BIS Certification Not Required Where Shipment Predated Quality Control: CESTAT quashes Penalty On Import of Stainless Steel Coils [Read Order]

The bench of the Customs, Excise & Service Tax Appellate Tribunal, Ahmedabad, set aside the order of confiscation and penalty relating to the import of stainless steel coils, holding that Bureau of Indian Standards (BIS) certification was not mandatory when the goods were shipped before the enforcement date of the Stainless Steel Products (Quality Control Order), 2016.

M/s Shah Foils Ltd., the appellant based in Gandhinagar, Gujarat, imported “Prime Stainless Steel Hot Rolled Coils Grade 201” through three Bills of Entry dated 7 March 2017. The consignment, valued at over Rs. 2.46 crore, was held by the customs authorities for not having the mandatory BIS certification as per the Quality Control Order, which came into effect from 7 February 2017.

The Adjudicating Authority, through order dated 11 April 2017, ordered confiscation under Section 111(d) of the Customs Act, 1962, imposed a redemption fine of ₹12,50,000 under Section 125 of the Act, and levied a penalty of ₹3,50,000 under Section 112(a).

The Commissioner (Appeals) upheld the decision through an order dated 29 June 2018.

Aggrieved by the order, the importer approached the Tribunal.

Represented by Manish Jain, the Appellant argued that the impugned orders violated principles of natural justice, as submissions made during hearings were not properly considered. It was contended that the date of import must be reckoned as the date of shipment, as per paragraph 2.17 read with paragraph 9.11 of the Handbook of Procedures 2015-20.

The Bill of Lading was dated 30 January 2017, predating the enforcement of the Quality Control Order. Hence, the BIS requirement was not applicable. It was further argued that the goods imported were strips classified under CTH 72201290, and not plates or sheets under IS 6911 as wrongly concluded by the appellate authority.

Reliance was placed on judicial precedents including Metro Bright Bar India Pvt. Ltd. v. Commissioner of Customs (2020).

Represented by M. P. Solanki, the Revenue argued that the importer was fully aware of the Quality Control Order since its issuance in June 2016 and had sufficient time to obtain BIS certification. It was contended that the order was rightly enforced, making the imported goods prohibited in the absence of certification, and therefore liable to confiscation and penalty.

The Bench comprising of Dr. Ajaya Krishna Vishvesha, Judicial Member held that the date of shipment was 30 January 2017, when the Stainless Steel Products (Quality Control Order), 2016 had not yet come into force.

Referring to paragraph 2.17 of the Foreign Trade Policy, the Tribunal observed that the date of import is to be reckoned as the date of shipment or dispatch from the exporting country, and not the date of arrival at an Indian port.

Since the order came into effect only from 7 February 2017, BIS certification could not be insisted upon for shipments made prior to this date.

The Tribunal also referred to the earlier precedent in Metro Bright Bar India Pvt. Ltd. (supra) where a similar interpretation was taken.

Accordingly, the CESTAT set aside the order of confiscation, redemption fine, and penalty.

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