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Rajhans Fertilizers Ltd Appellant v/s C.C.E. & S.T., Indore

    Appeal No. C/51031 of 2018-SMC in-Appeal No. IND-EXCUS-000-APP-499 of 2017 & Final Order No. 52559 of 2018

    Decided On, 20 July 2018

    At, Customs Excise Service Tax Appellate Tribunal Principal Bench New Delhi


    For the Appellant: R.K. Tomar, Advocate. For the Respondent: H.C. Saini, DR.

Judgment Text

1. The present appeal is against the Order-in-Appeal No. 449 dated 29/12/2017.

2. The brief facts of the case are that the appellant imported 4MT of the insecticide, Chlorpropham- technical vide Bill of Entry No. 4202533 dated 27/12/2013 through ICD Pithampur. The goods were duly cleared by customs on payment of duty but subsequently on 16/01/2014 the Department officers searched the factory of the appellant on the basis of communication from the Central Insecticide Board dated 03/04/2014 alleging that the appellant had imported insecticides in contravention of the provision of the Insecticides Act, 1968 read with Insecticides Rules, 1971. The goods imported and found in the factory of the appellant were seized and proceedings were initiated against the appellant by issue of show cause notice dated 01/07/2015 for irregular import of insecticides. The proceedings were finalized by the Original Authority by its order dated 17/02/2017 ordering confiscation of the seized insecticides and imposition of penalty. When the issue was challenged before the Commissioner (Appeals) the findings of the lower Authority were upheld. Aggrieved by the impugned order present appeal has been filed.

3. With the above background we heard Shri R.K. Tomar, Ld. Counsel for the appellant as well as Shri H.C. Saini, Ld. DR for the Revenue.

4. The case of the appellant argued by the Ld. Counsel is summarized below:-

i. The Ld. Advocate submitted that the appellant had imported the insecticides, ‘Chlorpropham’, not for use as an insecticide in India, but for the use in further manufacture for their products for export. It is his submission that the requirement of registration under the Insecticide Act and Rules is mandatory only in those cases where the insecticides are imported for use in India. Since the appellant has imported the same not for use but for further manufacture, it is his submission that the insecticides have not been imported in contravention of the Insecticides Act and Rules.

ii. To support his argument he relied on the decision of the Tribunal in the case of Veritas Exports V/s Commissioner, Nhava Sheva 2017 (1) TMI 342 (CESTAT, Mumbai) in which the Tribunal has taken the view that the import of insecticide for indigenous manufacture is exempted from the requirements of registration under the Insecticides Act, 1968. This view has been taken by the Registration Committee and referred to by the Tribunal.

iii. He argued that the Department was not right in the conclusion that the insecticides were prohibited goods. He referred to the para 9(b) of the show cause notice and argued that the goods have been considered as restricted goods and hence the lower Authorities order for absolute confiscation of the goods is not warranted. He requested that redemption of the goods may be permitted if ordered for the confiscation. He also submitted that the penalty imposed is exorbitant considering the fact that the value of the imported goods was only of the order of Rs. 19.7 Lakhs.

5. The arguments of the Ld. DR are summarized below:-

i. He submitted that in terms of Section (3) of the Insecticides Act 1968 read with Rule 45 of the Insecticides Rules 1971, Insecticides are allowed for import into India only after registration of the importer and that to only from approved sources through a specified port. At the time of the import of the insecticides in question, these goods were allowed for import only from a specified source in UK and the import was allowed only through Nhava sheva Port. The appellant has imported goods from a different source in China and through ICD Pithampur. It is his argument that the goods are not allowed for import and are to be considered as ‘prohibited’ goods for contravention of conditions insecticides.

ii. He also submitted that the appellant had obtained customs clearance on the basis of false Declaration that the goods are not prohibited goods. He pointed out that the registration which was earlier given in favour of the appellant was valid only till 2008 and not valid at the time of import in 2010. As such he supported the impugned order.

6. Heard both sides and perused the record.

7. The dispute in the present case is regarding the import of certain pesticides by the appellant vide Bill of Entry No. 3013736 dated 24/06/2013. The goods were cleared by customs after payment of duty but subsequently investigation was undertaken against the appellant on the allegation of import of prohibited goods. The issue to be decided is whether the goods imported vide the above Bill of Entry are liable for confiscation under Section 111(o) of the Customs Act, 1962.

8. The imported pesticides are allowed for clearance subjected to restrictions imposed by the Insecticides Act 1968 as well as the relevant Rules. For the import of the pesticide- Chlorpropham, as per Section 9 (3) of the Insecticide Act 1968 read with the Rules, the condition specified is that the item is allowed for import only from the specified source named in the United Kingdom and if the import is made through designated port such as JNPT Navi Mumbai. It is note worthy that ICTD Pithampur, through which the appellant had imported the item is not one of the ports specified for such import.

9. The importer is also required to register himself with the Designated Authorities under the Insecticides Act ibid.

10. As per the facts on record, I note that the appellant’s registration certificate dated 30/06/2008 was not valid at the time of import. Further the goods have been imported from China as against the designated source in UK. The import has also been done through a port which is not notified for permissible imports. In view of the above facts, it is established that the import of pesticides made by the appellant is in contravention of the conditions specified under the Insecticides Act Rules for import of such goods. Consequently, the imported goods are liable for confiscation in terms of Section 111 (o) of the Customs Act, 1962.

11. Considering the nature of the goods, we are of the view that the goods should not be allowed to be redeemed. But the lower authority may consider request if any made, for re-export of the goods on payment of redemption fine of Rs. 5 Lakhs.

12. On behalf of the appellant it has been strongly contended that the imported goods should not be considered as prohibited goods. It has been argued that import of pesticides is restricted only when the import is made for use in India and that such restrictions are not applicable for import of the pesticides for use in the manufacture and export of other goods. In this connection reliance has also been placed in the Tribunal’s decision in the case of Veritas Export (Supra). After considering the decision of the Tribunal carefully, it is noted that the Tribunal’s observation that insecticides imported for indigenous manufacture will be exempted from the requirements under the Insecticides Act 1968, has been delivered in the context of import of Boric Acid. The insecticides imported in the present case is different and since each insecticide has different properties, it is not proper to extend the observations in the case of boric acid, for Chlorpropham in the same way. Consequently, I am of the view that the

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facts of the present case are different from that before the Tribunal in the case. 13. Having come to the conclusion that the goods are liable for confiscation under Section 11 (o), next we consider the plea of the appellant that the penalty imposed under 112 (a) is exorbitant. Section 112 provides for imposition of penalty for improper importation of goods upto an amount not exceeding the value of the goods or Rs. 5000/- whichever is greater. The value of goods as assessed in bill of entry is Rs. 19.4 Lakh. Consequently, the penalty imposed is beyond the statutory limit. 14. In the facts and circumstances of the present case, I reduce the penalty from Rs. 25 Lakh to Rs. 15 Lakh. 15. But for the above modification the impugned order is upheld. In the result, appeal is partly allowed.