No confiscation of goods if import is not contrary to any prohibition imposed under Custom Act

Baby Marine Seafood Retail Pvt. Ltd. Vs C.C, Cochin (CESTAT Bangalore)

In this case appellant while placing purchase order clarified to the vendor that the goods in question should be in compliance with the Indian Standards –Food safety Standards (Contaminants, Toxins and Residues) Regulation, 2011 and Indian Food Safety and Standards Authority of India Regulation for microbiological requirements for fish and fishery products and also to meet other safety standards. In order to meet these standards, the vendor supplied the test certificate issued by the Ministry of Agriculture and Rural Development, Social Republic of Vietnam which certified that the goods imported was in compliance with FSSAI.

Further, I find that on subsequent laboratory analysis, the said product failed in two out of eighteen quality and safety parameters and as a result of which NOC was not issued by the Food and Safety Standard Authority. Further, I find that the findings of both the authorities that the goods are liable for confiscation under Section 111(d) of the Act is not legally justified.

Further, it is clear that confiscation under Section 111(d) of the Act is permissible only when the goods have been imported in contrary to the prohibition under the Act or any other law for the time being in force which is not the case in the case of present import by the appellant. I also find that appellant has taken reasonable care and attention to ensure that the goods are imported in compliance with the Safety Standard Act. Since the sample was drawn after about two weeks from the arrival of the goods, it is possible that the contamination had occurred during the transit of the import of the goods or subsequently, for which appellant cannot be blamed and it cannot be said that the import is contrary to the prohibition imposed under the Act or any other applicable law being in force.

The perusal of Section 125 clearly shows that the import by the appellant is not contrary to any prohibition imposed under the Act or any other law for the time being in force. Hence, the confiscation under Section 111(d) of the Act is unwarranted and therefore the imposition and redemption fine is also unwarranted. Further, I find that the imposition of penalty under Section 112(a) of the Act is also not warranted in the present case because the penalty under 112(a) of the Act is imposable only in case of goods liable for confiscation under Section 111 of the Act.

In view of my discussion above, I find that the appellant had no intention to violate FSSAI and FSS Act and had no intention to import goods contrary to the prohibition stipulated in the Act or any other law for the time being in force. Hence, the imposition of redemption fine and penalty is not sustainable in law and therefore I set aside the same by allowing the appeal of the appellant with consequential relief, if any.

FULL TEXT OF THE CESTAT BANGALORE ORDER 

The present appeal is directed against the impugned order dated 29/07/2020 passed by the Commissioner (Appeals) whereby the Commissioner (Appeals) has rejected the appeal of the appellant and confirmed the imposition of redemption fine and penalty on the appellant. Briefly the facts of the present case are that the appellants are engaged in the business of import of seafood for the purpose of export and trade. They filed Bill of Entry No. 2554712 dated 25/03/2019 for the clearance of 1000 packages of “Frozen Pangasius Fillet Untrimmed 100% Non IQF”with a declared assessable value of Rs. 26,17,367.81 which was purchased from M/s. Hung Phuc Thinh Foods Joint Stock Company, 09 Hung Vuong Street, My Tho Hamlet, My Quy Ward, Long Xuyen City, An Giang Province, Vietnam (hereinafter referred to as the “Vendor”) under the sales contract No. 001/PTF-BM-2019 dated 01/02/2019.

As per the contract the goods supplied was to be in compliance with the Indian Standards –Food safety Standards (Contaminants, Toxins and Residues) Regulation, 2011 and Indian Food Safety and Standards Authority of India (FSSAI) Regulation for microbiological requirements for fish and fishery products and to meet other safety standards. As proof of the same the Vendor also supplied the test certificate issued by the Ministry of Agriculture and Rural Development, Social Republic of Vietnam which certified that the goods imported was in compliance with FSSAI.

