Imported areca nuts unfit for human consumption allowed re-export with reduced penalties and mandatory endorsement

CESTAT Chandigarh allowed appeal in part regarding imported areca nuts found unfit for human consumption per FSSAI standards. Though appellants didn't challenge test reports, they sought re-export permission claiming foreign supplier would accept return. Court noted areca nuts have industrial uses beyond human consumption and couldn't presume re-exported goods would only be used for consumption abroad. Redemption fine reduced from Rs 2 crores to Rs 25 lakhs, penalty reduced from Rs 2 crores to Rs 10 lakhs. Re-export permitted upon payment of redemption fine with endorsement on export documents indicating goods unfit for human consumption per Indian standards.

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Issues Involved:
1. Compliance with FSSAI Regulations.
2. Request for re-export of imported areca nuts.
3. Validity of test reports and procedural adherence.
4. Imposition of penalties and fines.

Summary:

1. Compliance with FSSAI Regulations:
The appellants argued that the procedure for import of "Food Items" as per the FSSAI Act, 2016 and FSSAI (Import) Regulations, 2018 was not followed. They contended that:
- The visual inspection report was not submitted in Form-1.
- The sample was forwarded to the referral laboratory without intimating the importer.
- The referral laboratory analysis was not given in Form-2 within five days.
- The test report was not provided to the importer, denying them the opportunity to appeal within 15 days.
- The CRCL report was unreliable as CRCL is not a food laboratory registered under FSSAI.
- The report by ANRDF was unreliable due to the lack of expertise of Dr. S. Keshav Bhat, who had confessed in another case.

2. Request for Re-export of Imported Areca Nuts:
The appellants requested permission to re-export the consignments, citing that their foreign supplier was ready to take back the goods. They argued that the goods were of inferior quality and not hazardous. They referenced several cases where re-export was permitted after imposing a minimum redemption fine.

3. Validity of Test Reports and Procedural Adherence:
The Department contended that the samples were tested by accredited laboratories and found to be unfit for human consumption. The appellants were aware of the inferior quality, as evidenced by their submissions during the personal hearing. The Department argued that permitting re-export would pose a risk of the goods being re-routed back to India.

4. Imposition of Penalties and Fines:
The Adjudicating Authority confiscated the goods, citing public health concerns. The appellants argued that they were regular importers and unaware of the sub-standard quality. The Department highlighted past messages indicating the appellants' knowledge of the inferior quality. The Tribunal found that while the appellants could be penalized, not permitting re-export would not serve any purpose. The goods were allowed to be re-exported on payment of a redemption fine of Rs. 25 Lakhs and a penalty of Rs. 10 Lakhs.

Conclusion:
The appeal was partially allowed, modifying the impugned order:
- Absolute confiscation was set aside.
- The appellants were allowed to re-export the goods on payment of a fine of Rs. 25 Lakhs.
- The penalty under Section 112 of the Customs Act, 1962 was reduced to Rs. 10 Lakhs.
- The appellants were required to submit an undertaking that the goods would not be routed back to India.
- An endorsement was to be made in the export documents stating that the goods were unfit for human consumption as per Indian Standards.

(Order pronounced in the open court on 07/06/2024)

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