2006 (10) TMI 57 - AT - Customs

Confiscation & penalty- Revenue contended that appellant were didn t re-export the Herbal extract within time limit and accordingly redemption fine & penalty imposed on him-Authority find that appellant liable to pass fine & penalty in respect of consignment of its 25 Kg.

Summary

Issues:
- Appeal against rejection of goods exported to Japan and subsequent re-importation.
- Claim for exemption under Notification 158/95-Cus.
- Confiscation, redemption fine, duty demand, and penalty imposed.
- Violation of principles of Natural Justice.
- Discrepancies in identity of goods and buyers.
- Availment of Cenvat credit and reprocessing of goods.
- Requirement of physical examination by Customs Authorities.
- Imposition of redemption fine in absence of goods.
- Excessive quantum of fine and penalty.
- Warranted imposition of penalty and redemption fine.

Analysis:
1. Export and Re-importation Issue:
The appellants exported Herbal Extract to Japan, which was rejected by the buyer, leading to re-importation of the goods to India. The dispute arose regarding compliance with the conditions of Notification 158/95-Cus., which required re-export of the rejected goods after re-processing within six months. The Revenue alleged non-compliance, initiating proceedings against the appellants.

2. Exemption Claim and Imposition of Penalties:
The original authority held the imported Herbal Extract liable for confiscation under Section 111(o) of the Customs Act, imposing a Redemption Fine, duty demand, and penalty. The Commissioner (Appeals) upheld this decision, leading to the appeal before the Tribunal. The appellants challenged the penalties imposed, arguing against the quantum and justification for the redemption fine and penalty.

3. Violation of Natural Justice and Identity Discrepancies:
The appellants raised concerns about the ex parte order passed by the Adjudicating Authority without a personal hearing, alleging a violation of Natural Justice. They also disputed the findings regarding discrepancies in the identity of goods and buyers, claiming that the conclusions were based on conjecture and assumption.

4. Cenvat Credit and Reprocessing Issue:
The appellants contested the Commissioner's conclusion that availing Cenvat credit implied the goods were not reprocessed. They argued that claiming Cenvat credit for inputs used in reprocessing should not affect eligibility for the exemption under Notification 158/95-Cus.

5. Physical Examination Requirement and Redemption Fine:
The appellants argued against the requirement for physical examination by Customs Authorities before re-export, stating that there was no legal mandate for such verification. They also challenged the imposition of a redemption fine in the absence of the goods, citing a precedent case before CEGAT.

6. Tribunal's Decision and Partial Relief:
After careful consideration, the Tribunal found that while there was a procedural lapse in complying with certain conditions of the Notification, the appellants were only liable for payment of duty in relation to the goods where the identity was not satisfactorily explained. The Tribunal set aside the redemption fine, penalty, and confiscation, partially allowing the appeal in favor of the appellants.