2023 (6) TMI 548 - CESTAT BANGALORE

Absolute confiscation - Import of industrial composite solvent - prohibited goods - to be classified under CTH 38140010 for clearance? - allegation of the Department is that the goods imported when tested by the Revenue in their laboratory and on re-test in the BPCL laboratory, found to be Kerosene, whose import as per policy permitted through canalised agencies - HELD THAT:- It is also an admitted fact that copies of both test reports were not handed over to the appellant nor further testing of sample was allowed by the Department to be drawn for test in a well-equipped reputed Laboratory. Being not satisfied with the said test reports, and the subject assessment order of the adjudicating authority directing absolute confiscation and imposing condition of re-export after payment of fine and penalty, they have approached the Hon’ble High Court of Kerala by filing a writ petition for appropriate relief. While disposing the writ petition, Hon’ble High Court has directed the Revenue to handover the test reports and allow the petitioner to draw samples for re-testing so as to establish that the goods imported in question are not prohibited goods. Both the directions of the Hon’ble High Court were not complied with by the Revenue.

The appellants are engaged in the manufacture of paints for which they import industrial composite solvent, a raw material, use it captively in the manufacture of paints. They have been importing the same goods earlier also, declaring it under the same chapter sub-heading 38140010 of Customs Tariff Act, 1975 on the basis of invoice, chemical analysis report supplied along with goods by overseas supplier; the Customs Department also assessed it accordingly accepting the same and no objection was raised. In relation to the present consignment, except re-testing the samples, the reports though disputed by the Appellant, no further investigation was carried out, nor any statement of the appellant was recorded, whereby it could be inferred that the appellant had knowingly imported Kerosene but mis-declared it as industrial solvent.

If the re-test reports are accepted to be correct, the only breach of condition on the part of the appellant would be that they did not import the goods through canalised agencies. Such goods if imported through canalised agencies, there will be no restriction of its use in the country - once the goods are allowed to be redeemed on payment of appropriate fine, the condition of re-export tagged with it in the facts and circumstances of the present case is unwarranted.

The judgment of the Hon’ble Supreme Court in the case of Raj Grow Impex LLP [2021 (6) TMI 778 - SUPREME COURT] is not applicable to the facts of the present case as in that case, the goods, namely Yellow peas were knowingly imported in excess than the permissible quantity under the Policy and if allowed to be released on payment of fine to be sold in India, then it would have adversely affected the interest of indigenous farmers. In that scenario, giving due weight to the public interest in contrast to the interest of few importers, the Hon’ble Supreme Court upheld the imposition of fine and penalty with the direction of re-export of the goods.

In the present case, the appellants have imported goods viz. Industrial solvents for consumption in their factory for manufacture of paints. Hence, the interest of public would not in any manner be affected if the said goods are allowed to be used by the Appellant for their own use even if found to be a different item than imported, the import of which is allowed only through canalized agencies. There is no allegation that the import was not bona fide and the Appellant knowingly imported kerosene in the guise of Industrial solvent not for use in their factory but for sale. But, simultaneously, it cannot be ignored that that on the basis of the re-test reports the goods are liable for confiscation and ground for imposition of penalty, till further test of the samples resulting into confirmation of the overseas chemical analysis report - the goods are liable for confiscation but not absolute confiscation as held by the adjudicating and upheld in the impugned order.

There are no merit in the Order of the lower authorities directing absolute confiscation and allowing redemption solely to re-export on payment of redemption fine and penalty. Hence, the impugned order is modified to the extent of setting aside the direction of absolute confiscation and condition of re-export for redemption on payment of fine and penalty and hold that the goods are liable for confiscation; in the event the appellant choose to redeem the goods on payment of fine and penalty, he shall be allowed to exercise the said option and after payment fine of Rs.75,000/- and penalty of Rs.30,000/- as determined by the adjudicating authority, the goods be released to the Appellant forthwith - The appeal is disposed of.