Case Law Details
Greenlam Industries Ltd. Vs Commissioner Customs Preventive (CESTAT Delhi)
The Delhi Bench of the Customs, Excise and Service Tax Appellate Tribunal examined whether delayed registration under the Paper Import Monitoring System (PIMS) justified confiscation of imported goods and imposition of penalty. The appellant had imported base paper under four Bills of Entry filed in early October 2022, after PIMS became effective from 01.10.2022. Under the relevant DGFT notification, importers were required to obtain a PIMS registration number by applying not earlier than 75 days and not later than five days before the expected arrival of the consignment. In the appellant’s case, the goods arrived on 05.10.2022 and 06.10.2022, while PIMS registration was obtained on 07.10.2022 and 10.10.2022, i.e., after arrival but before clearance of goods.
The adjudicating authority treated the delayed registration as a violation of the import policy, ordered confiscation of the goods under Section 111(d) of the Customs Act, allowed redemption on payment of fine, and imposed penalty. This order was upheld by the Commissioner (Appeals). Before the Tribunal, the appellant argued that the lapse was procedural, as the PIMS certificates were obtained and uploaded before clearance, and the delay occurred due to late receipt of documents from the shipper.
The Tribunal analyzed the language of the notification and noted that the timeline provision used the expression “the importer can apply for registration,” indicating a directory, not mandatory, requirement. It observed that although advance registration was envisaged, non-adherence to the precise timeline did not automatically render the import illegal, particularly when the registration was completed before clearance. The Tribunal agreed with the lower authorities’ own finding that the lapse was procedural and held that such a procedural delay could not justify confiscation or penalty. Applying principles distinguishing procedural from substantive conditions, the Tribunal concluded that the purpose of PIMS stood fulfilled once registration was obtained prior to clearance. Accordingly, the impugned orders were set aside and the appeal was allowed.
FULL TEXT OF THE CESTAT DELHI ORDER
1. M/s Greenlam Industries Ltd., Behror1, has filed Bill of Entry2 No. 2710094/02.10.2022, B/E No.2708916/02.10.2022, B/E No. 2718679/03.10.2022 and B/E No.2718224/03.10.2022 at ICD Kathuwas through their authorized CHA, namely, M/s R.G. International, for import of Base Paper for waxing, coating and impregnation & Uncoated Base Paper classified under CTH 48119099.
2. The Central Government inserted a new policy condition under Chapter 48 of ITS (HS), 2022, Schedule-1 (Import Policy) revising the import of certain goods falling therein from ‘Free’ to ‘Free subject to compulsory registration’ and put in place the Paper Import Monitoring System. The PIMS required importers to submit advance information in an online system for import of the notified items of Chapter 48 of ITS (HS), 2022 and obtain an automatic Registration Number by paying registration fee of Rs.500. The importer could apply for registration not earlier than 75th day and not later than 5th day before the expected date of arrival of import consignment. The automatic Registration Number thus granted was to remain valid for a period of 75 days. Multiple Bills of Entries were allowed in same registration number within the validity period of registration for the permitted quantity. The Importer was required to enter the Registration Number and expiry date of Registration in the Bill of Entry to enable Customs for clearance of consignment. The PIMS was made effective from 01.10.2022 i.e. all Bills of Entry filed on or after 01.10.2022 for the items enlisted in Annexure-I to the Notification are to be governed by PIMS, however the facility of online registration was made available with effect from 15.07.2022.
3. In terms of the said Notification No.11/2015-2020 dated 25.05.2022, the appellant importer was required to register under the PIMS between 75 days to 05 days prior to arrival of the import consignment. The goods arrived at ICD Kathuwas (INCML6) on 05.10.2022 & 06.10.2022 but the importer/appellant registered under PIMS after the arrival of the import consignments, i.e, on 07.10.2022 & 10.10.2022, respectively.
