Hindustan Coca-Cola Beverages Pvt. Ltd vs Commissioner Of Customs (Import)

IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL, WEST ZONAL BENCH AT MUMBAI

COURT No. II

APPEAL No.C/89390/14

(Arising out of Order-in-Appeal No.2635 (Gr.IIA-F)/2014 (JNCH)/IMP-2505 dated 23/06/2014 passed by Commissioner of Customs (Appeals), JNCH, Nhava Sheva)

For approval and signature:

Honble Mr. P.R. Chandrasekharan, Member (Technical)

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1. Whether Press Reporters may be allowed to see : No the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?

2. Whether it should be released under Rule 27 of the : Yes CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?

3. Whether Their Lordships wish to see the fair copy : Seen of the Order?

4. Whether Order is to be circulated to the Departmental: Yes authorities?

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Hindustan Coca-Cola Beverages Pvt. Ltd., Appellant Vs. Commissioner of Customs (Import), Nhava Sheva Respondent

Appearance: Shri.Vipin Jain, Advocate for appellant Shri.M.K.Mall, Asst. Comm. (AR), for respondent

CORAM: Honble Mr. P.R. Chandrasekharan, Member (Technical)

Date of Hearing : 20/03/2015 Date of Decision : 20/03/2015

ORDER NO

1. The appeal arises from Order-in-Appeal No.2635 (Gr.IIA-F)/2014 (JNCH)/IMP-2505 dated 23/06/2014 passed by Commissioner of Customs (Appeals), JNCH, Nhava Sheva. Vide the impugned order, the learned lower appellate authority has upheld the order of the adjudicating authority vide order dated 24/01/2014 wherein a redemption fine of Rs.5.00 lakhs was imposed on the goods imported vide Bill of Entry No.3477710 dated 07/10/2013 under Section 125 of the Customs Act and a penalty of Rs.1.00 lakh was imposed on the appellant, M/s.Hindustan Coca-Cola Beverage Pvt. Ltd., under Section 112 (a) of the Customs Act, 1962. Aggrieved of the same, the appellant is before me.

2. The learned Counsel for the appellant submits that in the present case, the goods imported by the appellant were Diet Coke Beverage Base which was not for sale but was a raw material for making non-alcoholic beverages. Therefore, the product was not coming within the scope of Food Safety and Standards Act (FSS Act) and therefore, the imposition of fine on the goods and penalty on the appellant on the ground of violation of FSS Act is not sustainable in law. He relies on a decision of the Honble High Court of Delhi in the case of Danisco (India) Pvt.Ltd. dated 13/08/2014 in Writ Petition (C) 2644/2014 wherein also a similar issue came up for consideration, in the context of Packaging and Labelling Regulations under the FSS Act. The competent authority denied the permission to import the goods on the ground that the appellant therein had not complied with the regulations. However, Honble High Court noted that the said regulations would not apply to raw materials which are required for further manufacture in India. The ratio of the said decision would apply in facts of the present case also and therefore, the confiscation and consequent penal proceedings were not warranted at all.

The learned Counsel also points out that while the adjudicating authority has sought to confiscate the goods under Section 111 (m) of the Act, the appellate authority has held that the goods are confiscable not under Section 111 (m) but under Section 111 (d) of the Customs Act. It is also his contention that when the appellant placed the purchase orders on the foreign supplier he had specifically requested for dispatch of fresh production. However, in spite of such request, the foreign supplier dispatched shipments which were a few weeks old and were not fresh. For the mistake committed by the foreign supplier, the appellant should not be penalised. Since it was noticed that the goods supplied were few weeks old and NOC was not given by the FSS authorities, they had taken up the matter with the foreign supplier vide letter dated 09/12/2013 and 10/01/2014 and the foreign supplier had agreed to take back the goods. In these circumstances, imposition of penalty or redemption fine on the goods is not warranted and should be set aside. He also relies on the decision of this Tribunal in the case of Guru Ispat Ltd., Vs. CC (Port), Calcutta  2003 (151) ELT 384 (Tri-Kolkata) affirmed by the Apex Court reported in {2003 (157) ELT A87 (SC)] in support of the above contention.

