TMI Blog2007 (10) TMI 22X X X X Extracts X X X X X X X X Extracts X X X X ..... essing officer in the respective cases and directed the Customs Authorities to allow reprocessing of the confiscated goods and on reprocessing if the said goods meet the standards prescribed under the Prevention of Food Adulteration Act, 1954 ('1954 Act' for short) to allow clearance for home consumption. 3. In all the Writ Petitions, the importers have sought implementation of the orders passed by the CESTAT in their respective cases, except in the case of M/s. Jhunjhunwalla Vanaspati Ltd. (Appellate Side Writ Petition No. 3536 of 2007) wherein the Writ Petition is directly filed in the High Court seeking clearance of the goods subject to reprocessing. 4. The common question of law raised in all these cases is : - "Whether on the facts and in the circumstances of the case, the Tribunal was justified in setting aside the order of adjudication and directing the Customs authorities to allow reprocessing of the confiscated goods and thereafter allow clearance for home consumption, if the reprocessed goods are found to conform to the standard prescribed under the 1954 Act and the Rules made thereunder? " 5. All the appeals are admitted on the above question of law and by consen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .. (l) if the quality or purity of the article falls below the prescribed standard or its constituents are present in quantities not within the prescribed limits of variability, which renders it injurious to health; (m) if the quality or purity of the article falls below the prescribed standard or its constituents are present in quantities not within the prescribed limits of variability but which does not render it injuries to health : Provided that, where the quality or purity of the article being primary food, has fallen below the prescribed standards or its constituents are present in quantities not within the prescribed limits of variability; in either case, solely due to natural causes and beyond the control of human agency, then, such article shall not be deemed to be adulterated within the meaning of this sub-clause. 5. Prohibition of import of certain articles of food - No person shall import into India - (i) any adulterated food; (ii) any misbranded food; (iii) any article of food for the import of which a licence is prescribed except in accordance with the conditions of the licence; and (iv) any article of food in contravention of any other provis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... udication order dated 29-6-2006, the Commissioner of Customs confiscated the above goods under Section 111(d) of the Customs Act with an option to redeem the same on payment of nominal fine of Rs. 1,00,000/- for the purpose of re-export and on payment of nominal fine of Rs. 25,000/- under Section 112(a) of the Customs Act. 13. In the meantime, pursuant to an order passed by the Delhi High Court, the aforesaid goods imported by the Company were tested once again by the Central Food Laboratory, Kolkata and by its certificate of analysis dated 13-6-2006 the CFL, Kolkata reported that the goods failed in the melting point test and hence do not conform to the standards of Vanaspati prescribed under the 1955 Rules. 14. Challenging the OIO dated 29-6-2006 the Company filed an appeal before the CESTAT and by the impugned order dated 14-2-2007 the Tribunal allowed the appeal. By the said order, the Tribunal remanded the matter back to the adjudicating authority with a direction that the goods be allowed to be reprocessed and if found fit for human consumption on reprocessing, the same be allowed clearance for home consumption. Challenging the above order, the present appeal is filed by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the case of Union of India v. Paras Laminates reported in 1990 (49) E.L.T. 322 (S.C.) and Northern Plastics Limited v. Hindustan Photo Films Mfg. Co. Ltd. reported in 1997 (91) E.L.T. 502 (S.C.), Mr. Jetly submitted that the CESTAT being a creature of the statute and deriving its jurisdiction and powers from the statute could not have deviated from the mandate of the statute and order reprocessing of the confiscated goods and allow clearance if found to be conforming to the standards after reprocessing. 19. Mr. Jetly further submitted that it is a matter of record that the imported goods do not conform to the standards prescribed under the 1954 Act and the Rules made thereunder. Therefore, the said goods being prohibited goods, the assessing officer was justified in confiscating and ordering re-export of the said goods on imposition of fine and penalty. In support of the above submission he relied upon the decisions of the Apex Court in the case of Collector of Customs v. Elephanta Oil Industries Ltd. reported in 2003 (152) E.L.T. 257 and Om Prakash Bhatia v. Commissioner of Customs reported in 2003 (155) E.L.T. 423. 20. Mr. Jetly further submitted that the powers conferre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 06 (Teej Impex Pvt. Ltd. v. Commissioner of Customs) wherein similar goods have been allowed to be reprocessed and allowed clearance if after reprocessing found to be in conformity with the 1954 Act and the Rules made thereunder. 23. Mr. Shreedharan referred to Section 6 and Section 11 of the 1954 Act and submitted that since the customs officers are empowered to exercise powers under the 1954 Act, the Tribunal was justified in allowing clearance of the confiscated goods subject to reprocessing. 