CESTAT rules in favor of appellant on penalties under Customs Act, confiscation upheld for prohibited Ostrich feathers

The CESTAT ruled in favor of the appellant regarding penalties under Sec 114 (i) & Sec 114 AA of the Customs Act 1962, as there was no evidence of the appellant's knowledge of the prohibited nature of the feathers. Penalties were waived. However, the confiscation of the consignment was upheld due to the use of prohibited Ostrich feathers in the exported silk fabrics.

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Issues Involved:
(i) Whether feathers used in the making of silk fabrics, being exported by the appellant, are prohibited Ostrich feathers as per CITESRs.
(ii) Whether appellant is liable for penalty under Sec 114 (i) & Sec 114 AA of the Customs Act 1962.

Analysis:

Issue (i):
The appellant received a consignment of 'Imitation Ostrich Bird Feathers' from Spain, described as such in the invoice. The feathers were subject to the Convention on International Trade in Endangered Species of Wild Fauna & Flora (CITES). The CESTAT observed that Ostrich feathers from specific African countries are prohibited under CITES. As the feathers were imported without a certificate of origin proving they were not from prohibited areas, the confiscation of the consignment was upheld. The appellant's argument that they were not aware of the prohibition was dismissed, and the appeal on this issue was rejected.

Issue (ii):
Regarding the imposition of penalties under Sec 114 (i) & Sec 114 AA of the Customs Act 1962, the CESTAT noted that the appellant did not participate in the import clearance process of the feathers. The documents received indicated the feathers were imitation ostrich bird feathers, and there was no evidence of the appellant's knowledge of their prohibited nature. Referring to a judgment by the Calcutta High Court, it was emphasized that penal provisions must be strictly construed. As there was no proof that the appellant knowingly dealt with prohibited goods, the penalties imposed were deemed unjustified and set aside. The appeal on this issue was allowed, and penalties were waived.

In conclusion, the CESTAT ruled in favor of the appellant on the issue of penalties but upheld the confiscation of the consignment due to the use of prohibited Ostrich feathers in the exported silk fabrics.

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