Customs duty waived on contaminated imported shrimp shells unfit for export under Notification 32/1997-Cus

The CESTAT Bangalore allowed the appeal in a customs duty case involving contaminated imported shell on shrimps. The appellant imported goods under Notification No. 32/1997-Cus for job work and export but discovered contamination with Nitrofuran Metabolite AHD, making them unsuitable for export or consumption. The appellant sought permission to destroy the goods rather than pay customs duty. The tribunal held that duty cannot be demanded when goods were genuinely intended for permitted use but became unfit due to unforeseen contamination, distinguishing cases of deliberate diversion. The appeal was allowed.

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The issue in the present appeal before the Appellate Tribunal concerns the demand of Customs duty due to the alleged contravention of Condition (iii) of Notification No. 32/1997-Cus dated 01.04.1997. The Appellant imported 'Shell on Shrimps' under the said notification seeking exemption on imports for executing export orders. However, the goods were found contaminated with 'Nitrofuran Metabolite AHD,' rendering them unsuitable for export or consumption. Despite seeking permission for destruction of the goods and updating the authorities, a demand notice was issued for recovery of Rs. 8,20,600 along with a proposal for confiscation and penalty under the Customs Act, 1962. The Adjudicating authority confirmed the demand but refrained from confiscation and penalty. The Appellant, dissatisfied, appealed to the Tribunal.During the hearing, the Appellant's counsel argued that there was no wilful omission to comply with the notification conditions and highlighted the contamination issue. They also challenged the authority's power to issue the Show Cause Notice. The Revenue's representative emphasized the Appellant's failure to fulfill the notification conditions, leading to the duty liability.The Tribunal referred to precedents like M/s Alsa Marine & Harvests Ltd. v. CC Cochin, emphasizing the impossibility of meeting export obligations beyond the Appellant's control. It noted the Appellant's efforts to comply with Customs rules despite the contamination issue. Relying on M/s BPL Display Devices Ltd., the Tribunal held that duty cannot be demanded when goods were intended for use but became unfit due to unforeseen circumstances. Consequently, the appeal was allowed, granting relief to the Appellant in line with the law.In conclusion, the Tribunal's decision was based on the principles of impossibility to fulfill obligations beyond the Appellant's control and the intended use of goods despite contamination issues. The Appellant's efforts to comply with Customs rules were acknowledged, leading to the allowance of the appeal and relief granted accordingly.

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