24. Mr. Shreedharan further submitted that Section 143 of the Customs Act, 1962 has been enacted to take care of the situations as in the instant case. He submitted that the petitioners had placed an order for import of goods from Sri Lanka which conform to the standards prescribed in India. The foreign supplier has certified that the goods in question conform to the requisite standards, however, the authorities in India have held to the contrary. Having imported the goods bona fide and having paid for the said goods, the petitioners would suffer immensely if the goods are not allowed to be cleared on payment of duty even if the goods are found to be in conformity with the prescribed st ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... escribed standards. In these circumstances, as the imported food-articles do not conform to the prescribed standards, the assessing officer confiscated the said goods under Section 111(d) of the Customs Act and permitted redemption for re-export subject to payment of minimum fine and penalty. However, the Tribunal reversed the adjudication order and directed clearance of goods for reprocessing and on reprocessing if found to be conforming to the prescribed standards, then directed clearance of the reprocessed goods for home consumption. The revenue has challenged the orders passed by the Tribunal. 28. According to the importers the decision of the Tribunal is in consonance with Section 143 of the Customs Act. We find it difficult to accept this argument because, firstly, in the present case, the Tribunal has not directed clearance of the goods under bond as contemplated under Section 143 of the Customs Act and secondly, Section 143 applies to cases where the importer or exporter who is ordinarily liable to comply with certain requirements of law before import or export is unable to comply with those requirements of law due to circumstances beyond his control. 29. Section 143 of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot conforming to the standards prescribed in India, then it will not be a case covered under Section 143 of the Customs Act, because firstly, in such a case the dispute is regarding the quality of the imported goods and the dispute is not relating to the legal requirements to be fulfilled before importing the said goods. Secondly, shipment of goods to India that would conform to the standards prescribed in India is a requirement to be complied with by the foreign supplier and not the importer and in such a case, the importer cannot contend that it was his obligation to ship quality goods to India and that due to circumstances beyond his control substandard goods have been shipped to India. In other words, where the obligation to ship goods which conforms to the standards prescribed in India is on the foreign supplier, the importer cannot contend that due to circumstances beyond his control the goods have been shipped so as to invoke the provisions of Section 143 of the Customs Act. 31. Apart from the above, clearance of the goods for import or export on execution of bond under Section 143 of the Customs Act means actual clearance of goods from the custody of the customs officers ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... allenged before us. 34. It may be noted that before the adjudicating authority, the importers had sought permission to re-export the goods without fine and penalty but the same was declined by the adjudicating authority. Before the Tribunal as also in these appeals, the importers, instead of re-export, have opted for clearance of the goods for home consumption subject to reprocessing, inter alia on the ground that the goods in question have been imported long back and at this belated stage if the goods are directed to be re-exported serious prejudice will be caused to them. The Tribunal has accepted the contention of the importers and allowed clearance of the goods for home consumption subject to reprocessing and subject to the reprocessed goods conforming to the prescribed standards. 35. In our opinion, the approach of the Tribunal is not entirely correct, because where the imported goods do not conform to the standards prescribed in India, they become prohibited goods and in such a case, the goods are liable to be confiscated under Section 111(d) of the Customs Act. Section 125 of the Customs Act, however, empowers the customs officers to grant option to the importers to rede ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... irect reprocessing of the prohibited goods. As stated earlier in the absence of any express bar under the Customs Act or the 1954 Act, the Tribunal in an appropriate case is entitled to allow redemption of the confiscated goods subject to reprocessing. In the present case, since the imported goods were found to be sub-standard, the Tribunal ought to have upheld the confiscation and allowed redemption of the confiscated goods for reprocessing subject to payment of fine and penalty and subject to the reprocessed goods conforming to the prescribed standards. As held by the Apex Court in the case of Elephanta Oil Industries Ltd. (supra) for redemption of the confiscated goods in addition to the fine under Section 125, penalty under Section 112 of the Customs Act is imposable. The argument of the importers that the imports have been effected under the Indo Sri Lankan treaty and that the foreign supplier has certified the goods to be of standard quality would not absolve them of their obligation to pay fine and penalty for redemption of the confiscated goods, because, admittedly, the said goods do not conform to the standards prescribed in India and importation of such sub-standard goo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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