What Are the Penalties for Importing Hazardous Goods Without PESO Approval?

Importing explosives, petroleum products, compressed gas cylinders, pressure vessels or ammonium nitrate without a valid PESO No Objection Certificate is a statutory offence under Indian law. The consequences include seizure and forfeiture of goods, financial penalties and imprisonment for deliberate or repeat violations and the commercial cost of a detained consignment compounding daily in port charges.

What are the penalties for importing without PESO NOC approval?

The penalties for importing PESO-regulated goods without the required No Objection Certificate are set out across the statutes that PESO administers and all of them interact with the enforcement powers available to Customs under the Customs Act, 1962.

The Explosives Act, 1884 penalises any person who imports any explosive in contravention of the Act or the Rules made under it. The penalty provisions provide for fines and imprisonment. An importer who brings in explosives, including detonators, blasting agents, fireworks, pyrotechnics, or safety fuses, without the required NOC commits an offence on the day the goods enter Indian territorial waters, not only on the day they are detected. Detection at the port triggers enforcement, but the offence is constituted at the point of non-compliant import.

The Petroleum Act, 1934 and the Petroleum Rules, 2002 prohibit the import of non-compliant Class A, Class B, or Class C petroleum products and attract monetary penalties and imprisonment for deliberate violations. The Act also provides for the seizure and forfeiture of the offending petroleum consignment. A seized consignment is in the custody of the authorities and the importer has no right to the goods until the enforcement proceedings are resolved.

Implications for businesses

Foreign manufacturers face a reputational and commercial risk of consignment being seized at an Indian port, delayed payment, relationship damage and recovering goods for re-export because the Indian buyer did not obtain PESO clearance.

Indian importers face a multi-layered penalty exposure under the Explosives Act, 1884 and the Petroleum Act, 1934 along with Customs enforcement under the Customs Act, 1962, including confiscation of goods under Section 111 for goods imported in violation of any prohibition or restriction. The confiscation power under the Customs Act, 1962 applies in addition to the penalties under the product-specific statutes. An importer who imports explosives without a PESO NOC is simultaneously in violation of the Explosives Act, 1884 and the Customs Act, 1962 and faces enforcement action under both.

How penalty exposure compounds

When a PESO-regulated consignment arrives without an NOC, Customs detains the goods. From day one of vessel arrival, the importer incurs port dues, container detention charges and ground rent or container yard storage charges at the port. The statutory penalty is the ceiling set by law. The commercial cost has no ceiling of its own.

A medium-sized consignment of gas cylinders held at a major port for three weeks while the NOC is retroactively sought will accumulate container detention, ground rent and related port charges that frequently reach several lakh rupees.

If the goods are ultimately confiscated because the import cannot be regularised, the importer loses the value of the goods entirely in addition to all port charges incurred during the detention period in cases where importers import non-approved products believing that approval can be obtained quickly once the goods are already in India.

Legality and risks

Section 111 of the Customs Act, 1962 provides for confiscation of goods imported in contravention of any prohibition or restriction such as the PESO NOC requirement. Under Section 112, penalties apply to persons who cause or attempt to cause the import of goods in contravention of provisions of the Act. The importer is liable for non-compliance. A confiscation of a high-value consignment such as a shipment of industrial gas cylinders, a tank of aviation fuel or a container of industrial explosives represents the total loss of the goods and all associated procurement costs, plus every port charge incurred during the detention period and the cost of enforcement proceedings.

The Explosives Act, 1884 and the Petroleum Act, 1934 carry additional penalties that are independent of the Customs Act framework with enhanced penalties including the potential suspension or cancellation of any PESO licences for domestic operations for repeat offenders.

Word of counsel

Foreign manufacturers who regularly export regulated goods to India should include contractual representations from their Indian buyers confirming PESO NOC status and should not release goods for loading until that confirmation is received in writing.

Importers should avert not only the statutory fine but also the risk of confiscation as a fine can be paid and business continues. Importers should verify PESO NOC obtained before the goods are shipped and not to be discovered only after the vessel has arrived. PESO does not fast-track approvals on account of goods already sitting in a port.

CHAs should institute a strict compliance verification process for all regulated imports, including mandatory confirmation of PESO NOC status before filing or clearance.

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