2015 (10) TMI 2389 - AT - Customs

Enhancement of Redemption fine and penalty - Non-declaration of MRP on package of goods - Redemption fine and penalty imposed, reduced by appellate authority - Held That - Considering minimum profit of 10% of value of goods the redemption fine shall be ₹ 2,00,000/- - Omission of declaration of MRP brought Respondent to fold of law - Penalty imposed imposed by Commissioner (Appeals) has to send message to society that breach of law is mildly punished and such approach shall be bonus to evasion - Penalty enhanced to ₹ 1,00,000/- under section 112(a) looking to gravity of the matter - Decision made in case of Commissioner of Customs, Mumbai Vs. Mansi Impex 2011 (8) TMI 470 - Supreme Court of India followed - Decided in favour of Revenue.

Summary

Issues:
Violation of Standards of Weights & Measures (Packaged Commodities) Rules, 1977 - Reduction of redemption fine - Reduction of penalty under section 112(a) of Customs Act, 1962.

Analysis:
The appeal pertains to a case where the imported goods did not have the Maximum Retail Price (MRP) declared on the package, violating the Standards of Weights & Measures (Packaged Commodities) Rules, 1977. The adjudicating authority initially imposed a redemption fine of Rs. 4,00,000 and a penalty of Rs. 2,00,000 under section 112(a) of the Customs Act, 1962. However, the appellate authority reduced the redemption fine to Rs. 50,000 and the penalty to Rs. 25,000, causing prejudice to the Revenue. The respondent argued that the Commissioner (Appeals) correctly calculated the redemption fine and penalty.

Upon hearing both sides and examining the records, it was noted that the reduction of the redemption fine and penalty by the appellate authority was not justified. The appellate order highlighted the importance of the redemption fine in neutralizing profit margins, especially considering the substantial investment made in importing the goods. It was observed that expecting a profit of Rs. 50,000 on goods worth Rs. 20,10,531 was unrealistic, indicating that a higher redemption fine was warranted. Consequently, the redemption fine was increased to Rs. 2,00,000, partially favoring the Revenue.

Regarding the penalty imposed under section 112(a) of the Customs Act, 1962, the violation of the law on MRP necessitated a penalty as a preventive and curative measure to deter unlawful behavior. The Commissioner (Appeals) had imposed a nominal penalty of Rs. 25,000, which was deemed insufficient to deter future violations effectively. Citing a Supreme Court decision, the penalty was enhanced to Rs. 1,00,000, considering the gravity of the offense and the need to send a strong message against breaching customs laws. This decision aimed to uphold the integrity of the customs regulations and prevent evasion, thereby addressing the prejudice caused to the Revenue.

In conclusion, the Revenue's appeal was allowed partially, with adjustments made to the redemption fine and penalty amounts to align with the seriousness of the violations and to safeguard the interests of the Revenue authorities.