2009 (6) TMI 696 - HC - Customs

Rate of redemption fine and penalty - Import of second hand photocopiers without obtaining licence - violation of the ITC regulation and the EXIM policy Held that - Value as declared by the respondents was not accepted and it was refixed based on the Chartered Engineer s certificate, which was no doubt higher than the value as declared by the respondent - quantum should depend on the totality of the facts and circumstances of each case and that bona fide action of assessee by itself cannot entitle him to claim full waiver of fine - power of discretion by the authority is to be exercised based on well founded principles and should not be done in a mechanical way - rate at which the redemption fine is imposed in similar cases has been taken note of only for the limited purpose of maintaining consistency - this is not a case where the rate is applied uniformly in a mechanical way; but similar rate of redemption fine was adopted for parity of reasons

Issues Involved:
1. Applicability of Section 5 of the Limitation Act to appeals under Section 130 of the Customs Act.
2. Legality of imposing redemption fine and penalty on imported second-hand photocopiers.
3. Quantum of redemption fine and penalty imposed by the adjudicating authority and its reduction by the Tribunal.

Detailed Analysis:

1. Applicability of Section 5 of the Limitation Act to Appeals under Section 130 of the Customs Act:
The primary issue was whether Section 5 of the Limitation Act applies to appeals presented under Section 130 of the Customs Act. The court noted that the Apex Court in Commissioner of Customs & Central Excise v. Hongo India (P) Ltd. had held that Section 5 of the Limitation Act stood excluded in the absence of any express provision making it applicable. However, the court clarified that this question did not directly arise in the present case since the delay had already been condoned by a court order, and no review of that order was sought.

2. Legality of Imposing Redemption Fine and Penalty on Imported Second-Hand Photocopiers:
The respondent imported second-hand photocopiers without obtaining the necessary license, violating ITC regulations and the EXIM policy. The adjudicating authority found the respondent in violation of excise provisions and initiated proceedings. The value declared by the respondent was not accepted and was refixed based on the Chartered Engineer's certificate, leading to confiscation of goods with an option to redeem them on payment of fine and penalties.

3. Quantum of Redemption Fine and Penalty Imposed by the Adjudicating Authority and Its Reduction by the Tribunal:
The appeals primarily contested the quantum of redemption fine and penalty. The respondents argued that the fine and penalty were arbitrary and not based on market enquiry, urging for a reduction to 10% and 5% respectively. The Tribunal, after considering precedents, reduced the redemption fine to 10% and the penalty to 4%. The Department contended that the Tribunal erred in uniformly applying rates without considering individual case facts and that the reduction undermined the deterrent purpose of the fine and penalty.

The court upheld the Tribunal's decision, noting that the Tribunal had considered the enhanced value based on the Chartered Engineer's certificate, which escalated the duty, redemption fine, and penalty. The Tribunal's decision to follow precedents for consistency was deemed appropriate. The court emphasized that the discretion exercised by the Tribunal was objective and based on well-founded principles, and no substantial question of law arose from the Department's appeal.

Conclusion:
The court dismissed the appeals, affirming that the Tribunal had appropriately exercised its discretion in reducing the redemption fine and penalty, maintaining consistency with previous decisions. The decision was not arbitrary or whimsical, and no substantial question of law warranted interference. The appeals were dismissed with no order as to costs.

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