2012 (10) TMI 169 - AT - Customs

Reduction of fine and penalty - goods have been imported unauthorizedly without valid import licenses Held that - Lower appellate authority reduced the fines and penalties was unjustified - original authority has imposed fines ranging from 20% to 30% only and penalties ranging from 5% to 25% which are not arbitrary or unreasonable - respondents are repeatedly importing the same goods and they are not deterred by lower fines and penalties imposed in the past - fines and penalties imposed in these cases cannot be said to be excessive considering the repeated nature of offences - orders passed by the lower appellate authority reducing the fines and penalties are set aside and the impugned Orders-in-Original are restored in regard to imposition of fines and penalties.

Issues Involved:
1. Confiscation of imported goods without valid import licenses.
2. Reduction of fines and penalties by the lower appellate authority.
3. Classification and licensing requirements for multifunction machines under the EXIM policy.
4. Determination of margin of profit for imposing fines.
5. Precedent decisions and their applicability.

Issue-wise Detailed Analysis:

1. Confiscation of Imported Goods Without Valid Import Licenses:
The lower appellate authority upheld the confiscation of the impugned goods imported by the respondents without valid import licenses. The respondents did not appeal against this decision, indicating acceptance of the confiscation ruling. The Tribunal reiterated that the multifunctional print and copying machines are subject to import restrictions applicable to photocopiers, as per the detailed reasons provided in the case of M/s. Unitech Enterprises v. Commissioner of Customs, Chennai.

2. Reduction of Fines and Penalties by the Lower Appellate Authority:
The Department appealed against the reduction of fines and penalties by the lower appellate authority, which had reduced them to 15% and 5% of the assessable value, respectively. The Tribunal found that the original fines and penalties ranging from 20% to 30% and 5% to 25%, respectively, were neither arbitrary nor unreasonable. The Tribunal emphasized that lower fines and penalties failed to deter repeated offenders and upheld the original fines and penalties imposed by the original authorities.

3. Classification and Licensing Requirements for Multifunction Machines Under the EXIM Policy:
The respondents argued that their imported goods were multifunction machines classified under different headings (8443.31 and 8443.39) and should not be treated as photocopiers for licensing purposes. However, the Tribunal held that the term 'photocopier' in the Policy should be interpreted in a generic sense, noting that the primary use of such machines in the Indian market is for photocopying. The Tribunal rejected the distinction between photocopiers and multifunction machines for licensing purposes, aligning with the lower appellate authority's decision.

4. Determination of Margin of Profit for Imposing Fines:
The respondents contended that the margin of profit had not been determined and that imposing fines based on oral enquiries was improper. The Tribunal noted that the respondents did not appeal or request a remand for determining the margin of profit. The original authority's fines, ranging from 20% to 30%, were deemed reasonable and not arbitrary, as the respondents had cleared the goods on payment of these fines, indicating a margin of profit.

5. Precedent Decisions and Their Applicability:
The respondents cited the Bangalore Bench's decision in M/s. Shivam International, which held that no license was required for importing digital multifunctional devices. However, the Tribunal found this decision per incurium and not a valid precedent. The Tribunal referred to its own decision in M/s. Unitech Enterprises, which held that multifunctional print and copying machines are subject to import restrictions applicable to photocopiers. The Tribunal also noted that the Department's failure to appeal in two similar cases did not invalidate their appeals in the present cases.

Conclusion:
The Tribunal concluded that the fines and penalties imposed by the original authorities were justified and necessary to prevent illegal imports and enforce the Import Policy. The reduction of fines and penalties by the lower appellate authority was deemed unjustified. Consequently, the Tribunal set aside the lower appellate authority's orders and restored the original fines and penalties. All 16 appeals filed by the Department were allowed in these terms.

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