2003 (3) TMI 446 - AT - Customs

Summary

Issues Involved:
1. Enhancement of the unit price of imported garlic.
2. Calculation of redemption fine based on market price.
3. Imposition of penalty under Section 112(a) of the Customs Act.
4. Consideration of average market price for fixing redemption fine and penalty.
5. Previous offenses committed by the appellant.
6. Whether to remand the matter for reconsideration or decide based on existing records.

Detailed Analysis:

Enhancement of the Unit Price of Imported Garlic:
The unit price of garlic imported in mesh bags was enhanced to US $450 PMT based on the contemporary import price, against the declared unit price of US $445 CIF PMT, Chennai. The appellant did not challenge the enhancement of the value.

Calculation of Redemption Fine Based on Market Price:
The value adopted for the entire consignment of 607 MTs of garlic was Rs. 1,33,11,282/-, with a fine of Rs. 20 lakhs imposed under Section 125 of the Customs Act due to importation without a license. The appellant contended that the average price during the contemporary period should have been considered to determine the margin of profit for fixing the redemption fine.

Imposition of Penalty Under Section 112(a) of the Customs Act:
A penalty of Rs. 10 lakhs was imposed under Section 112(a) of the Customs Act. The appellant argued that the margin of profit would be only 2.43% if the average price was considered, leading to a redemption fine of Rs. 3.23 lakhs and a penalty of Rs. 35,000/-.

Consideration of Average Market Price for Fixing Redemption Fine and Penalty:
The Tribunal found merit in the appellant's argument for adopting the average market price, as upheld in previous cases (Shankar Trading Co. v. CC and Murali Enterprises v. CC, Chennai). The Commissioner was instructed to consider the average price and examine the worksheet presented by the appellant before passing a detailed order, following principles of natural justice.

Previous Offenses Committed by the Appellant:
The Commissioner considered the appellant's previous offense of importing garlic without a license, which influenced the decision to impose a higher redemption fine and penalty.

Whether to Remand the Matter for Reconsideration or Decide Based on Existing Records:
- Member (Judicial): Proposed remanding the matter to the Commissioner for de novo consideration, emphasizing the need for the Commissioner to re-evaluate the average market price and the appellant's worksheet.
- Member (Technical): Disagreed with remanding, arguing that all necessary materials were available on record. Cited Supreme Court judgments (Dimple Overseas v. CC, Kandla and ITC Ltd. v. CC, Bangalore) to support the position that the Tribunal should decide the matter based on existing records. Reduced the redemption fine to Rs. 8.5 lakhs and the penalty to Rs. 2.5 lakhs.
- Third Member (Judicial): Concurred with the Technical Member, emphasizing that the average market price was already established and no new material was needed. Supported the reduction of the redemption fine and penalty without remanding the case.

Majority Order:
The appeal was dismissed, but the impugned order was modified by reducing the redemption fine from Rs. 20 lakhs to Rs. 8.50 lakhs and the penalty from Rs. 10 lakhs to Rs. 2.50 lakhs, in line with the decision of the Technical Member.