3. The learned AR appearing for the Revenue on the other hand would support the impugned orders and submits that when the FSS authorities have declined to give no objection certificate for the import of goods on the ground that the imported goods did not confirm to the shelf life prescribed and that decision of the FSS authority was not challenged by the appellant, they cannot take a plea that the goods are not offending or the appellant did not commit any mistake while undertaking the said imports. Inasmuch as in the declaration given the appellant had not indicated the shelf life, which was found to be less than the prescribed norms, there is a mis-declaration with respect to the material particulars attracting the provisions of Section 111 (m). Inasmuch as the goods are not permitted to be imported, the goods are also liable to confiscation under Section 111 (d) and therefore, there is no contradiction in the orders passed by the lower authorities as far as the confiscability of the goods is concerned. Consequently, the goods, which are offending in character, is liable to confiscation attracting imposition of fine and the appellant is liable for penalty under Section112. Therefore, he pleads for upholding the impugned order.

4. I have carefully considered the submissions made by both the sides.

4.1 From the records, it is seen that the FSS authorities had declined to issue NOC for the import of the goods on the ground that the imported goods did not have shelf life of 60% of the original shelf life as required under the provisions of FSS Act. Inasmuch as the appellant has not challenged this decision of the FSS authorities, the Customs cannot overlook or ignore the decision of the said authority. It is in this context, the issue has to be examined as to whether the goods are liable to confiscation or not. In the bill of entry, the appellant had not declared the shelf life of the product at all, whereas on testing, the goods were found to be wanting in shelf life as per the norms prescribed under the FSS Act. If that is so, it is a case of misdeclaration or non-declaration of the material particulars and in that view of the matter, the liability to confiscation under Section 111 (m) would arise. Inasmuch as the goods do not form to the provisions of FSS Act, they would also be liable to confiscation under Section 111 (d). Thus, though there is a contradiction in the findings of the lower authorities, the confiscability of the goods is not in doubt.

Inasmuch as confiscation is sustainable, the goods being offending in nature, is liable to imposition of fine under Section 125 and the importer liable to penalty under Section 112. However, the mitigating factor in the present case is that the appellant had in their purchase order specifically requested for fresh production so that at the time of importation, the shelf life norms could be adhered to or complied with. However, the foreign supplier has not ensured this request of the appellant in the purchase order. In these circumstances, in the absence of a mens rea and also considering that the goods have been exported back, imposition of penalty under Section 112 is not warranted. Accordingly, I set aside the penalty imposed on the appellant in the impugned order to the extent of Rs.1.00 lakh. As regards the fine imposed under Section 125, inasmuch as the goods are liable to confiscation, the goods attract liability to fine, being offending in nature. Inasmuch as the goods have been allowed to be re-exported, only a nominal fine is required to be imposed so that the appellant does not resort to similar violations in future.

Accordingly, I reduce the fine imposed from Rs.5.00 lakhs to Rs.80,000/- (Rupees eighty thousands only) which is approximately 1% of the value of imports.

4.2 As regards the reliance placed by the appellant on the Delhi High Court decision and the Tribunal decision in the case of Guru Ispat, I find the said cases are distinguishable on facts. In the present case, the appellant has not challenged the findings of the FSS authorities at all. The goods under import being in the nature of food products, the importability has to be examined more sensitively and carefully than import of iron or steel items. Hence, the ratio of these decision cannot be applied to the facts of the present case.

5. In sum, I reduce the fine from Rs.5.00 lakhs to Rs.80,000/- (Rupees eighty thousand only) and also set aside the penalty imposed on the appellant. But for the above modification, the impugned order is sustained.

(Dictated in Court)

(P.R. Chandrasekharan) Member (Technical)

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