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2015 (5) TMI 800 - HC - CustomsImports in violation of the Exim Policy - Deterrent penalty - Tribunal set aside penalty - Non speaking order - Held that - Goods were contracted and shipped on 01.08.2004, i.e., when the import of second-hand machinery was not permitted. However, the bill of entry was filed on 09.09.2004. The importer taking advantage of the new Foreign Trade Policy, 2004-09, submitted that at the time of filing bill of entry, new policy had come into force permitting importation of second-hand machinery, the importer is entitled to import the second-hand machinery without any specific licence. - Tribunal, having upheld the contravention of Section 111(d) of the Customs Act, had merely referred to the decision in the case of Soni Ispat Ltd. Vs. Commissioner of Customs (Import) 2007 (2) TMI 125 - CESTAT, MUMBAI and reduced the redemption fine from ₹ 3.00 lakhs to ₹ 50,000/- and set aside the entire penalty. There is no reason why the Tribunal had reduced the fine and set aside the entire penalty. - Tribunal has not passed a speaking order justifying the reduction of fine and setting aside the penalty. Hence, we have no other option except to remand the matter back to the Tribunal to reconsider the issue afresh - Decided in favour of Revenue.
Issues:
1. Justification of setting aside penalty under Section 112(a) of the Customs Act without reasons by the Customs, Excise and Service Tax Appellate Tribunal. 2. Justification of reducing the redemption fine under Section 125 of the Customs Act without reasons by the Customs, Excise and Service Tax Appellate Tribunal. Issue 1: Justification of setting aside penalty under Section 112(a) of the Customs Act without reasons by the Customs, Excise and Service Tax Appellate Tribunal: The case involved the import of second-hand capital goods without the required license under the Exim Policy 2002-2007. The Customs Authorities confiscated the goods and imposed penalties under Section 112(a) of the Customs Act. The Adjudicating Authority confiscated the goods with an option for redemption on payment of a fine and imposed a penalty. The Commissioner (Appeals) set aside the confiscation and penalty, stating that the new foreign trade policy did not restrict the import of second-hand capital goods. The Tribunal remanded the matter back to the Commissioner (Appeals) for fresh disposal. The Commissioner (Appeals) re-adjudicated the order and upheld the confiscation, redemption fine, and penalty. The Tribunal, however, reduced the redemption fine and set aside the penalty without providing detailed reasons. The High Court noted that the Tribunal upheld the contravention of Section 111(d) of the Customs Act but reduced the fine and cancelled the penalty without sufficient justification. Issue 2: Justification of reducing the redemption fine under Section 125 of the Customs Act without reasons by the Customs, Excise and Service Tax Appellate Tribunal: The Tribunal reduced the redemption fine from Rs. 3.00 lakhs to Rs. 50,000 and set aside the penalty without clear reasons. The High Court highlighted that the Tribunal's decision lacked detailed justification for the reduction in fine and cancellation of the penalty. Referring to a previous case, the High Court emphasized that penalties under Section 112(a) of the Customs Act are automatic once confiscation is ordered. The Court cited a case where the penalty was upheld due to the involvement of the Managing Director in the importation process, emphasizing that penalties are applicable when acts render goods liable to confiscation. The Court found that the Tribunal did not provide a sufficient explanation for reducing the fine and cancelling the penalty, leading to the Department's appeal before the High Court. This detailed analysis of the judgment from the Madras High Court addresses the issues surrounding the justification of setting aside the penalty under Section 112(a) and reducing the redemption fine under Section 125 of the Customs Act by the Customs, Excise and Service Tax Appellate Tribunal. The High Court's review emphasized the importance of providing clear and reasoned justifications for decisions, especially in matters involving penalties and fines under the Customs Act.
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