TaxTMI 
TaxTMI 
2026 (1) TMI 1291
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....England from Virginia in the pre-independent colonies of America. That horrific description notwithstanding, the appellant herein, M/s Mumbai Travel Retail Private Limited, preferred to obtain approval for the impugned goods as one such rather than the much touted 'less harmful substitute and replacement', generally known as 'e-cigarette' or 'vapes', which the customs authorities opined to be more apt. That the benignness attributed to the latter was not the cause for choice or discard is evident in the order [order-in-appeal no. MUM-CUSTM-AMP-APP1146/2024-25 dated 17th December 2024] of Commissioner of Customs (Appeals), Mumbai-III which upheld the order of the original authority to the detriment of the importer. And, therein lies the twist of this tale. 2. For reasons best known to policymakers, there is no ban on cigarettes or tobacco products but there is on the substitute which supposedly sates the urge of craving for nicotine without having to smoke paper that wraps tobacco into a convenient cylindrical stick. It is not for us to engage in the causes and consequences of policy made under valid authority; however, it is for us, while presuming such policy to be enforceable,....
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....ettes;...' either in section 4 and section 5 therein. 5. The impugned order, after analyzing 'front plug', 'tobacco plug', 'hollow acetate tube (HAT)', 'thin hollow acetate tube (thin HAT)', 'mouth piece filter (MPF)', 'outer paper' and 'tipping paper' - the components making up the imported article, upheld the confiscation and destruction, as well as imposition of penalty, on the finding that '18. From the above it is clear that the goods are nothing but E-Cigarette. Also, it is concluded by the Adjudicating Authority that during the detailed examination of the goods of subject bill of entry, the goods are actually refills of E-Cigarette, that Importer does not have Tobacco Board Certificate and there are no pictorial health warning mentioned as per Ministry of Health & Family Welfare Notification g.s.r. 417(e) dated 27.05.2011; that the important goods are prohibited as per DGFT Notification No. 54/2015-20 dated 09.02.2022 and hence appear to be absolutely confiscated; that the case laws cited vide their letter dated 26.12.2023 by the Importer are not relevant in the instant case as the same are pertaining to Taxation under GST & Service Tax and the facts in the in....
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....orized Representative, 'e-cigarettes' are also classifiable therein and, consequently, prohibited for import. The impugned order has proceeded to find that impugned goods are 'e-cigarettes' even as the said description finds no place in the impugned heading in the First Schedule to Customs Tariff Act, 1975. Nor is there any foundational support drawn from the Explanatory Notes appended to Harmonized System of Nomenclature (HSN). The essence of the article banned for production and sale in the domestic market by The Prohibition of Electronic Cigarettes (Production, Manufacture, Import, Export, Transport, Sale, Distribution, Storage and Advertisement) Act, 2019 is an 'electronic device for heating substance for creation of aerosol for inhalation' which, by prohibition in the Foreign Trade Policy, applies to imported goods so as not to discriminate merely from having been manufactured abroad. 8. It is moot if mere tabulation of component parts of the impugned goods, described by the importer as 'products containing tobacco intended for inhalation without combustion', conforms to description of the article banned from production, storage and sale in the domestic market by the specia....
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....ting statute; whether printing on cartons, either during or after clearance for home consumption, suffices as adherence to regulatory prescriptions will be contingent on the intent of the regulating statute and on peculiar construct of facts of each import. That certainly was not an option and, despite the finding of non-adherence to prescriptions in Cigarettes and Other Tobacco Products (Prohibition of Advertisement and Regulation of Trade and Commerce, Production, Supply and Distribution) Act, 2003 as well as referred notification of Ministry of Health & Family Welfare, no visible effort appears to have been taken to render investigation on the channel of distribution or the retail presentation of the article. 10. Learned Counsel relied upon the decision of the Hon'ble Supreme Court in Hotel Ashoka (Indian Tourism Development Corporation Ltd) v. ACCT & anr [2012 (12) TMI 62 - SUPREME COURT] holding that '29. The learned counsel appearing for the respondent submitted that the sale would not be subject to tax under the Act only if it occasions in the course of import but the transactions of sale, which are subject matter of this litigation had not taken place in the cou....
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....al waters of India, has been erroneously fastened on the appellant. 12. In the light of facts set out in the show cause being insufficient to conclude that the impugned goods are 'e-cigarettes' and the evident inability to narrow down coverage of the impugned goods to 'tobacco product' or 'refill for e-cigarette', there is no justification for confiscation under section 111 of Customs Act, 1962, by way of being either, to survive let alone absolute confiscation. To set aside the impugned order is also tantamount to condonation of proceedings which, though under appropriate empowerment, may well be questioned for impropriety; the existence of power to initiate proceedings under section 124 of Customs Act, 1962 does not, in the absence of threshold cause, warrant deployment and, therefore, rendering resort thereto as inconsistent with responsible exercise of adjudicatory process. 13. The appellant filed bill of entry for warehousing and not to enable clearance for home consumption. Warehoused goods may, at some future date, be entered to be cleared for home consumption, under section 68 of Customs Act, 1962, entered for such clearance after alteration of form following manufact....
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....ocess of assessment and clearance with entry preferred under the authority of section 77 of Customs Act, 1962 and in the hands of the owner after purchase in a 'duty free shop' thus alienating the 'duty free' operator from the goods for classification as well as trade policy restrictions enforceable on an importer. To put it in most simple terms, a warehousing bill of entry filed by 'duty free' operator is nothing but an accounting control instrument for fastening default liability on goods not traded and found not to be in stock. To initiate adjudicatory proceedings for contraventions, yet to occur and, if at all, to be fastened on a travelling passenger only on some distant date, by issue of notice under section 124 of Customs Act, 1962 is attributable either to ignorance of law or to disregard for comprehended law. And neither reflects credit on the customs administration. 15. This peculiarity has been legislatively acknowledged [Finance Act, 2016 (28 of 20160] by incorporation of '58A Licencing of special warehouses (1) The Principal Commissioner of Customs or Commissioner of Customs may, subject to such conditions as may be prescribed, licence a special wa....