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Judgment
The appellant is in appeal against the Order-in-Appeal dated 15.03.2018 whereby two separate appeals of the appellant against two Orders-in-
Original dated 19.02.2013 and 25.02.2013 have been dismissed. At paragraph 5 of the impugned order, it is recorded by the learned Commissioner
(Appeals) that the basic issue of the appeals before him was whether confiscation of goods and imposition of fine and penalty by the Lower Authority
in absence of valid PSI certificate is maintainable or otherwise.
It is contended on behalf of the appellant that the imported goods were declared as Tin Waste and Scrap (Light Melting Scrap) in accordance to the
import documents provided by the foreign supplier. Only during 100% examination after import, a Chartered Engineer was appointed who opined on
visual examination that the goods are Tin Plated Steel Scrap as steel predominates by weight. The Learned Advocate appearing on behalf of the
appellant refers to the Chartered Engineer Certificate dated 16.1.2013 as annexed to the Appeal Memorandum. It is contended that prior to such
inspection, it was not possible for the appellant to verify the actual nature of goods being supplied by the foreign supplier. Reference has further been
made to a letter dated 28.1.2013 from the Overseas Supplier to the importer/appellant to the effect that there was mistake on their part in supplying
the goods and that too without any Pre Shipment Inspection Certificate (in short ‘PSI Certificate’). The Overseas Supplier provided seven Pre
Shipment Inspection Certificates along with such letter which is annexed to the Appeal Petition.
The learned Advocate for the appellant further submits that there was neither any knowledge nor reason to believe on the part of the appellant
herein w.r.t. the alleged mis-declaration of the goods so imported. In reply to a specific query from this Bench, the learned Advocate submitted that
the goods imported during January, 2013 are of no material value as on date and as such, the appellant is no more interested in getting release of the
goods against the redemption fine as imposed by the learned Adjudicating Authority.
Per contra, the learned Authorized Representative for the department reiterated the finding of the Ld. Appellate Commissioner below and submitted
that since at the time of importation there was no PSI Certificate and since admittedly the goods were other than as declared in the Bill of Entry, the
order of confiscation has rightly been passed.
Heard both sides through video conferencing and perused the appeal records.
I have gone through the records and documents of the present case and considered the rival submission made before me. It is apparent that the
goods declared as Tin Waste and Scrap (Light Melting Scrap) were on verification by the qualified Chartered Engineer certified as Tin Plated Steel
Scrap since steel predominates by weight. The appellant had not asked for any re-test or alike at the relevant point of time. On the contrary under
letter dated 24.01.2013 (page no. 23 of the appeal memorandum) the appellant/ importer had waived his right of show cause notice and/or hearing at
the stage of adjudication and hence, the contention on behalf of the appellant before me that the certificate was issued by the Chartered Engineer on
visual examination, cannot come to rescue of the appellant with regard to the proper description of the goods.
I find that it is also not in dispute that for importation of steel scrap, Pre Shipment Inspection Certificate was mandatory in terms of the Foreign
Trade Policy, 2009-14. The subsequent communication from the Overseas Supplier together with PSI Certificates cannot come to the aid of the
appellant w.r.t. the confiscation of the goods under Section 111(d) of the Customs Act, 1962 since there was restriction under Foreign Trade Policy,
2009-14 in importation of steel scrap. The importation was permitted only against Pre Shipment Inspection Certificates and it is settled position of law
that conditions for import, if not fulfilled, the importation is not permitted. Section 2(33) of the Customs Act, 1962 defines ‘Prohibited Goods’
which includes the goods the import or export of which is subject to any prohibition under the Customs Act, 1962 or any other law for the time being in
force but does not include any such goods in respect of which the conditions subject to which goods are permitted to be imported or exported have
been complied with. In other words, when goods imported or exported without complying with the conditions subject to which such goods are
permitted for export and import, the goods shall be rendered as ‘Prohibited Goods’.
In the present case, at the time of importation of the goods, admittedly, Pre Shipment Inspection Certificates were not available and the goods were
wrongly described as scrap of tin instead of scrap of steel. The appellant could not even produce such certificates prior to adjudication and as such, in
my considered opinion, the order of confiscation of the imported goods are proper and correct under Section 111(d) of the Customs Act, 1962 and thus
upheld.
With respect to the imposition of penalty upon the present appellant being importer under Section 112 of the Customs Act, 1962, I find that the
Adjudication Order dated 25.02.2013, issued on 27.02.2013, does not provide any specific finding on the same. At paragraph 8 of the said Adjudication
Order, the penalty has been imposed upon the appellant mechanically even without mentioning any particular clause of Section 112 of the Customs
Act, 1962. Section 112 of the Customs Act, 1962 provides for imposition of penalty under two separate clauses being Clause (a) & Clause (b). Clause
(a) of the said Section provides that any person who does or omits to do any act which act or omission would render the goods liable for confiscation
under Section 111 or who abets such doing or omission, shall be liable for penalty. Whereas, Clause (b) of Section 112 ibid provides that a person who
knowingly or having reason to believe about confiscable nature of goods under Section 111 ibid has dealt with the same in any manner whatsoever,
shall be liable for penalty. In the present case, the Adjudicating Authority has not referred to any of the ingredient of any such clause of Section 112 of
the Customs Act, 1962 and had mechanically imposed the penalty upon the present appellant. The Appellate Commissioner below has also upheld
such imposition of penalty without considering such position of law. It is also settled position of law that without specific finding, no penal action can be
invoked. It is evident on record that the appellant had declared the goods in the Bill of Entry in terms of the documents of import provided by the
foreign supplier. The Revenue has also not alleged any connivance on the part of the appellant/importer in the alleged misdeclaration. No doubt has
been expressed by any of the Authorities below with respect to subsequent correspondence from the Overseas Supplier as on record. From such
correspondence it is evident that the present appellant/importer had hardly any role to play in the misdeclaration. There is nothing on record to suggest
any prior knowledge or reason to believe about the confiscable nature of the imported goods under Section 111 of the Customs Act, 1962. Moreover,
the goods imported in January, 2013 by the appellant have already lost its market value of Rs.21,73,643.25 (as declared) and the appellant /importer
has already suffered substantial loss and injury for no fault on his part. The law requires existence of mens rea and maintenance of balance of
convenience prior to imposition of penalty upon any person. In the present case, neither there is any existence of ingredient of section 112 of the
Customs Act, 1962 nor any mens rea and hence, the imposition of penalty upon the appellant is bad in law and liable to be quashed.
In view of the above, I uphold the order of confiscation of the imported goods under section 111(d) of the Customs Act, 1962 but set aside the
penalty imposed upon the appellant under Section 112 of the Customs Act, 1962.
The appeals, filed by the appellant, are thus partly allowed.
(Order pronounced in the open court on 23 Dec 2020.)