Case Law Details

Case Name : Ferryman Trading Company Vs Commissioner of Customs (Appeals) (CESTAT Delhi)
Appeal Number : Customs Appeal No. 51130 of 2020 [SM]
Date of Judgement/Order : 28/10/2021
Related Assessment Year :

Ferryman Trading Company Vs Commissioner of Customs (Appeals) (CESTAT Delhi)

Absolute discretion of Customs Authority either to order absolute confiscation or impose fine in lieu of confiscation

CESTAT Delhi held that the confiscating officer under section 125 of the Customs Act, 1962 has the absolute discretion to either impose fine in lieu of confiscation or to order the absolute confiscation.

The M/s. Ferryman Trading Company (“the Appellant”) filed the current appeal being aggrieved of the Order-in-Appeal (“OIO”) passed by Commissioner (Appeals), New Delhi. The Appellant is an importer who had imported the cosmetic products through its CHA firm M/s. R.P. Cargo Handling Services at the declared value of Rs.2288502.77. The Adjudicating Authority however, rejected the said value and accepted the re-determined assessable value of Rs.25,45,129/- and the goods were ordered to be confiscated. However the option was given to the importer to redeem the goods but those having clearance value of Rs.2455289.94 on the payment of redemption fine of Rs. one lakh. However, the goods having a value of Rs.89829/- were ordered for absolute confiscation on the ground that they were not declared in the Central Drugs Standard Control Organisation (“CDSCO”) Registration Certificate.

The Appellant submitted that there is no provision ordering the absolute confiscation of the goods. It is impressed upon that goods in question are the cosmetics products, hence, these goods were neither prohibited nor restricted. For this reason also the authorities have committed an error while ordering the absolute confiscation. The Appellant has also impressed upon the CDSCO certificate as was produced before the adjudicating authorities incorporating the impugned product.

Further the Respondent Department submitted that where the Appellant himself has acknowledged its mistake about the address of the manufacturer being wrong and also about the products to have been misdeclared. He also admitted not to have the CDSCO Registration Certificate at the relevant point of time. And in the absence of the said Certificate, there is no infirmity in ordering the absolute confiscation of the impugned goods.

The Hon’ble CESTAT, Delhi while considering the technicality attached to the CDSCO Certificates observed that all cosmetic products that are imported for sale in India need to be registered with the Licensing Authority, as is defined under Rule 21 of Drugs and Cosmetic Act, 1940 which regulate the import of cosmetic to ensure safety, quality and performance.

Further upholding the order of the adjudicating authority, the CESTAT held that no doubt section 125 of the Customs Act, 1962 gives the importer an option to pay fine in lieu of confiscation but the word used in the provision is “may’’ hence the intention of the statute is apparently clear that the discretion lies with the Confiscating Officer to either impose fine in lieu of confiscation or to order the absolute confiscation.

Relevant Provisions:

“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.

Discretion lies with Confiscating Officer to either impose fine in lieu of confiscation or to order absolute confiscation

FULL TEXT OF THE CESTAT DELHI ORDER

The appellant is an importer having IEC No.301308199 who had imported the cosmetic products through bill of entry No.8300179 dated 03.10.2018 through its CHA firm M/s. R.P. Cargo Handling Services at the declared value of Rs.2288502.77. On the basis of intelligence, the said consignment was put on hold vide letter dated 10.10.2018 and was examined by team of Preventive Officers, New Custom House at ICD, Tughlakabad on 10.12.2018. The goods were found to be T.Y.A. Plant cosmetic products having individual packing, but packed in large cartons. The manufacturer of goods was shown as M/s. Jaidili Cosmetics Company Ltd., Longhu Industrial Zone, Lain Jiang Road, Shantou, China whereas the invoice reflects that the manufacturer as M/s. Shantou Aldieces Cosmetics Co. Ltd. No.3, Longxin 1st Street, Longxin Industrial District Longhu Shantou City 515000, Gaungdong Province China. The goods were also found to be mis­declared in description as well as quantities, accordingly were seized by seizure Memo dated 12.10.2018 in terms of Section 110 of the Customs Act.

