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M/s.Synergies Castings Ltd. v/s Commissioner of Customs, Chennai

    Appeal No.C/279 of 2008

    Decided On, 27 January 2009

    At, Customs Excise Service Tax Appellate Tribunal South Zonal Bench At Chennai

    By, THE HONOURABLE MR. P. KARTHIKEYAN
    By, MEMBER (TECHNICAL)

    Ms.Anjali Agarwal, Advocate. Shri M.K.A.K. Mohiddin, JDR



Judgment Text

M/s.Synergies Castings Ltd. (SCL, for short) imported a consignment of Nickel Chloride Crystals, Boric Acid and Copper Sulphate valued at Rs.5,98,936/- and filed Bill of Entry No.267726 dt. 2.8.06 for its clearance. M/s.SCL are an EOU. SCL had imported the consignment and submitted a procurement certificate No.89/06 dt. 11.7.06 issued by the jurisdictional Range Officer for clearance of the consignment in terms of Exemption Notification No.52/03-Cus. dt. 31.3.03. The goods under import being insecticides, the importer was asked to produce an import permit or registration certificate issued by the Central Insecticide Board & Registration Committee (CIB & RC). SCL replied that they were engaged in the manufacture and export of aluminium alloy wheels and Boric Acid was essential for manufacture of their final goods. They had recommendation from the Development Commissioner, Visakhapatnam Special Export Zone and their application for permit for import of Boric Acid was pending with CIB & RC, New Delhi. Adjudicating a show-cause notice issued to SCL, the Additional Commissioner of Customs, found that import of Boric Acid was prohibited in the EXIM Policy 2002-09; para 6.2 (b) of the Foreign Trade Policy allowed an EOU to import all types of goods except those prohibited under ITC HS Policy and any permission required under other law for import of any goods equally applied to EOUs. As per Section 9(1) of the Insecticides Act, 1968, any person desiring to import any insecticide should apply for registration by the Registration Committee of Central Insecticides Board for import of any insecticide. The CBEC had, vide Circular No.528/8/2004-Cus(TU) dt. 6.10.2006, clarified that import of insecticides covered under the Schedule to the Insecticides Act, 1968 required a certificate of registration or permit issued by CIB & RC. Any import of insecticides in contravention of provisions of Insecticides Act shall liable for confiscation under Section 111 (d) of the Customs Act, 1962 (the Act). In the absence of a certificate of registration or permit from the CIB & RC, import of Boric Acid by SCL was found to be in contravention of the Insecticides Act . As regards the other items Nickel chloride and Copper Sulphate, the importer had not applied for either registration certificate or import permit. Accordingly, the original authority confiscated the consignment under Section111 (d) of the Act and imposed a penalty of Rs.15,000/- on SCL under Section 112 (a) of the Act. The impugned order affirmed the order of the original authority finding that the same had been in line with the instructions contained in CBEC s Circular No.61/04 dt. 28.10.05 and another circular dt. 6.10.06.


2. In the appeal before the Tribunal, SCL submitted that it catered to the requirement of automobile wheels of manufacturers such as M/s.Ford Chennai, Toyota Kirlosokar, Bangalore, General Motors, Halol, Mahendra & Mahendra, Tata Motors etc. They were authorized by the Letter of Intent issued by the competent authority to manufacture automobile wheels in the Visakhapatnam Special Economic Zone and to export them. The three items under import were required in the Chrome Plating process for completing the manufacture of automobile wheels. The subject import was made on the strength of a certificate of procurement dt. 11.7.06 issued by the jurisdictional Range Superintendent. The impugned order is challenged on the ground that the items involved were freely importable and they could not have been confiscated. The goods under import were to be transported in Bond and used in the EOU. The import permit or registration certificate was required only when the goods were imported for use as insecticides. Therefore, confiscation and penalty were not justified.


3. During hearing, ld. counsel representing the appellants submitted that as per Section 38 of the Insecticides Act 1968, nothing contained in that act applied to any substance specified or included in the Schedule or any preparation containing any one or more such substances, if such substance or preparation is intended for purposes other than preventing, destroying, repelling or mitigating any insects, rodents, fungi, weeds and other forms of plant or animal life not useful to human beings. Boric Acid, Nickel Chloride and Copper Sulphate imported were all for use in the EOU in the manufacture of automobile wheels and not for use as insecticide. Therefore, in terms of Section 38 (b) of the Insecticides Act, no certificate of registration or permit was required to import the impugned goods.


4. The ld. JDR submitted that the importer being an EOU was not exempt from fulfilling the requirements in relation to import of any goods prescribed under any other law. Import of insecticides was subject to the provisions of Section 9 of the Insecticides Act and certificate of registration or permit issued by the CIB & RC was required for the import of Boric Acid, Nickel Chloride and Copper Sulphate. In the absence of the prescribed registration certificate/import permit, the impugned order confiscating the consignment of insecticides and imposing penalty on the appellants was passed in accordance with law.


5. I have carefully considered the facts of the case and the submissions by both sides. Import of goods into India is regulated by the EXIM Policy in force at the time of import. As per the clarification issued by the CBEC in F.No.528/9/2004-Cus(TU) dt. 6.10.2006, import of insecticides is restricted. Import of Boric Acid requires a certificate of registration / import permit from the CIB & RC. In the absence of certificate of registration / import permit from CIB & RC, import of Boric Acid would attract provisions of Section 111 (d) of the Act. I find from Notification No.2(RE-2006)/2004-2009 dt. 7.4.06 submitted by the ld. JDR, that import of Boric Acid for non-insecticidal purposes would be subject to production of an import permit issued by the Central Insecticide Board & Registration Committee under the Ministry of Agriculture. The import of the subject consignment of Boric Acid is not supported by an import permit issued by CIB &RC. Therefore, Boric Acid imported by SCL was confiscated under Section 111 (d) of the Act as per law. As regards the Copper Sulphate and Nickel Chloride under import, ld. JDR had submitted that there was no such requirement to obtain registration certificate or import permit for their import as per EXIM Policy. Section 38 (1) (b) of Insecticides Act, 1968 reads as follows :


?any substance specified or included in the Schedule or any preparation containing any one or more such substances, if such substance or preparation is intended for purposes other than preventing,

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destroying, repelling or mitigating any insects, rodents, fungi, weeds and other forms of plant or animal life not useful to human beings?. I find that as per this sub-section, import of insecticides for non-insecticidal use is not subject to the restrictions contained in that Act. In the circumstances, the confiscation of Boric Acid is sustained. Confiscation of Nickel Chloride and Copper Sulphate as well as the penalty imposed are set aside. Appropriate penalty shall be decided afresh considering the fact that only Boric Acid is liable for confiscation under Section 111 (d) of the Act. Needless to say that the importer shall be allowed adequate opportunity to present its case. The appeal is allowed by way of remand.
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