2018 (9) TMI 2083 - AT - Customs

Confiscation - imposition of redemption fine and personal penalty - goods are re-exported - mis-declaration to the extent that the description stated in the Bill of Entry was parts of mobile phones whereas the import was found to be of complete mobile phones - enhancement of assessable value - HELD THAT - The order by the original authority that goods should be redeemed and be re-exported is contradictory because if the goods are re-exported then the appellant will not have ownership of the goods and for such goods on which he does not have ownership he is made to pay redemption fine and if he does not pay redemption fine, the goods are Government's property in terms of Section 126 of Customs Act, 1962. In that situation, the order to re-export cannot be enforced by the appellant. The original authority had option of either ordering re-export of the goods without confiscation of the same or he had option of confiscating the goods and giving an option to redeem the same on payment of redemption fine. Since the goods are re-exported the confiscation of the goods is set aside and therefore automatically the imposition of redemption fine does not become sustainable. The imposition of redemption fine is also set aside. Further the penalty imposed under Section 112(a) of Customs Act, 1962 is reduced to Rs. 50,000/-. Appeal allowed in part.

Summary

Issues: Mis-declaration of goods leading to enhanced assessable value, re-export of goods, confiscation, redemption fine, penalty under Section 112(a) of Customs Act, financial loss due to demurrage.

In the present case, the appeal arose from an Order-in-Original passed by the Commissioner of Customs, Noida, regarding mis-declaration of goods in two Bills of Entry filed by the appellant as parts of mobile phones, whereas the import was of complete mobile phones. The original authority enhanced the assessable value, ordered re-export of the entire consignment, confiscated goods worth Rs. 1.09 Crore, imposed a redemption fine of Rs. 8.00 Lakhs, and a penalty of Rs. 2.00 Lakhs under Section 112(a) of the Customs Act, 1962. The appellant challenged the confiscation, redemption fine, and penalty, arguing that since the goods were re-exported, redemption and penalty should not apply, and demurrage costs caused financial loss.

Upon hearing both parties, the Tribunal found the original authority's order contradictory as it directed redemption and re-export of goods, which would deprive the appellant of ownership, making redemption unenforceable. The Tribunal held that the original authority should have either ordered re-export without confiscation or confiscated the goods with an option for redemption. Since the goods were re-exported, the Tribunal set aside the confiscation and deemed the redemption fine unsustainable. The penalty under Section 112(a) of the Customs Act, 1962 was reduced to Rs. 50,000. Therefore, the appeal was partially allowed, addressing the issues of confiscation, redemption fine, and penalty.

The judgment highlighted the importance of clarity in orders involving re-export and confiscation, ensuring that penalties and fines are imposed in accordance with ownership of goods. The Tribunal's decision aimed to rectify the inconsistencies in the original authority's order and provide a fair resolution by setting aside the confiscation and reducing the penalty, considering the re-exported goods' ownership status.