2025 (12) TMI 463 - AT - Customs

Confiscation quashed as BIS licence valid; missing mark at import held curable, penalties on alloy steel set aside

Voestalpine High Performance Metals India Pvt Ltd Versus Commissioner of Customs, Nhava Sheva- III, Raigad

CESTAT Mumbai set aside the order of confiscation and allowed the importer's appeal. It held that, since the foreign manufacturer possessed a valid BIS ... Confiscation of goods - absence of BIS marking printed/embossed on the imported goods ‘Alloy Tool steel’ as required under para (6) of Scheme (1) of BIS notification dated 4.6.2018 - permission was granted to affix the BIS marking prior to clearance and the goods were cleared after affixing the mark - HELD THAT:- Admittedly the foreign manufacturer supplier of the imported goods holds a valid BIS license in respect of the subject imported goods. As per the Test Certificate, these goods conforms to the prescribed IS standards. The said foreign supplier has authorised the appellant-importer to affix the mark on the goods prior to their clearance from customs. The appellant was ready to affix the marking on those goods under Customs supervision before clearance which has been acknowledged in the impugned order also. The object of the rules, relied upon by the authorities below, is to ensure that only the goods of prescribed standard enter the Indian market and that object stands satisfied. It is neither the department’s case that the goods fail BIS standard nor the test report raises any doubt about its standard. Any mala fide also cannot be attributed to the appellant on the given set of facts. Once the required marks have been affixed under the supervision of the customs authorities, the condition stands satisfied and confiscation cannot survive. The facts herein are stronger in favour of the importer. In Ganesh Banzeplast Ltd. [2020 (9) TMI 180 - BOMBAY HIGH COURT], the BIS registration was granted to the foreign manufacturer after the goods have reached India, yet confiscation was held unjustified by Hon’ble Bombay High Court. In the instant matter, the foreign manufacturer has been granted BIS license on 18.7.2023, prior to import in August/ September, 2023. Therefore, applying the aforesaid ratio, the confiscation is not sustainable. The absence of BIS marking was a curable defect and has already been cured as stated earlier. Therefore, in view of the settled legal position, the impugned order is not sustainable - Appeal allowed. 1. ISSUES PRESENTED AND CONSIDERED 1.1 Whether imported 'Alloy Tool Steel' lacking BIS marking at the time of import, but covered by valid BIS licence and conforming to BIS standards, and subsequently marked under customs supervision prior to clearance, is liable to confiscation under section 111(d) of the Customs Act, 1962. 1.2 Whether, in the above circumstances, imposition of redemption fine and penalty under section 112(a)(i) of the Customs Act, 1962 is legally sustainable. 2. ISSUE-WISE DETAILED ANALYSIS Issue 1 & 2: Confiscation under section 111(d) and consequential fine/penalty in case of absence of BIS marking at import but later affixed under customs supervision Legal framework 2.1 The Tribunal considered para (6) of Scheme (1) of BIS Notification dated 4.6.2018 which mandates that imported goods to which a BIS standard applies must bear the BIS marking. 2.2 Section 2(33) of the Customs Act, 1962 defining 'prohibited goods' was examined, with emphasis on the exclusion for goods in respect of which the conditions subject to which import is permitted have been complied with. 2.3 Section 111(d) of the Customs Act, 1962 regarding confiscation of goods imported contrary to any prohibition and section 112(a)(i) concerning imposition of penalty were applied. 2.4 The Tribunal relied on decisions of the jurisdictional High Court holding that absence of BIS/IS mark, where the goods conform to BIS standards and marking can be done before clearance, is a curable defect and does not justify confiscation, fine, or penalty. Interpretation and reasoning 2.5 It was undisputed that the foreign manufacturer held a valid BIS licence for the subject goods at the relevant time and that the goods conformed to the prescribed IS standard, as shown by test certificates. 2.6 The Tribunal recorded that the foreign manufacturer had authorised the importer to affix the BIS mark on the goods prior to clearance and that the importer had offered, and was permitted, to affix the marking under customs supervision before clearance; this was also acknowledged in the impugned order. 2.7 After the impugned order, the BIS mark was in fact affixed under customs supervision and the goods were cleared, thereby fulfilling the marking condition contemplated under the BIS scheme and customs supervision requirements. 2.8 Applying section 2(33), the Tribunal held that once the conditions of import (i.e., conformity to BIS standards and affixing of BIS marking) stand complied with before clearance, the goods do not fall within the definition of 'prohibited goods'; consequently, the basis for invoking section 111(d) ceases to exist. 2.9 The Tribunal emphasised that the object of the BIS-related rules is to ensure that only goods of the prescribed standard enter the Indian market. Since it was neither the department's case that the goods failed BIS standards, nor was there any adverse test report, the substantive objective of the rules was satisfied. 2.10 On the facts, no mala fides were attributable to the importer: the omission was solely the absence of marking by the foreign supplier despite holding BIS registration and despite the goods conforming to BIS standards, a defect which was later rectified. 2.11 Relying on the jurisdictional High Court's reasoning that objection regarding absence of BIS marking at the time of arrival is 'more of form than of substance' when the goods fall within a valid BIS licence and conform to the prescribed standard, the Tribunal treated the absence of marking at import as a curable defect, not warranting confiscation. 2.12 The Tribunal noted that, in a precedent where BIS registration was granted even after the goods arrived in India, confiscation was held unjustified after it was shown that the goods conformed to BIS standards; in the present case, the BIS licence was already in place before import, rendering the importer's case even stronger. 2.13 The Tribunal also noted High Court authority where, in similar circumstances of non-marked but BIS-compliant imports, customs authorities were directed to permit clearance after completion of labeling/marking, reinforcing the conclusion that such non-marking is rectifiable rather than constituting a ground for confiscation and penalty. Conclusions 2.14 As the imported goods were covered by a valid BIS licence, conformed to BIS standards, and the BIS marking requirement was fulfilled prior to clearance under customs supervision, the goods were not 'prohibited goods' within section 2(33), and their confiscation under section 111(d) was unsustainable. 2.15 The absence of BIS marking at the time of import constituted a curable procedural lapse which, having been cured, could not lawfully sustain confiscation, redemption fine, or penalty. 2.16 The impugned order was set aside to the extent it upheld confiscation and imposed redemption fine and penalty under section 112(a)(i); the appeal was allowed with consequential relief in accordance with law.