2014 (6) TMI 714 - AT - Customs

Valuation - Sample medical equipments received as Gift - Mis declaration regarding value - Confiscation of goods - Redemption fine - Held that - There is no restriction in the matter of import of medical equipments. Further, the duty payable on medical equipments is also low as may be seen from the fact that the duty demand is only about 10% of the CIF value. In this type of offence, involving only attempt to evade duty and no attempt to circumvent restrictions on import redemption fine and penalty should be based on duty that would have escaped assessment and not on the value of the item. Profit margin on sale of goods is a proper extension in cases of import of restricted goods without the necessary license. The adjudicating officer has put redemption fine of about 50% of the duty sought to be evaded and penalty of about 25% of duty sought to be evaded and these are reasonable and I do not find any reason to interfere with the impugned order - Decided against Revenue.

Summary

Issues: Mis-declaration of imported medical equipments, imposition of redemption fine and penalty, appeal by Revenue for increasing fine and penalty, justification of fine and penalty, consideration of submissions for leniency, determination of redemption fine and penalty based on duty evasion.

The judgment pertains to the mis-declaration of imported medical equipments by the respondent, which were declared as 'Sample medical equipments received as Gift' but were actually imported under a letter of credit against payment. The adjudicating authority confiscated the goods valued at Rs. 45,90,764/- CIF and allowed redemption on payment of a fine of Rs. 2,25,000/-, along with imposing a penalty of Rs. 1,00,000/- under the Customs Act, 1962.

The Revenue filed an appeal seeking an increase in the redemption fine and penalty, arguing that the imposed amounts were disproportionately low considering the gravity of the offense. The Revenue contended that the fine and penalty, being only a small percentage of the imported goods' value, were unjustifiably low and should be raised.

In response, the appellant's advocate argued that the misdeclaration was unintentional, as the import was handled by an agent of the supplier, and requested leniency based on the circumstances. The advocate highlighted that the appellant, being a hospital importing such equipment for the first time, rectified the mistake by providing necessary documents like the letter of credit.

Upon evaluating the arguments from both sides, the tribunal noted that there were no restrictions on importing medical equipments and that the duty payable on such items was relatively low. The tribunal emphasized that in cases of attempted duty evasion without circumventing import restrictions, the redemption fine and penalty should be determined based on the duty evaded, not the item's value. The tribunal found the initially imposed redemption fine and penalty, set at around 50% and 25% of the evaded duty, respectively, to be reasonable. Therefore, the tribunal rejected the Revenue's appeal, upholding the original order.