The Chennai Customs Excise and Service Tax Appellate Tribunal (CESTAT) clarified that an abandonment of shipment cannot be claimed as of right unless the underlying import is lawful. The Court, however, reduced the penalty under Section 112(a) of the Customs Act, observing that although import of restricted goods without the authorisation justifies penal action, absence of any mala fide intent attributable to the importer calls for lesser punishment.
Vasa Seshagiri Rao (Technical Member) observed that the appellant’s stand regarding the lack of consent for shipment is contradicted by its own explanation that the import became uneconomical due to increased charges.
The Single Member holds that restricted goods under the Foreign Trade Policy are deemed prohibited for purposes of customs law, relying on Supreme Court precedent and statutory deeming provisions, and that abandonment cannot be claimed as of right unless the underlying import is lawful.
However, highlighting that although the import of restricted goods without authorisation justified penal action, no malicious intent is attributable to the appellant, and therefore, the penalty of about Rs 4 lakh is disproportionate. The Bench accordingly reduced the penalty to about Rs 1 lakh under Section 112(a) of the Customs Act and partly allowed the appeal.
Briefly, appellant, a 100% EOU, imported rough granite blocks but failed to file Bills of Entry u/s 46 of the Customs Act, resulting in the consignment remaining uncleared for an extended period. The custodian issued notices u/s 48 requiring clearance, but the appellant did not respond. Since rough granite blocks were restricted items under the applicable Foreign Trade Policy requiring specific import authorisation, a show cause notice proposed confiscation under Section 111(d) and penalty under Section 112(a) of the Customs Act.
The appellant claimed that the shipment was made without consent and that the escalating storage and freight charges made the import economically unviable, leading to a decision to abandon the goods. The Original Authority rejected this explanation, holding that restricted goods could not be abandoned without establishing a valid import and without complying with EOU scheme requirements such as bond execution and procurement certificates. Later, the authority ordered absolute confiscation and imposed a penalty of about Rs 4 lakh, which was upheld by the Commissioner (Appeals).
Appearances:
Advocate Priyadarsini, for the Appellant/ Taxpayer
AR N Satyanarayana, for the Respondent/ Revenue
