2013 (11) TMI 1032 - HC - Central Excise

Uniformity in imposition of final penalty - Consideration of prior Orders while reducing the amount of redemption fine and penalty - Held that - No standard formula is possible but when facts of the case are taken for evaluation, it is found that the Tribunal had side-tracked the issue only by taking into account the fact that the appellant had already got the goods released on payment of redemption fine, whereas it remains a fact that mere payment of redemption fine in no way dwarfs the right of the appellant to challenge not only confiscation but also imposition of redemption fine and final penalty. Even otherwise, to save cost of detention and demurrage as also to avoid further deterioration in value and quality of goods, making of payment of redemption fine by the importer for release of goods at the earliest, cannot be said to be bad or improper - It also remains a fact that for release of the goods, the appellant had to pay detention and demurrage charges which also entailed cost of legal expenses etc. - The purpose of imposition of redemption fine is to wipe out the element of profit on import of restricted goods - element of wiping of profit in the interface of expenditure incurred on detention and demurrage charges as also in defraying of legal expenses and interest, was also required to be considered - The Tribunal did not consider these aspects at all and just side-tracked the entire issue by holding that on making payment of disputed amount, the goods had been released to the importer. Sequelly, redemption fine is reduced to 10% of the value assessed by the department. Penalty is reduced to 5% of such value except in case of appeal No.8 of 2012 where penalty has already been reduced to 50% i.e. less than even 5%, by the Tribunal itself. - Decided partly in favour of Appellant.

Summary

Issues:
Customs valuation, imposition of redemption fine and penalty, uniformity in assessment, legality of impugned orders, restricted goods, plea of goods not being restricted, reduction of redemption fine and penalty, uniformity in Tribunal's approach.

Customs Valuation:
The case involved the import of photocopier machines with disputed valuation leading to imposition of redemption fine and penalty. The appellant argued that the goods were not restricted and challenged the Tribunal's assessment of value. The Tribunal noted discrepancies in the appellant's claims and lack of evidence supporting the goods not being restricted. The Tribunal emphasized the importance of maintaining uniformity in valuation and penalties for similar cases.

Imposition of Redemption Fine and Penalty:
The appellant contested the heavy fines and penalties imposed, citing lack of uniformity in the Tribunal's decisions. The respondent department justified the varying fines based on the nature of restricted goods and the need to deter such imports. The Tribunal acknowledged instances where fines and penalties were reduced significantly in similar cases, highlighting the need for consistency in imposing penalties.

Uniformity in Assessment:
The Tribunal's approach to assessing value, redemption fine, and penalty lacked consistency, as evidenced by the varying amounts imposed in similar cases. The appellant argued for a standard formula for determining fines and penalties, while the respondent emphasized the need for deterrent fines to discourage the import of restricted goods.

Legality of Impugned Orders:
The legality of the orders issued by the Tribunal was questioned by both parties. The appellant raised concerns about the lack of uniformity and evidence supporting the restrictions on imported goods. In contrast, the respondent defended the imposition of fines and penalties as necessary measures to regulate restricted imports.

Restricted Goods and Plea of Goods Not Being Restricted:
The nature of the imported goods as restricted items was a key point of contention. The appellant claimed that the goods were not restricted, while the respondent argued otherwise. The Tribunal highlighted the importance of accurate disclosures and genuine valuation in cases involving restricted goods.

Reduction of Redemption Fine and Penalty:
The Tribunal considered precedents where redemption fines and penalties were reduced significantly, indicating a precedent for lowering such charges in certain cases. The appellant referenced specific cases to support their argument for reduced fines and penalties, leading to adjustments in the impugned orders.

Uniformity in Tribunal's Approach:
The Tribunal's inconsistent approach to assessing fines and penalties was a central issue. Discrepancies in the amounts imposed in different cases with similar facts were highlighted. The appellant sought uniformity in the Tribunal's decisions, while the respondent defended the varying fines as necessary to deter restricted imports.

Conclusion:
Ultimately, the Tribunal modified the impugned orders, reducing the redemption fine to 10% of the assessed value and penalty to 5%, except in one case where the penalty was already reduced to less than 5%. The judgment emphasized the need for consistency in imposing fines and penalties in cases involving restricted goods to maintain fairness and deterrence.