Subsequent to import of the consignment, the products in question were subjected to laboratory analysis wherein the same failed in two out of eighteen quality and safety parameters due to the presence of Escherichia coli and Vibrio Cholerea (01 and 0139) both of which were specifically certified as not present by the laboratory analysis done by Ministry of Agriculture and Rural Development, Social Republic of Vietnam. Since the imported products were not certified by FSSAI the appellants requested for permission to re-export the imported goods to the country of export. Thereafter, the original authority vide Order-in-Original confiscated the goods and imposed redemption fine of Rs. 2,00,000/- (Rupees Two Lakhs only) under Section 125 of the Customs Act and penalty of Rs. 1,00,000/- (Rupees One Lakh only) under Section 112(a) of the Customs Act, 1962 on the appellant. The appellant paid the redemption fine and penalty and re-exported the goods. Thereafter, the appellant filed the appeal before the Commissioner who rejected the said appeal. Hence, the present appeal.

2. Heard both the parties and perused the records.

3. Learned counsel for the appellant submitted that the impugned order is not sustainable in law as the same has been passed without properly appreciating the factual and legal position in proper perspective. He further submitted that the Order-in-Original was passed confiscating the goods and imposing redemption fine and penalty without issuing a show-cause notice to the appellant and thereby violating the principles of natural justice and on this ground alone the impugned order is liable to be set aside. He further submitted that the imported goods are not liable to confiscation and redemption fine not imposable under the Act. He then referred to Section 111(d) of the Customs Act and submitted that under the said Section confiscation is permissible only when the goods have been imported in contrary to any prohibition under the Act or any other law for the time being in force, which is clearly not the case in the present import made by the appellant. He also referred to Annexure-5 Analysis Certificate and submitted that it is clear from the certificate that the products in question had been tested for presence of Escherichia coli and Vibrio Cholerea on 09/03/2019 and were certified clear for export and human consumption. It is based on this certification which falls in line with the quality requirements of FSSAI and the FSS Act that the appellants imported the products. He further submitted that the appellant had taken more than reasonable care and attention to ensure that the goods are imported in compliance with the FSSAI Act and FSS Act and Annexure-5 certificate clearly shows that products in question had met all the necessary specifications under the FSS Act and FSSAI Act at the time of export. He also submitted that there is absolutely no culpable mental state in order to attract confiscation under Section 111(d) of the Act as it is evident that the contamination has occurred either during the transit of the imported goods or subsequently which is beyond the control of the appellants and cannot be deemed as an import in contrary to prohibitions imposed under the Act or any other applicable laws in force. Learned counsel also referred to Section 125 of the Customs Act and submitted that the import by the appellant is not in contrary to any prohibition imposed under the Act or any other law for the time being in force. He further submitted that the confiscation under Section 111(d) of the Act is unwarranted and therefore the imposition of redemption fine would also automatically be unwarranted and incorrect. He further submitted that for imposition of penalty under Section 112(a) of the Act there is no basis because the penalty under Section 112(a) of the Act is imposable only in case of goods liable for confiscation under Section 111 of the Act. In support of his submission, he relied upon the decision in the case of Health Caps India Ltd. Vs. CC, Noida reported in 2018 (364) E.L.T. 815 (Tri.-All.) wherein on identical facts the Tribunal has set aside the confiscation and the penalty imposed on the importer.

4. On the other hand, the learned AR defended the impugned order and submitted that the import in the present case was in contravention of the provisions of para 4 of the general note regarding import policy FTP 2015-20 and the impugned goods are unauthorized imports and hence liable for confiscation under Section 111(d) of the Customs Act, 1962.

5. After considering the submissions of both the parties and perusal of the material on record, I find that the appellant while placing purchase order clarified to the vendor that the goods in question should be in compliance with the Indian Standards –Food safety Standards (Contaminants, Toxins and Residues) Regulation, 2011 and Indian Food Safety and Standards Authority of India Regulation for microbiological requirements for fish and fishery products and also to meet other safety standards. In order to meet these standards, the vendor supplied the test certificate issued by the Ministry of Agriculture and Rural Development, Social Republic of Vietnam which certified that the goods imported was in compliance with FSSAI.

