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2021 (1) TMI 1110 - HC - CustomsLevy of penalty - release of subject goods on payment of redemption fine conforms to the scheme of Sections 2(33), 111(d) and 135 of Customs Act, 1962, section 3 of FTDR Act, 1992 read with notification dated 18.12.2019 and 28.3.2020 issued by Union of India or not? - HELD THAT - The Customs Act defines what is prohibited goods and effect of importing prohibited goods; consequence of goods imported contrary to Section 111(d) option to pay redemption fine in lieu of confiscation or confiscation. This Court is of the view that the exercise of discretion and jurisdiction either by the adjudicating authority or by the Appellate Tribunal ought not to be moulded by a cast. The jurisdiction under Sections 111 (d) and 125 of Customs Act, 1962 is read with the provisions of FTDR Act, 1992, foreign trade policy and the notifications issued by the Government from time to time - The combined exercise of authority and discretion by Customs Commissioner etc. in these matters, conform to the requirements of judicial discretion. The discretion or power is exercised combining the relevant provision in the Act, notification and facts prevailing on the date of consideration etc. The authorities are guided by the information available to them in a given case. The consideration of Appellate Tribunal in the case on hand is illegal, ignored relevant notifications, the mandate of FTDR Act and Customs Act 1962. The adjudications of a dispute in these matters is neither on the pedestal of travesty of justice or we have so much discretion for doing proverbial justice to an importer. In matters of this nature, such approach would go contrary to the object sought to be implemented by the authorities, in whom power is conferred particularly in matters of import, export, price etc. In our considered view, the other question whether it is restricted, prohibited the decisions rendered under customs under import and export etc., need not be considered. By juxtaposing the order of Commissioner of Customs and the order under appeal we are fully convinced that the Appellate Tribunal committed serious error in law by ordering release of goods under Section 125 - question is answered in favour of Revenue and against the Importer. Penalty - HELD THAT - The importer, as noted by the Commissioner of Customs is familiar with the practices and procedures for import and export of goods. The chronological events in the matter are already noted in the preceding paragraph. The importer in the case on hand files an application for trade licence on 22.04.2020. Bill of lading is dated 27.04.2020. Bill of entry is filed on 23.06.2020. The importer used its volition and choices for importing the subject goods. It is not the argument of importer that for contravention in any import the authorities does not power to levy the penalty - Penalty upheld. Appeal allowed in part.
Issues Involved:
1. Legality of the Tribunal's order directing the release of goods on payment of redemption fine. 2. Justification for the imposition of a penalty of ?4 lakhs on the importer. Issue-wise Detailed Analysis: 1. Legality of the Tribunal's Order Directing Release of Goods on Payment of Redemption Fine: The appeals arise from the final order of the CEST Appellate Tribunal, which allowed the redemption of impugned goods on payment of a fine of ?12,00,000 in lieu of confiscation but upheld the penalty of ?4,00,000. The Importer challenged the penalty, while the Revenue questioned the release of goods on payment of redemption fine. The core issue revolves around the notifications issued under Section 3 of the Foreign Trade (Development and Regulation) Act, 1992 (FTDR Act), particularly Notification No.37/2015-2020 dated 18.12.2019 and Notification No.1225(E) dated 28.3.2020. These notifications imposed restrictions on the import of peas, including a minimum import price (MIP) of ?200/- CIF per kg and allowed import only through Kolkata sea port. The Supreme Court in Agricas LLP v. Union of India upheld similar notifications, rejecting challenges by traders and stating that imports made relying on interim orders would be contrary to the notifications and dealt with under the Customs Act, 1962. The subject import in this case was not covered by the Supreme Court's judgment in Agricas LLP. The Commissioner of Customs at Kochi confiscated the goods and imposed a penalty, noting that the importer did not comply with the conditions of the notifications. The Appellate Tribunal, however, directed the release of goods on payment of redemption fine, relying on judgments like Commissioner of Customs v. M/S. Atul Automations Pvt Ltd. and M/s Harihar Collections v. Union of India. The High Court, after considering the arguments and the legal framework, concluded that the Tribunal erred in directing the release of goods. The Court emphasized that the notifications and the judgment in Agricas LLP were binding and that the Tribunal's order undermined the regulatory framework, potentially opening floodgates for similar imports. The Court held that the goods should be treated as prohibited and upheld the Commissioner’s order of confiscation. 2. Justification for the Imposition of a Penalty of ?4 Lakhs on the Importer: The importer argued against the penalty, claiming it was arbitrary and capricious. However, the High Court noted that the importer, being familiar with import-export practices, chose to import the goods despite the restrictions. The Court found that the penalty was justified given the circumstances and the importer's non-compliance with the applicable notifications. The High Court upheld the Tribunal's decision to sustain the penalty, concluding that the imposition of the penalty was warranted and not arbitrary. Conclusion: The High Court dismissed the importer's appeal (Customs Appeal No.13 of 2020) challenging the penalty and allowed the Revenue's appeal (Customs Appeal No.14 of 2020), setting aside the Tribunal's order for the release of goods on payment of redemption fine. The Court reinforced the importance of adhering to the regulatory framework and upheld the confiscation of goods as per the notifications and the Customs Act, 1962.
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