2025 (7) TMI 10 - AT - Customs

Absolute confiscation of imported goods - Light Melting Steel Scrap - Pre-Shipment Inspection Certificate (PSIC) in terms of para 2.51 of the Handbook of Procedure prescribed under Foreign Trade Policy 2023 has not been furnished in compliance to Board Circular No. 48/2016 read with DGFT Trade Notice No. 19/2017 - opening a container without a Pre-Shipment Inspection Certificate - HELD THAT - Since the articles are kept with Customs Authorities possibilities of any explosion that would cause more hazard affecting officials and staff of Customs cannot be ruled out. Examination of the goods imported with adequate precaution would not only provide safety in the absence of which it would otherwise endanger life but it would also help the proper officer to take a decision on the fate of imported goods if fit for home consumption or required to be re-exported. The order passed by the Commissioner of Customs (Appeals) JNCH Nhava Sheva Mumbai-II is hereby set aside - appeal allowed.

Summary

1. ISSUES PRESENTED and CONSIDERED

- Whether the order for absolute confiscation of "Light Melting Steel Scrap" imported without furnishing the Pre-Shipment Inspection Certificate (PSIC) under Section 111(d) of the Customs Act, 1962, along with imposition of redemption fine and penalties under Sections 125 and 112(a) respectively, was justified.

- Whether the absence of PSIC, as mandated under para 2.51 of the Handbook of Procedure prescribed under Foreign Trade Policy, 2023, and Board Circular No. 48/2016 read with DGFT Trade Notice No. 19/2017, warranted confiscation and penalties without allowing physical examination of the goods.

- Whether the goods could be subjected to physical inspection by experts despite the absence of PSIC and whether such inspection would be hazardous or permissible.

- The applicability and relevance of judicial precedents where goods imported without PSIC were subsequently inspected and cleared or dealt with accordingly.

2. ISSUE-WISE DETAILED ANALYSIS

Issue 1: Justification of confiscation and penalties for import without PSIC

Relevant legal framework and precedents: Section 111(d) of the Customs Act, 1962 authorizes confiscation of goods if the importer fails to comply with any provision of the Act or rules made thereunder. Section 125 empowers the Customs authorities to impose a redemption fine for release of confiscated goods for re-export, and Section 112(a) provides for penalties for contravention of provisions of the Customs Act. The Foreign Trade Policy, 2023, para 2.51 requires furnishing of PSIC for certain goods, supported by Board Circular No. 48/2016 and DGFT Trade Notice No. 19/2017.

Court's interpretation and reasoning: The Adjudicating Authority and Commissioner (Appeals) held that non-furnishing of PSIC mandated confiscation and penalties. However, the Tribunal noted that the appellant had requested physical examination of the goods by experts to verify their fitness for home consumption, which was not acted upon by the authorities.

Key evidence and findings: The appellant's submissions before both authorities recorded that the goods could be examined in totality (100%) by experts. The authorities, however, proceeded with confiscation and penalties without ordering such inspection.

Application of law to facts: The Tribunal observed that confiscation and penalties without allowing physical examination of the goods, especially when the appellant had offered to have the goods inspected, was improper. The Tribunal relied on prior decisions where goods imported without PSIC were allowed inspection and appropriate decisions were taken subsequently.

Treatment of competing arguments: The Department contended that the absence of PSIC justified confiscation and penalties. The appellant relied on precedents and procedural fairness to argue for inspection before any punitive action.

Conclusion: The Tribunal found the confiscation and penalties imposed without physical examination to be unjustified and set aside the impugned order.

Issue 2: Permissibility and safety of physical inspection of goods without PSIC

Relevant legal framework and precedents: The requirement of PSIC includes declarations that the consignment does not contain hazardous items such as arms, ammunition, explosives, or radioactive materials. The Department relied on this to argue that opening containers without PSIC could be hazardous.

Court's interpretation and reasoning: While the Tribunal acknowledged the Department's concern about potential hazards in opening shielded containers without PSIC, it balanced this against the risk of endangering life and the need for proper examination to determine the fate of the goods.

Key evidence and findings: The Tribunal noted that the goods were under Customs custody, which allowed for examination with adequate precautions to ensure safety of officials and staff.

Application of law to facts: The Tribunal concluded that examination of goods by experts with adequate safety measures was feasible and necessary to avoid wrongful confiscation and to ensure proper decision-making.

Treatment of competing arguments: The Department's safety concerns were accepted as valid but not sufficient to deny inspection altogether. The Tribunal emphasized the importance of inspection to safeguard interests of both the importer and the Department.

Conclusion: The Tribunal directed that the goods be inspected by an expert agency at the importer's cost within three months, ensuring safety and compliance.

3. SIGNIFICANT HOLDINGS

- "Examination of the goods imported with adequate precaution would not only provide safety, in the absence of which it would otherwise endanger life, but it would also help the proper officer to take a decision on the fate of imported goods if fit for home consumption or required to be re-exported."

- The Tribunal held that confiscation and imposition of redemption fine and penalty without allowing physical examination of the goods when requested by the importer is improper and liable to be set aside.

- The Tribunal established the principle that absence of PSIC does not ipso facto justify confiscation without affording an opportunity for inspection of the goods, especially where prior judicial precedents have upheld inspection in such circumstances.

- Final determination: The impugned order of confiscation, redemption fine, and penalties was set aside. The Department was directed to arrange inspection of the consignment by an expert agency at the importer's cost and decide the matter within three months, thereby ensuring procedural fairness and adherence to legal safeguards.