2026 (1) TMI 405 - AT - Customs

Rough marble imports under SIL licences challenged as restricted; penalties u/s112 and confiscation u/s111 set aside

The dominant issue was whether penalties under s.112 could be sustained for import of restricted rough marble allegedly in excess of, or without, valid ... Imposition of penalties under section 112 - Imports rough marble - lack of the required licence - restricted under the Foreign Trade Policy and they could be imported only on a Special Import Licence [SIL] issued by the Director General of Foreign Trade [DGFT] - liable confiscation under section 111 - HELD THAT:- While it was clear that the goods were imported without adequate valid licences and also that the officers had cleared the goods, the details of the adjudication orders and fines paid, etc., were not available. DRI issued the SCN proposing to confiscate the goods and impose penalties which culminated in the impugned order. It is undisputed that PG and Priceless (which were amalgamated into Marble City)had imported rough marble, a good whose import was restricted and which could be imported only on a licence issued by the DGFT. It is also undisputed that in some Bills of Entry, the imports of rough marble were in excess of the quantities indicated in the corresponding SIL or without an SIL covering the entire quantity. Learned authorized representative submitted that in some cases, the import consignments were booked by PG and Priceless even before the issue of SIL which, however, is immaterial because licence is required to import goods into India and not to enter into a contract or place orders for goods. One may place an order without a licence but at the time the goods are imported one should have a licence covering the import. Since DRI could only get details of the Bills of Entry which were filed and the SILs which were issued by the DGFT and could not obtain copies of the adjudication orders, details of fine and penalties, etc. or even hard copies of the Bills of Entry where the details of fines and penalties imposed by the officer and paid by the appellant might have been recorded, the SCN was issued presuming that in all cases where there was a difference between the Bill of Entry and the SIL, the appellant had imported and cleared the goods without a licence. Since the documents are not available, one cannot draw an adverse inference that the person was unauthorizedly absent on that day. Extending further, if the entire register for the entire year is examined one can discover all the days on which every employee had not signed in the attendance register on each working day during that entire year. It is possible that nobody may have kept copies of leave sanction, tour bills, directions to attend meetings outside the office, etc. One cannot, from this investigation, conclude that there was rampant unauthorized absenteeism in the entire office ten years ago. We do not share the views of the DRI or the Principal Commissioner about the officers in the appraising group, import shed and the officers who issued the ‘out of charge’ in the disputed Bills of Entry; these Customs officers deserve better trust and respect. In the absence of any evidence to the contrary, it must be presumed that the goods were cleared by the officers after adjudication, etc. and that the custodian had given the goods to the importers only after the customs officer issued ‘Out of Charge’. Since we have found in favour of Marble City on merits, the question of limitation need not be examined. Consequently, the penalties imposed on it cannot be sustained and neither can the penalties imposed on others in the impugned orders. The impugned orders deserve to be set aside and are set aside. All the six appeals are, accordingly, allowed. Issues: (i) Whether the impugned orders imposing confiscation/penalties under the Customs Act in respect of alleged imports of restricted goods without valid Special Import Licences are sustainable in the absence of positive evidence of removal without licence and adjudication records.Analysis: The legal framework governing entry, assessment and clearance of imported goods under the Customs Act includes the procedures for filing Bills of Entry (Section 46), assessment (Section 17), and clearance for home consumption (Section 47). Restricted imports require licences issued by DGFT and, if goods are imported without a licence, consequences under Section 111 and penal provisions under Section 112 and Section 114AA may follow. The records available to the investigating authority consisted primarily of system-stored Bills of Entry and DGFT licence data; adjudication orders and manual entries were not in the system for the relevant historical period. The reasonable inference from the combination of: (a) absence of positive evidence showing goods were removed without an Out of Charge order, (b) the practical process involving multiple officers (appraiser, assistant commissioner, examining officer and Out of Charge officer) and the custodian before goods leave the customs area, and (c) consistent explanations from importers, CHAs and customs officers that alleged discrepancies were addressed by adjudication and payment of redemption fines, is that the department failed to establish, with positive evidence, that removals occurred without licences or adjudication. Where historic adjudication records are missing, an adverse inference that all relevant officers colluded or were negligent is not justified without supporting evidence.Conclusion: The impugned orders imposing confiscation/penalties are unsustainable for want of positive evidence that the goods were removed without valid licences or without adjudication; the appeals are allowed and the impugned orders are set aside (decision in favour of the assessee).