Case Law Details
Chadhuram Enterprises Vs Commissioner of Customs (CESTAT Chennai)
In Chadhuram Enterprises vs Commissioner of Customs, CESTAT Chennai dealt with an appeal challenging the order passed by the Commissioner (Appeals), which upheld the confiscation of imported goods while reducing the redemption fine and penalty imposed by the original adjudicating authority. The appellant had imported Circular Saw Blades without mandatory labeling, leading to confiscation under Section 111(d) of the Customs Act, 1962, with a redemption fine of 竄ｹ5,50,000 and a penalty of 竄ｹ50,000 under Section 112(a).
The primary issue examined by the Tribunal was whether the sustained redemption fine and penalty were justified, given the facts and circumstances of the case. The goods were imported without compliance with the Legal Metrology (Packaged Commodities) Rules, 2011, particularly in the absence of labels and the required registration certificate. Though the appellant claimed to have applied for registration, the certificate had not been obtained at the time of import.
The Tribunal acknowledged that the failure to produce the Legal Metrology registration certificate at the time of import amounted to a contravention of the Foreign Trade Policy (2009-2014). As such, the goods were rightly held liable for confiscation under Section 111(d), which covers goods imported contrary to any prohibition under any law in force. Consequently, penal action under Section 112(a) was also justified for knowingly importing goods in contravention of legal provisions.
However, CESTAT took a balanced approach, considering the fact that the appellant had applied for registration and subsequently obtained it. The Tribunal regarded this lapse as procedural rather than willful evasion. It therefore decided to reduce the redemption fine to 竄ｹ30,000 and the penalty to 5,000. This was seen as a reasonable resolution that aligned with the principles of equity while upholding statutory requirements.
The judgment reinforces the necessity for compliance with procedural requirements under the Legal Metrology Rules during import and highlights that even technical lapses can attract statutory consequences. However, judicial discretion can be exercised where the lapse is procedural and rectified later. While the case does not cite specific precedents, it aligns with prior rulings where penalties were moderated due to mitigating circumstances and the absence of mala fide intent.
FULL TEXT OF THE CESTAT CHENNAI ORDER
This appeal is filed against the Order-in-Appeal No. C.CUS. II No.568/2015 dated 26.06.2015 passed by the Commissioner of Customs (Appeals-II), Chennai whereby the Commissioner (Appeals) has rejected the appeal thereby upholding the confiscation, reducing the redemption fine under Section 125 and reducing the penalty under Section 112 of the Customs Act, 1962.
2. Shri A.K. Jayaraj, Ld. Advocate argued for the Appellant and Shri M. Selvakumar, Ld. Assistant Commissioner defended the impugned order; it is ascertained from both the representatives that the Department has not filed any appeal in so far as the partial relief granted by the First Appellate Authority.
3. We have considered the rival contentions and we have also gone through the documents placed on record; the only issue we find, upon hearing both sides, is “Whether the redemption fine and penalty as sustained in the impugned order are justified ?”
4. The facts are not in dispute; the appellant filed a Bill of Entry dt. 23.12.2014 for clearance of Circular Saw Blade of different types, which upon examination by the shed officers was found to be carrying ‘no label’ whatsoever. This was brought to the notice of the appellant, the appellant appears to have indicated that they had already filed necessary application for registration under Legal Metrology (Packaged Commodities) Rules, 2011 [LMPC Rules, for short], but however they appear to have requested for adjudication without issuance of show cause notice and personal hearing with the further request to waive fine and penalty. Vide the Order in Original No.35933/2015 dt. 24.03.2015, the adjudicating authority has ordered confiscation of the goods in question under Section 111 (d) of the Customs Act, 1962, however allowing a redemption fine of Rs.5,50,000/- under Section 125 ibid and a penalty of Rs.50,000/- under Section 112 (a) ibid. The only reason attributed for the above order by the Original Authority is that the Registration Certificate as required under Rule 27 of LMPC Rules was not produced and hence the appellant had not complied with the provisions of LMPC Rules. It appears that the appellant feeling aggrieved by the above order, approached the Commissioner (Appeals) and upon hearing, the First Appellate Authority though reduced the redemption fine and penalty as imposed by the Original Authority, but however the confiscation of goods under Section 111 (d) ibid was upheld. It is against the said order of the Commissioner (Appeals) that the present appeal has been filed before this forum.
5. Section111 (d) reads thus :
“111. Confiscation of improperly imported goods, etc.
The following goods brought from a place outside India shall be liable to confiscation:
… …
(d) any goods which are imported or attempted to be imported or are brought within the Indian customs waters for the purpose of being imported, contrary to any prohibition imposed by or under this Act or any other law for the time being in force;
6. From the above, on perusal of the records in the appeal, it is evident that the appellant has not complied with the labelling requirements of the Legal metrology (Packaged Commodities) Rules, 2011. There was a failure on the part of the appellant in not producing the Registration Certificate from the Legal Metrology Department when the imported goods landed. Thus, appellant contravened the provisions of Foreign Trade Policy 2009-2014. This contravention automatically entails the confusability of the goods under Section 111 (d) of the Customs Act, 1962 as it is an ‘improper’, hence the appellant is also liable for penal action under Section 112 (a) of the Act. The Ld. Appellate Authority has also observed that it was only a procedural delay on the part of the appellant as the Registration Certificate was able to be obtained and produced later on i.e., after the arrival of the goods. However, having regard to the facts and circumstances of this case as the appellant had applied for registration but could not get the Registration Certificate in time, we are of the considered view that the ends of justice would meet if redemption fine imposed is further reduced to Rs.30,000/- (Rupees Thirty thousand only) and also penalty imposed under Section 112 (a) is reduced to Rs.5,000/- (Rupees Five thousand only).
7. In the result, the appeal is partly allowed on the above terms.
Order pronounced in the open court on 03.01.2025
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