2010 (11) TMI 362 - AT - Customs

Confiscation - Penalty - it is not in dispute that the Commissioner s order is bad in law insofar as the goods, in respect of which no Bill of Entry was filed, are concerned - whether, in lieu of confiscation, a redemption fine should be imposed and, if so, to what extent - High Court, after detailed examination of the circumstances of the case, held that 20% of the value of the goods would be a reasonable redemption fine under Section 125 of the Act - Held that appellants are liable to pay redemption fine @ 20% of the value of the goods Regarding quantification of fine - Confiscation with redemption fine would be applicable only to the other diamonds covered by Bills of Entry, and the share of these goods in the sale proceeds would be approximately 50% of Rs. 4.95 crores - It is not in dispute that the diamonds were disposed of by the department during the pendency of these appeals in violation of the instructions of the Board contained in the circular dated 14-2-2006 - The penalties imposed on M/s. Vaibhav Exports and M/s. Pushpak Impex shall remain the same as those imposed by the Hon ble High Court, Rs. 36 lakhs and Rs. 42 lakhs respectively Regarding interest - Held that the interest shall be calculated on the seizure value of the goods not covered by any Bill of Entry and on the declared value of other goods covered by Bills of Entry - Appeals are disposed of

Issues Involved:

1. Confiscation and penalties related to rough diamonds without Bills of Entry.
2. Confiscation and penalties related to rough diamonds with Bills of Entry.
3. Entitlement to return of sale proceeds from auctioned diamonds.
4. Imposition and quantum of redemption fine.
5. Entitlement to interest on sale proceeds.

Detailed Analysis:

1. Confiscation and Penalties Related to Rough Diamonds Without Bills of Entry:

The Tribunal noted that the Commissioner's order regarding the confiscation and penalties on rough diamonds without Bills of Entry was not sustainable in law. This was in line with the Hon'ble High Court's earlier judgment, which upheld the Tribunal's view that such goods were not liable for confiscation. Consequently, the penalties imposed on these goods were also deemed unsustainable.

2. Confiscation and Penalties Related to Rough Diamonds With Bills of Entry:

The Tribunal upheld the confiscation of rough diamonds for which Bills of Entry were filed, as previously affirmed by the Hon'ble High Court. The importers had not contested this confiscation at this stage. The focus was on whether a redemption fine should be imposed in lieu of confiscation, and if so, the extent of such a fine. The Hon'ble High Court had previously determined that a 20% redemption fine was reasonable, which the Tribunal affirmed.

3. Entitlement to Return of Sale Proceeds from Auctioned Diamonds:

The Tribunal acknowledged that the diamonds were auctioned by the department during the pendency of the appeals, violating the CBEC Circular No. 711/4/2006-Cus. As a result, the appellants were entitled to the sale proceeds. The Tribunal ordered that the sale proceeds, after adjusting for the redemption fine and penalties, be returned to the appellants. The penalties were proportionately reduced based on the value of the goods covered by Bills of Entry.

4. Imposition and Quantum of Redemption Fine:

The Tribunal rejected the appellants' plea against imposing a redemption fine due to the non-availability of goods. It clarified that the physical presence of goods is not always determinative for imposing a fine. In this case, the goods were confiscated, and the importers were not permitted to clear them. The Tribunal upheld the Hon'ble High Court's determination of a 20% redemption fine on the value of the goods covered by Bills of Entry.

5. Entitlement to Interest on Sale Proceeds:

The Tribunal considered the appellants' plea for interest on the sale proceeds, citing precedents where interest was granted in similar circumstances. The Tribunal decided that the appellants were entitled to interest at 9% per annum on their respective shares of the sale proceeds (after deducting redemption fine and penalties), from the date of seizure for goods without Bills of Entry, and from the date of Bills of Entry for other goods, until the date of refund.

Conclusion:

The appeals were disposed of with the Tribunal ordering the return of sale proceeds after adjustments for redemption fine and penalties, and granting interest at 9% per annum on the net amounts due to the appellants. The penalties and fines were adjusted proportionately based on the specific circumstances of each appellant.

← Previous Next →