4. The above said B.E was RMS facilitated and the importer did not upload PIMS certificate during filing of Bills of Entry. During out of charge, on scrutiny of the documents uploaded by the importer in e-sanchit of the said BEs, the Out Of Charge Officer raised the following query regarding timeline of registration of PAPER IMPORT MONITORING SYSTEM (PIMS): For Greenlam Industries Ltd.
“IMPORT IS SUBJECT TO COMPULSORY REGISTRATION UNDER PAPER IMPORT MONITORING SYSTEMS (PIMS). REFER DGFT NTFN NO 11/2012-20 DATED 25.05.2022. PLS UPLOAD RELEVANT DOCUMENTS?
5. The appellant importer failed to justify the delay in PIMS registration and the import consignment was found to be non-compliant of PIMS registration timeline. Reply of the above query was submitted by the importer on 10.10.2022 as “Respected Sir, uploaded PIMS Copy against IRN NO 2022101000005744 82022101000009912”. On perusal of the PIMS certificate uploaded by the importer vide IRN No.2022101000005744 &852022101000009912, it was noticed that PIMS Certificate was obtained by the importer on 07.10.2022 & 10.10.2022 although the same should have been obtained between 75 days to 05 days prior to the arrival of the import consignment and was thus contrary to Para-(c) of the above mentioned Notification No. 11/2015-2020 dated 25.05.2022.
6. As the impugned goods were imported without following the timeline of the requisite Notification No. 11/2015-2020 dated 25.05.2022 for PIMS registration, so importer has made violations of section 46 (4) of the Customs Act, 1962, therefore, impugned goods have been imported without valid authorization and are liable for confiscation under Section 111(d) of the Customs Act, 1962, and for this act of omission and commission the importer is liable for penalty under Section 112 (a)(i) of the Customs Act, 1962. The appellant requested for waiver of show cause notice.
7. Accordingly, the Adjudicating Authority passed the Order-in-Original No.45/2022-ADC-Customs dated 21.10.2022 as under:
(i) Ordered for confiscation of goods imported vide Bill of Entry No.2710094/02.10.2022, B/E No. 2708916/02.10.2022, B/E
No.2718679/03.10.2022 and B/E No. 2718224/03.10.2022 under Section 111 (d) of the Customs Act, 1962. However, option was given to the importer to redeem the same on payment of Redemption Fine of Rs.3,00,000/-(Rupees Three Lakh only) under Section 125(1) of the Customs Act,1962.
(ii) Imposed penalty of Rs.50,000/- (Rupees Fifty Thousand only) upon M/s Greenlam Industries Ltd., Behror, Alwar, Rajasthan, under Section 112 (a)(i) of the Customs Act, 1962.
8. Being aggrieved with the impugned order, the appellant has filed the appeal before the Commissioner(Appeals) who was pleased to reject the appeal vide Order-in-Appeal No.10(RLM)CUS/JPR/2024 dated 21.06.2024. Challenging the order of the Commissioner, the appellant has filed the present appeal before this Tribunal.
9. Heard both sides and perused the records of the case.
10. Shri R.G.Chaudhary, representing the appellant has taken us through the order-in-original passed by the Adjudicating Authority observing that the non-submission of PIMS certificate by the importer is mainly a procedural lapse as the importer has submitted the certificate subsequently. These findings have been affirmed by the Appellate Authority by upholding the order-in-original. Shri Anand Narayan, the learned Authorised Representing for the Revenue, reiterated the findings of the authorities below and prayed that the appeal be dismissed.
11. The issue for consideration is whether the appellant had violated the condition prescribed under the Notification No.11/2015 of uploading the PIMS certificate later than the fifth day of arrival of the consignment. The relevant contents of the notification are quoted below:
“c.Paper Import Monitoring System (PIMS)) shall require importers to submit advance information in an online systern for Import of items under the Annexure-A and obtain an automatic Registration Number by paying registration fee of Rs. 500. The Importer can apply for registration not earlier than 75th day and not later than 5th day before the expected date of arrival of import consignment. The automatic Registration Number thus granted shall remain valid for a period of 75 days. Multiple Bill of Entries shall be allowed in same registration number within the validity period of registration for the permitted quantity.”
