1999 (3) TMI 567 - AT - Customs

Import licence having the description of goods as Speciality Polyester Filament Yarn - Redemption fine - Quantum - Penalty

Summary

Issues:
1. Import of polyester filament yarn under a specific import license for speciality yarn.
2. Determination of whether the imported goods qualify as speciality yarn.
3. Assessment of redemption fine and penalty imposed on the importer.
4. Consideration of the importer's intention and profit margin in the importation process.

Issue 1 - Import of Polyester Filament Yarn:
The appellant imported polyester filament yarn (PFY) claiming clearance under an import license issued for "speciality polyester filament yarn." However, the Custom House found the imported goods did not match the specified criteria, leading to a notice proposing confiscation and penalty under Sections 111 and 112. The appellant contended the yarn was unique, made using a different process by M/s. EMS Inventa A.G., intended for market distribution to create demand for similar yarn to be manufactured in India. The appellant argued against the confiscation and penalty, claiming potential import under Open General License (OGL).

Issue 2 - Qualification as Speciality Yarn:
The Collector determined that the imported yarn did not meet the criteria for speciality yarn, as it lacked micro denier or profile cross-section features. The Collector emphasized that PFY was importable only by actual users or authorized letter holders, not for profit-making purposes. The Tribunal concurred, stating that the goods failed to demonstrate characteristics of speciality yarn based on tests and correspondence with the licensing authority, leading to the confirmation of confiscation under Section 111(d).

Issue 3 - Redemption Fine and Penalty Assessment:
Regarding the redemption fine, the Collector set it at 10% of the consignment value, which the appellant disputed citing incurred import expenses resulting in a loss and potential profit as a letter of authority holder. Various legal precedents were cited during arguments, emphasizing that the quantum of redemption fine should consider the totality of circumstances, with bona fide actions not warranting a full waiver but influencing the fine amount. The Tribunal highlighted the need to wipe out any profit from illegal importation through redemption fines, indicating the absence of bona fide could justify a higher fine than the profit margin.

Issue 4 - Intention and Profit Margin:
The Collector's presumption of the appellant's profit-seeking motive due to yarn shortage was challenged, with the Tribunal finding the Collector's reasoning speculative. While acknowledging the appellant's failure to establish the goods as speciality yarn, the Tribunal declined to limit the fine to the profit margin. The penalty imposed for misdeclaration of the goods as speciality yarn was set aside, considering the appellant's application for a license for such goods as indicative of belief in their speciality nature.

In conclusion, the Tribunal partially allowed the appeal, setting aside the penalty but upholding the confiscation and redemption fine, emphasizing the need to consider the circumstances and intent behind importation in determining fines and penalties.