2018 (8) TMI 1694 - AT - Customs

Appellate authority nullifies duty, penalties under Customs Act; destruction of goods and lack of intent key.

The appellate authority set aside the duty demand, interest, and penalty imposed under section 112 of the Customs Act, 1962. The revocation of the ... Remission of duty - section 23 of Customs Act, 1962 - goods destroyed while in custody of the custodian - revocation of Customs bonded warehousing licence - recovery of duty along with interest thereon - confiscation of goods - imposition of penalty - Held that:- The goods had been destroyed in April 2017. It was incumbent upon the original authority to have ordered remission of duty along with the order of destruction. Recovery of duty, along with interest thereon, ordered by the original authority is, therefore, not proper - The appellant had, of their own accord, reported the non-conformity with the prescribed shelf-life at the time of import. There is no evidence on record to sustain the contention that the appellant had imported the goods even though aware that it was contrary to Foreign Trade Policy. Demand set aside - appeal allowed - decided in favor of appellant. Issues:1. Revocation of Customs bonded warehousing license and imposition of penalty.2. Destruction of goods due to non-compliance with FSSAI norms.3. Remission of duty under section 23 of Customs Act, 1962.4. Intent of the appellant in importing goods.5. Violation of restrictions in the Foreign Trade Policy.6. Order of remission of duty along with the destruction of goods.7. Appeal against the order of the adjudicating authority.Analysis:Issue 1: Revocation of Customs bonded warehousing license and imposition of penaltyThe original authority confirmed the demand of duty, interest, and imposed a penalty under section 112 of the Customs Act, 1962. The first appellate authority enhanced the duty and imposed an equivalent penalty. However, the first appellate authority held that revocation of the warehousing license was beyond the power of the adjudicating authority. The appellant sought setting aside the duty demand, interest, and penalty.Issue 2: Destruction of goods due to non-compliance with FSSAI normsThe appellant communicated non-compliance with FSSAI norms to the exporter, who did not take back the goods. The goods were destroyed on the order of the Assistant Commissioner of Customs. The appellant argued that duty should have been remitted under section 23 of the Customs Act, 1962, as the goods were destroyed while in custody. The duty liability is questioned as the goods were not cleared for home consumption.Issue 3: Remission of duty under section 23 of Customs Act, 1962The destruction of goods in April 2017 should have been accompanied by an order for remission of duty. The recovery of duty and interest by the original authority was deemed improper. With the destruction of goods, the liability to duty ceases, and re-determination of value is unnecessary. The appellant had reported non-conformity at the time of import, indicating no intent to violate the Foreign Trade Policy.Issue 4: Intent of the appellant in importing goodsThe appellant argued that there was no intent to import goods in violation of any laws, hence challenging the issuance of a show cause notice for duty recovery or penalty imposition.Issue 5: Violation of restrictions in the Foreign Trade PolicyThe Authorized Representative contended that the goods were imported in violation of Foreign Trade Policy restrictions, with the original authority finding the appellant aware of the consignment's arrival.Issue 6: Order of remission of duty along with the destruction of goodsThe order set aside the duty liability and penalty, considering the destruction of goods and lack of evidence supporting the appellant's awareness of any policy violations.Issue 7: Appeal against the order of the adjudicating authorityThe order was set aside, providing consequential relief by nullifying duty liability and penalty imposition due to the destruction of goods and lack of evidence of policy violations by the appellant.