2002 (4) TMI 494 - AT - Customs

Summary

Issues:
1. Redemption fine on deteriorated goods.
2. Commissioner's authority to re-adjudicate penalty.
3. Consideration of extenuating circumstances for fine determination.
4. Application of market value for deteriorated goods.

Issue 1: Redemption fine on deteriorated goods
The appeal concerned an Order-in-Original where imported Garlic was found pilfered and deteriorated, leading to a redemption fine of Rs. 5 lakhs. The appellant argued against the fine for totally deteriorated goods that were destroyed. The Tribunal noted previous cases where a 22% redemption fine was confirmed for marketable goods, questioning the imposition of a fine in this case.

Issue 2: Commissioner's authority to re-adjudicate penalty
The Commissioner, in the original order, retained a penalty of Rs. 2 lakhs imposed under Section 112(a), claiming the Tribunal's remand did not cover this aspect. However, the Tribunal held that upon remand, the Commissioner was obligated to re-adjudicate all aspects, including the penalty, and his decision to retain the penalty without proper consideration was incorrect and unsustainable.

Issue 3: Consideration of extenuating circumstances for fine determination
The Commissioner's fixation of the redemption fine at Rs. 5 lakhs was based on factors like pilferage and deterioration. However, the Tribunal found that the Commissioner failed to consider precedents where a 22% redemption fine was imposed on goods in marketable condition. The failure to apply this standard to the deteriorated goods indicated a lack of proper assessment.

Issue 4: Application of market value for deteriorated goods
The Commissioner erred in adopting a market value of Rs. 45 per kg for the deteriorated goods, which were not in a marketable condition. The Tribunal emphasized that the value of marketable goods cannot be applied to deteriorated ones. The Commissioner's errors in fixing both the redemption fine and penalty necessitated setting aside the order for re-adjudication, directing the Commissioner to consider all factors and principles of natural justice within three months.