2022 (3) TMI 954 - AT - Customs

Valuation of imported goods - Canada Whole Green Peas - restricted goods, in terms of the Mandatory Compliance Requirements/Appraising Instructions, or not - granting of redemption option without ordering for absolute confiscation - penalty - HELD THAT - The findings in the impugned order as regards non-violation of minimum import price as well as port restriction has attained finality, as there being no specific challenge by the Revenue. The very fact that the adjudicating authority himself has ordered confiscation but, however, has also granted an option for redemption of goods on payment of fine has also not questioned by the Revenue. Section 125 ibid. prescribes for providing an option to pay in lieu of confiscation, in case of any goods the importation or exportation of which was prohibited under this Act or under any other law for the time being in force, subject to the conditions laid down thereunder. Such option could be offered to the owner of the goods or, where such owner is not known, to the person from whose possession such goods were seized and hence, the appellant could be treated as other person from whose possession the impugned goods have been seized. The only short-coming here is the quantitative restriction and hence, the redemption fine and penalty should be commensurate with the quantity that exceeded the limit of import. Viewed thus, the redemption fine ordered to be paid is very much on the higher side - the redemption fine could be modified to the extent of ₹ 2.5 lakhs instead of ₹ 7.5 lakhs under Section 125 ibid - penalty imposed under Section 112 is on the higher side and hence, the same is directed to be reduced to ₹ 1 lakh. Appeal allowed in part.

Summary

Issues:
1. Import of goods under specific tariff heading and exemption claim.
2. Compliance with Mandatory Compliance Requirements/Appraising Instructions.
3. Violation of Foreign Trade Policy leading to confiscation of goods.
4. Challenge to fine and penalty imposed by adjudicating authority.
5. Interpretation of transitional arrangements under FTP and Handbook of Procedure.
6. Consideration of redemption option and penalty reduction in appeal.

Issue 1: Import of goods under specific tariff heading and exemption claim:
The appellant, a miller, imported 'Canada Whole Green Peas' from Canada under Tariff Heading 0713 3120, claiming exemption under Notification No. 002/2017. The Revenue raised concerns regarding import restrictions, minimum import price, and annual quota, leading to a query for import authorization from DGFT due to discrepancies in declared value.

Issue 2: Compliance with Mandatory Compliance Requirements/Appraising Instructions:
The adjudicating authority observed that although the Bill of Lading predated the Notification, the Bill of Entry was filed after the issuance of the Notification, highlighting the lack of import authorization as mandated under the FTP. This non-compliance led to the confiscation of goods under Section 111(d) of the Customs Act, 1962.

Issue 3: Violation of Foreign Trade Policy leading to confiscation of goods:
The authority determined that the goods were in transit before the amendment of the Import Policy, making the amended Notification inapplicable. The adjudicating authority ordered confiscation but allowed redemption on payment of a fine and imposed a penalty, leading to the appellant's challenge in the appeal.

Issue 4: Challenge to fine and penalty imposed by adjudicating authority:
The appellant contested the fine and penalty imposed, citing precedents where such penalties were reduced. The Revenue relied on a High Court decision setting aside a similar redemption option, emphasizing the authority's findings on the application of import policies.

Issue 5: Interpretation of transitional arrangements under FTP and Handbook of Procedure:
The adjudicating authority referenced relevant provisions of the FTP, transitional arrangements, and Handbook of Procedure to determine the date of import based on the Bill of Entry. The authority concluded that the minimum import price and port restrictions were not applicable due to the timing of the import.

Issue 6: Consideration of redemption option and penalty reduction in appeal:
The appellate tribunal reviewed the redemption fine and penalty, finding them excessive given the specific violation of quantitative restrictions. The tribunal reduced the redemption fine to ?2.5 lakhs and the penalty under Section 112 to ?1 lakh, allowing the appeal in part and modifying the fines accordingly.