12. From the perusal of the contents of the notification, I find that the time line for obtaining the registration, not earlier than 75th day and not later than fifth day before the expected date of arrival of import consignment has been couched by using the expression, “the importer can apply for registration”. The term ‘can’ has to be construed as ‘may’, which has been interpreted to imply as directory as against the term ‘shall’ which denotes the mandatory nature of the requirement. Perusal of the notification, although speaks of requiring the importer to submit an advance information in an online system for import of items and obtain an automatic Registration Number however, the later part of the said para while giving the timeline by using the term ‘can’, leaves room for an intendment that non-adherence to the prescribed time shall not disentitle the party and the goods shall not be liable to confiscation. It is in that view of the matter, that the Adjudicating Authority had observed that the submission of the PIMS certificate by the appellant being beyond the cut-off date is only a procedural lapse as the importer had submitted the certificates subsequently. I find that though the appellant had submitted the PIMS Certificate after the filing of bill of entry, however, the same have been filed before the clearance of the goods. In the circumstances, it cannot be said that the goods have been imported in contravention of the notification and Section 46(4) of the Customs Act,1962.
13. The goods arrived at ICD Kathuwas on 5.10.2022, and 6.10.2022 and the PIMS certificate was obtained on 7.10.2022 and 10.10.2022, which is later than 5th day before the expected date of arrival of the imported consignment. The submission of the learned Counsel is that the appellant could not complete the PIMS registration five days prior to shipment arrival in terms of the notification due to late receipt of documents from the shipper. The reason given by the appellant cannot be said to be unjustified so as to hold the appellant liable for violation of the condition of the notification and the goods liable for confiscation. In the case of Siddharth Enterprises Vs. Nodal Officers3, the High Court of Gujarat was considering the issue, where the writ petitioners had prayed for a declaration that the due date contemplated under Rule 117 of the CGST Rules to claim transitional credit is procedural in nature and, therefore, being merely directory and not a mandatory provision, they should be permitted to file the declaration in Form GST TRAN-I and GST TRAN-2 to enable them to claim transitional credit. The Court considered several case laws on the issue. In the case of Commissioner of Central Excise, Madras versus Home Ashok Leyland Ltd,4 the Supreme Court held that Rule 57E being procedural and classificatory would not affect the substantive rights of the manufacturer of the specified final product to claim the Modvat credit for the duty paid on the input subsequent to the date of the receipt of those inputs. Reliance was also placed on the decision of the Supreme Court in Mangalore Chemicals & Fertilisers Ltd versus Deputy Commissioner5, where it has been held, the mere fact that the condition is statutory does not matter one way or the other as there are conditions and conditions. Some may be substantive, mandatory and based on consideration of policy and some others may merely belong to the area of procedure. It would be erroneous to attach equal importance to the non-observance of all the conditions, irrespective of the purposes they were intended to serve. The High Court, therefore, concluded that the due date contemplated under Rule 117 of the CGST Rules for the purposes of claiming transitional credit is procedural in nature and thus should not be construed as a mandatory provision.
14. Applying the above principle in the facts of the present case, I am inclined to hold that the minuscule delay in uploading the PIMS Certificate will not substantially affect the compliance of the condition. Especially so long as the same stands uploaded before the clearance of the goods whereby the purpose of contemplating such an import condition is fulfilled.
15. The authorities below having held that submission of the PIMS certificate by the importer being a procedural lapse, there was no scope for ordering for confiscation of the goods on account of violation of the import policy condition as notified by the notification. The impugned order is, therefore set aside and the appeal filed by the appellant is, hereby allowed.
[Order pronounced on 4th November 2025]
Notes:-
1 The appellant
2 B/E
3 2019(29) GSTL 664 (Guj)
4 2007 (210) ELT 178
5 1991 (55) ELT 437 (SC)
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