2001 (11) TMI 789 - AT - Customs

Summary

Issues Involved:
1. Nature of the imported goods.
2. Requirement of a valid import licence.
3. Quantum of redemption fine and penalty imposed.

Detailed Analysis:

1. Nature of the Imported Goods:

The primary issue was whether the imported goods were "pre-mutilated rags" as declared by the importers or old and used garments. The Commissioner (Appeals) concluded that the goods were indeed old and used garments, not pre-mutilated rags, and noted that the quantity of goods was in excess of what was declared, leading to a mis-declaration. The importers contended that they had placed orders for "old synthetic woollen rags completely pre-mutilated and fumigated" and had filed the relevant documents accordingly. However, the examination revealed otherwise, confirming the mis-declaration.

2. Requirement of a Valid Import Licence:

Since the goods were found to be old and used garments instead of pre-mutilated rags, they required a valid import licence for clearance, which the appellants did not possess. Consequently, the goods were liable for confiscation under Sections 111(d) and 111(m) of the Customs Act, 1962. The adjudicating authority justified the confiscation based on these provisions.

3. Quantum of Redemption Fine and Penalty Imposed:

The Commissioner (Appeals) and the Tribunal considered various factors and case laws regarding the imposition of redemption fine and penalties. The appellants argued that the redemption fines imposed were excessively high and not in line with the practice at the Calcutta Custom House, where similar consignments were cleared with a redemption fine of approximately 20% of the CIF value. The Commissioner (Appeals) acknowledged the appellants' contention and referenced several case laws, including:

- Commissioner of Customs, Calcutta v. Star Enterprises: This case emphasized the need to consider all valid expenses incurred by the importers before sale when calculating the margin of profit for redemption fine.
- V.G. Mohanan v. Commissioner of Customs, Chennai: It was held that the imposition of redemption fine and penalty should be consistent and judiciously exercised, with a clear justification for any higher penalties.
- Parasakthi Pictures Mart v. Collector of Customs, Trichi: It was held that substantial differences in fines and penalties for identical imports could amount to discrimination under Article 14 of the Constitution of India.
- J. & K. Textiles v. CC, Cochin: The Tribunal consistently held that the quantum of redemption fine for such imports should be 25% of the CIF value.

The Tribunal found that the adjudicating authority had failed to maintain a uniform practice and had imposed an unjustifiably high fine. The Tribunal decided to reduce the redemption fine to 20% of the CIF value and the penalty to 5% of the CIF value, aligning with the consistent view of the Tribunal and the practice at the Calcutta Custom House.

Conclusion:

The Tribunal modified the Commissioner (Appeals)'s order, reducing the redemption fine to 20% of the CIF value and the penalty to 5% of the CIF value for all three appellants. The appeals were partly allowed in these terms, ensuring a fair and consistent application of the law.