2015 (9) TMI 1200 - HC - Customs

Confiscation of goods - Imposition of redemption fine - Penalty u/s 112(a) - Contravention of licensing terms - Held that - Tribunal had recorded that as per the provisions of the licensing notes, the secondary/defective HR Coils could be imported only at the ports of Mumbai, Chennai or Kolkatta. The import of goods at ICD, Ludhiana by the assessee was contrary to the licencing note No.4 of Chapter 72 of the ITC (HS) as there was restriction about the port at which the goods could be imported and, therefore, the goods had been rightly confiscated. The Tribunal, however, waived off the penalty on the appellant under Section 112(a) of the Act and reduced the quantum of redemption fine from ₹ 3,00,000/- to ₹ 1,00,000/-. The Tribunal had taken a lenient view and it would not give any substantive right to the appellant to get the redemption fine of ₹ 1,00,000/- set aside on the ground that once penalty has been waived, no redemption fine could be sustained especially when the appellant had violated the provisions of the licencing note. - No question of law arises - Decided against assessee.

Summary

Issues:
1. Interpretation of provisions regarding clearance of imported goods by 100% EOU.
2. Justification of imposition of redemption fine when penalty is waived.
3. Imposition of redemption fine in cases related to interpretation of statutory provisions.
4. Imposition of redemption fine in the absence of malafide on the part of the appellant.
5. Granting relief to the appellant.
6. Addressing manifest injustice.
7. Arbitrary imposition of penalty under Section 112-A of the Customs Act without corroborating evidence.

Analysis:

Issue 1:
The appellant imported goods for use in manufacturing final products in their factory premises. The dispute arose regarding the clearance of goods under specific notifications and licensing notes. The Tribunal confirmed the confiscation of goods due to the violation of port restrictions specified in the licensing notes, despite the appellant's claim for clearance at nil rate under a notification. The Tribunal reduced the redemption fine but upheld the confiscation based on the licensing note provisions.

Issue 2:
The Tribunal waived the penalty imposed under Section 112(a) of the Customs Act but reduced the redemption fine. The appellant contended that if the penalty was waived, the redemption fine should not be sustained. The court upheld the reduction of the redemption fine to &8377; 1,00,000, emphasizing that leniency was shown by waiving the penalty, but the violation of licensing notes warranted the redemption fine.

Issue 3:
The court addressed the issue of whether a redemption fine could be imposed in cases involving the interpretation of statutory provisions. The Tribunal's decision to reduce the redemption fine was based on the violation of licensing notes, indicating that even in cases of statutory interpretation, fines could be imposed for non-compliance.

Issue 4:
Regarding the imposition of redemption fine without malafide on the part of the appellant, the court did not find the absence of malicious intent as a sufficient ground to set aside the redemption fine. The court emphasized that the violation of licensing notes justified the imposition of fines, irrespective of malafide intentions.

Issue 5 & 6:
The court considered the relief claimed by the appellant and the presence of manifest injustice. Despite the appellant's plea for relief, the court dismissed the appeal, emphasizing that the lenient view taken by the Tribunal in reducing the redemption fine did not warrant setting it aside, especially considering the violation of licensing notes.

Issue 7:
The court addressed the arbitrary imposition of penalties under Section 112-A of the Customs Act in the absence of corroborating evidence. The court did not find any substantial question of law in this appeal and dismissed it, indicating that penalties could be imposed based on statutory provisions even without direct evidence.

In conclusion, the court upheld the reduction of the redemption fine but dismissed the appeal, emphasizing the importance of complying with statutory provisions even in cases of leniency shown in penalty imposition.