1.1 The Adjudicating Authority vide its order No.191/2018 dated 05.12.2018 had rejected the declared value of Rs.2288502.77 and accepted the re-determined assessable value of Rs.25,45,129/- . The goods of the said value were ordered to be confiscated. However, option was given to the importer to redeem the goods but those having clearance value of Rs.2455289.94 on the payment of redemption fine of Rs.1.00 Lakh. However, the goods having value of Rs.89829/- were ordered for absolute confiscation on the ground that they were not declared in the CDSCO Registration Certificate. The total Customs Duty of Rs.1079350/- in respect of the impugned Bill of Entry No.8300179 was confirmed and a penalty of Rs.73322/- was imposed upon the appellant alongwith the order of recovery of interest. The said order was challenged before Commissioner (Appeals) who vide order No.17332- 17338 dated 05.12.2018 has upheld the said order. Being aggrieved, the appellant is before this Tribunal.

2. I have heard Mr. A.S. Bisla, learned Counsel for the appellant and Mr. Mahesgh Bhardwaj, learned Authorised Representative for the Revenue.

3. It is submitted on behalf of the appellant that there is no provision ordering the absolute confiscation of the goods. It is impressed upon that goods in question are the cosmetics products (the make-up Kit), hence, were neither prohibited nor restricted for this reason also, the authorities below have committed an error while ordering the absolute confiscation. Learned Counsel has also impressed upon the CDSCO certificate as was produced before the adjudicating authorities incorporating the impugned However, the same was not considered. While relying upon the decision of this Tribunal, Chennai Bench in the case of Shri Natraja Trading Company vs. Commissioner of Customs, Chennai reported in 2009 (236) ELT 681, the order under challenge is prayed to be set aside and appeal is prayed to be allowed.

4. While rebutting these submissions, it is mentioned on behalf of the Department that present is the case where the appellant himself has acknowledged its mistake about the address of the manufacturer being wrong and also about the products to have been misdeclared. He also admitted to not to have the CDSCO Registration Certificate at the relevant point of time with respect to the T.Y.A. Fashion Make Up/ make-up kit. In the absence of the said Certificate there is no infirmity in ordering the absolute confiscation of the impugned goods. Appeal is accordingly, prayed to be dismissed.

5. After hearing the parties, rival contentions and perusal of record, the sole issue to be adjudicated in the present appeal is observed to be as follows:-

“Whether the absolute confiscation of the goods valued at Rs.89,839/- due to the reason that same were not declared in the CDSCCO.. Registration Certificate is permissible or not.”

6. Foremost, we need to know the technicality attached to the CDSCO Certificates. It is the Certificate being issued by Central Drugs Standard Control Organization. All cosmetic products that are imported for sale in India need to be registered with the Licensing Authority, as is defined under Rule 21 of Drugs and Cosmetic Act which regulate the import of cosmetic to ensure safety, quality and performance. For this purpose that the CDSCO Certificates are issued by the afore-mentioned organization in terms of the provisions of Cosmetic Rules, 1945, which stands amended with Cosmetic Rules, 2020. The certificate is issued by the Central Licensing Authority for registration of cosmetic manufactured for import into India and use in India. This particular perusal makes it abundantly clear that the goods which are not mentioned in CDSCO Certificate are the restricted goods. No doubt section 125 of the Customs Act gives the importer an option to pay fine in lieu of confiscation but the word used in the provision is “may’, hence, the intention of statute is apparently clear that the discretion lies with the Confiscating Officer to either impose fine in lieu of confiscation or to order the absolute confiscation. This particular perusal is sufficient to answer the afore-framed query in affirmative.

Further from the facts of the present case, it is clearly a case of admitted misdeclaration:

1) Of the goods which are absolutely confiscated to not have been mentioned in CDSCO Certificate.

2) About the details of the manufacturer to have been wrongly mentioned on the consignment and

3) About the declared value (2288502.77 INR) which is totally different from the invoice value of the consignment (30727 USD).

7. As per the settled law of evidence admissions have to be accepted and the voluntary admissions need no further proof. This particular perusal is sufficient to distinguish the present case from the case of M/s. Natraja Trading Company (Supra). Said admission also supports the presence of intent to evade the requisite Customs Duty.

8. Resultantly, I do not find any infirmity in the order under challenge where the goods of value of Rs.89,829/- have been ordered absolute confiscation, Customs duty has been demanded with  interest and penalty has been imposed. The same is accordingly, upheld. Appeal stands dismissed.

[Order pronounced in the open Court on 28.10.2021]

*****

(Author can be reached at [email protected])

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