import of goods beyond the validity period of registration certificate.Confiscation of goods under Section 111(d) and imposition of penalty under Section 112(a) of the Customs Act, 1962.Validity of registration certificate and compliance with import conditions.Appellant's submission of unintentional mistake and reliance on judgments.Revenue's argument of non-compliance with registration requirements.Reduction of redemption fine and penalties by the Tribunal.Analysis:The appeal before the Appellate Tribunal CESTAT MUMBAI concerned the import of Turkish White Poppy Seeds beyond the validity period of the registration certificate issued by the Central Bureau of Narcotics (CBN). The appellant imported the goods on 28.3.2014, while the registration certificate was valid until 23.4.2014. The Customs authority confiscated the goods under Section 111(d) and imposed a redemption fine of &8377; 5,20,000/- along with a personal penalty of &8377; 2,60,000/- under Section 112(a) of the Customs Act, 1962.The appellant argued that the contract for the import of the goods was valid until 31.3.2014, and the foreign supplier shipped the goods on 28.3.2014 based on this contract. They contended that they informed the Customs department about the situation and cited the Foreign Trade Policy provision that deems an authorization valid until the last date of the concerned month. The appellant proposed to re-export the goods, highlighting unintentional mistake and sought relief based on previous judgments.On the other hand, the Revenue contended that the goods were indeed imported after the expiration of the registration, emphasizing the non-compliance with the vital condition of CBN registration for import. The Revenue argued that the goods were liable for confiscation due to the lack of valid registration at the time of import.After considering the submissions, the Tribunal acknowledged that the foreign supplier shipped the goods in accordance with the contract's validity period. However, the Tribunal noted that despite knowing the registration's validity until 23.3.2014, the appellant did not inform the supplier, leading to the illegal import. The Tribunal distinguished the present case from the judgments cited by the appellant, where the mistake was attributed to the foreign supplier, not the importer.Ultimately, the Tribunal found no mala fide intention behind the mistake and decided to reduce the redemption fine from &8377; 5,20,000/- to &8377; 2 lakhs and the penalties from &8377; 2,60,000/- to &8377; 1 lakh. The Tribunal partially allowed the appeal based on the circumstances of the case and the reduction in fines and penalties was deemed sufficient to meet the ends of justice.