Further, I find that on subsequent laboratory analysis, the said product failed in two out of eighteen quality and safety parameters and as a result of which NOC was not issued by the Food and Safety Standard Authority. Further, I find that the findings of both the authorities that the goods are liable for confiscation under Section 111(d) of the Act is not legally justified. Here it is pertinent to reproduce Section 111(d) of the Customs Act, which reads as follows:

“SECTION 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;

…………..”

Further, it is clear that confiscation under Section 111(d) of the Act is permissible only when the goods have been imported in contrary to the prohibition under the Act or any other law for the time being in force which is not the case in the case of present import by the appellant. I also find that appellant has taken reasonable care and attention to ensure that the goods are imported in compliance with the Safety Standard Act. Since the sample was drawn after about two weeks from the arrival of the goods, it is possible that the contamination had occurred during the transit of the import of the goods or subsequently, for which appellant cannot be blamed and it cannot be said that the import is contrary to the prohibition imposed under the Act or any other applicable law being in force. It is relevant to reproduce Section 125 of the Customs Act which deals with imposition of redemption fine, which is reproduced herein below:

“SECTION 125. Option to pay fine in lieu of confiscation. – (1) Whenever confiscation of any goods is authorised by this Act, the officer adjudging it may, in the case of any goods, the importation or exportation whereof is prohibited under this Act or under any other law for the time being in force, and shall, in the case of any other goods, give to the owner of the goods [or, where such owner is not known, the person from whose possession or custody such goods have been seized,] an option to pay in lieu of confiscation such fine as the said officer thinks fit.”

The perusal of Section 125 clearly shows that the import by the appellant is not contrary to any prohibition imposed under the Act or any other law for the time being in force. Hence, the confiscation under Section 111(d) of the Act is unwarranted and therefore the imposition and redemption fine is also unwarranted. Further, I find that the imposition of penalty under Section 112(a) of the Act is also not warranted in the present case because the penalty under 112(a) of the Act is imposable only in case of goods liable for confiscation under Section 111 of the Act. In this regard, I find that the facts of the present case are identical with that of Health Caps India Ltd. V. CC, Noida cited supra by the appellant wherein on similar facts the Hon’ble Tribunal held as under:

“5. Having considered the rival contentions and on perusal of the facts on record, I am satisfied that in the facts of the present case the appellants have not ventured to import any prohibited goods and or restricted goods. Further the item imported was permissible to be imported freely subject to compliance of standards and permission by Wild Life (Protection) Act, 1972 & CITES. The only irregularity found is that upon test, two of the parameters (biological criteria) were found to non-compliant. Under the facts and circumstances, I find that there was a delay in testing and the samples were drawn by the Customs officers and not by the experts of FSSAI or Staff of Sriram Institute for National Research, Delhi. There were every chances of contamination due to non-handling as per the required criteria. Accordingly, I hold that there is no mala fide on the part of the appellant-importer nor a case is made out against them that they have ventured to import prohibited/restricted goods in violation of the provisions of the Customs Act. In the course of argument, the Ld. Counsel have also produced certificate of analysis of the load port according to which the goods comply with the prescribed specifications and quality. In this view of the matter, I set aside the order of confiscation as well as penalty. Thus, the appeal is allowed with consequential relief to the appellant, if any, in accordance with law.”

6. In view of my discussion above, I find that the appellant had no intention to violate FSSAI and FSS Act and had no intention to import goods contrary to the prohibition stipulated in the Act or any other law for the time being in force. Hence, the imposition of redemption fine and penalty is not sustainable in law and therefore I set aside the same by allowing the appeal of the appellant with consequential relief, if any.

(Order was pronounced in Open Court on 26/04/2021)