Pre-shipment certificate reliance barred confiscation and penalty for declared goods, but war material remained confiscable.

Confiscation and penalty could not be sustained for containers carrying only declared goods where the importer had relied on a pre-shipment inspection certificate issued before a later DGFT clarification on branch-office recognition; the defect, if any, lay in the certifying agency's compliance, not the importer's conduct, so confiscation of those containers and the penalty were set aside. However, the container found to contain war material remained liable to absolute confiscation, and the remaining goods in that same container were confiscated with option to redeem, as consistent with the treatment of prohibited import goods.

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Issues: (i) Whether the confiscation and penalty could be sustained in respect of containers containing no war material, on the footing that the pre-shipment inspection certificate was issued by an overseas branch office not yet specifically recognised; (ii) Whether the absolute confiscation of the war material and the confiscation of the remaining goods in the same container with option to redeem were justified.

Issue (i): Whether the confiscation and penalty could be sustained in respect of containers containing no war material, on the footing that the pre-shipment inspection certificate was issued by an overseas branch office not yet specifically recognised.

Analysis: The requirement regarding branch-office registration and inclusion in the relevant appendix was clarified by the DGFT after the goods had already been contracted and imported. The importer had produced a pre-shipment inspection certificate, and the defect, if any, lay in the agency's branch-office compliance rather than in the importer's conduct. In those circumstances, the importer could not be faulted for relying on the certificate issued before the subsequent clarification, and there was no basis to sustain confiscation of containers that contained only declared goods and no war material, or to fasten penalty on that ground.

Conclusion: The confiscation of the remaining containers where no war material was found was set aside and the penalty was set aside, in favour of the assessee.

Issue (ii): Whether the absolute confiscation of the war material and the confiscation of the remaining goods in the same container with option to redeem were justified.

Analysis: The presence of war material in the relevant container rendered that part of the consignment liable to confiscation. The importer did not dispute the confiscation of the war material or the confiscation of the balance goods in the same container with an option of redemption. The result was consistent with the statutory treatment of prohibited import goods.

Conclusion: The absolute confiscation of the war material and the confiscation of the remaining goods in the same container with option to redeem were upheld, against the assessee.

Final Conclusion: The Tribunal sustained confiscation only to the extent of the container containing war material and the balance goods in that container, while setting aside confiscation of the other containers and the penalty.

Ratio Decidendi: Where a post-import clarification regarding recognition of a branch office was issued after the import, the importer cannot be penalised or subjected to confiscation for containers containing only declared goods if the defect lies in the certifying agency's branch-office compliance rather than in the importer's conduct.

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