Customs Act | 'Prohibition Includes Restriction': CESTAT Chennai Holds S.111(d) Covers Both Complete & Partial Restricted Imports
The Chennai Bench of Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) held that under Section 111(d) of the Customs Act, the term 'prohibition' includes both complete and partial restrictions under the Foreign Trade Policy. Hence, restricted goods imported without fulfilling mandatory conditions are treated as prohibited, which attracts confiscation and...
The Chennai Bench of Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) held that under Section 111(d) of the Customs Act, the term 'prohibition' includes both complete and partial restrictions under the Foreign Trade Policy. Hence, restricted goods imported without fulfilling mandatory conditions are treated as prohibited, which attracts confiscation and a penalty.
Section 111(d) of the Customs Act, 1962, makes goods liable for confiscation if they are imported, or attempted to be imported, contrary to any prohibition imposed by the Act or any other law for the time being in force.
Vasa Seshagiri Rao, Technical Member) noted that once the goods are restricted, either subject to any conditions or otherwise, they become prohibited goods if the condition is not complied with.
In this case, the assessee/appellant, an 100% Export Oriented Unit (EOU), had imported rough granite blocks, but failed to file the necessary Bills of Entry under Section 46 of the Customs Act.
The imported consignment remained uncleared since 10.09.2013. In this backdrop, the custodian of the goods issued a Notice under Section 48 of the Customs Act, calling for clearance of the said goods within a period of 15 days.
Thereafter, in view of the rough granite blocks being a restricted item under the Foreign Trade Policy for 20092014, requiring a specific license or import authorization from the regional licensing authority, a Show Cause Notice was issued to the assessee proposing as to confiscation of the goods under Section 111(d) of the Customs Act, and to impose penalty under Section 112(a) of the Act.
The Joint Commissioner of Customs did not accept the reasoning of the assessee that non-waiver of 100% detention charges by the shipping line was a valid reason allowing the Appellant importer to relinquish/abandon the goods.
Furthermore, the Original Authority noted that since the goods were restricted and the assessee has failed to produce any license under which such import was made, accordingly abandoning/relinquishing the goods cannot be permitted.
Accordingly, the Original Authority ordered for absolute confiscation and penalty of Rs.4,00,000/- under Section 112(a) of the Customs Act, 1962.
The assessee, being aggrieved, preferred an appeal before the Commissioner (Appeals-II), which came to be dismissed.
According to the assessee, only prohibited goods cannot be imported by EOU, and restricted goods are allowed. Therefore, the department was not right in rejecting the request for the abandonment of goods under Section 23(2) of the Act, and the rough granite blocks in question cannot be brought under the scope of prohibited goods.
Regarding the question of whether prohibition would include restriction also, the Tribunal opined that the expression prohibition not only in the policy but under Section 111(d) of the Customs Act, 1962 would also cover any restriction, whether complete or partial.
No evidence had been submitted to prove that they did not ask for the goods from the suppliers, since the abandonment of the goods before clearance from customs is not an automatic facility, and it is subject to proving that otherwise the importation was valid, opined the bench.
In view of the above, the Tribunal partly allowed the appeal and reduced the penalty from Rs. 4,00,000/- to Rs. 1,00,000/- under Section 112 (a) of the Customs Act, 1962.
Case Title: M/s. Jennex Granite Industries v. Commissioner of Customs
Case Number: Customs Appeal No. 41068 of 2015
Counsel for Appellant/ Assessee: Priyadarsini
Counsel for Respondent/ Department: N. Satyanarayana