The Bangalore Bench of the Customs, Excise, and Service Tax Appellate Tribunal ( CESTAT ) reduced the redemption fine and penalty imposed on the import of cocoa beans acknowledging 11-month delay in Bureau of Indian Standards ( BIS ) testing could have caused the deterioration in quality.
Mondelez India Foods Ltd., the appellant, manufactures chocolates and related products. The company imported “Fermented and Dried Processed Sumatra Cocoa Beans (Dead Beans)” from Indonesia and filed Bills of Entry on May 21, 2014, and September 11, 2014. The imports were accompanied by quality certifications indicating compliance with Indonesian National Standards (SNI 2323:2008).
Customs authorities mandated that the imports comply with the Food Safety and Standards Authority of India (FSSAI) regulations. The FSSAI conducted tests under the category of “Dry Fruits and Nuts” and found that cocoa beans did not meet the standards. The appellant challenged this arguing that there were no specific FSSAI standards for cocoa beans and filed a writ petition in the Kerala High Court.
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The Kerala High Court directed testing as per Bureau of Indian Standards ( BIS ) standards. Tests conducted nearly a year later found the imports non-compliant with BIS standards (IS 8865:2003) due to factors such as excess mold and insect damage. The appellant argued that the deterioration was caused by delays in testing and that the goods met BIS standards at the time of import.
The customs department issued a show cause notice and the adjudicating authority ordered confiscation under Section 111(d) of the Customs Act, imposing a redemption fine of Rs. 15,00,000 and a penalty of Rs. 5,00,000. The authority permitted re-export upon payment of the fine and penalty. The appellant appealed to CESTAT.
The appellant’s counsel argued that the absence of specific FSSAI standards for cocoa beans made the testing method inappropriate. They also argued that delays in testing caused natural deterioration which made the BIS test results unreliable.
The appellant’s counsel relied on the principle Lex Non Cogit Ad Impossibila (law does not compel the impossible) and explained the impossibility of compliance with non-existent standards. They relied on foreign supplier test reports confirming compliance with BIS standards at the time of shipment.
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The revenue argued that the imports failed quality parameters and that the confiscation and fines were justified under the Customs Act. The department explained that the delay in testing did not absolve the appellant of liability and cited the FSSAI’s mandate to ensure the safety of food products.
The two-member bench observed that the absence of specific FSSAI standards created ambiguity but upheld the principle of ensuring the safety and quality of imports. The tribunal observed that the appellant responsibly obtained relevant permits and challenged discrepancies legally and the confiscation was lawful under the Customs Act.
The tribunal observed that delay in BIS testing might have possibly caused the quality deterioration. Considering the facts, the tribunal reduced the redemption fine to Rs. 5,00,000 and the penalty to Rs. 2,00,000. The appeal was partially allowed.
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