2016 (4) TMI 362 - AT - Customs

Imposition of fine and penalty - Export of marble articles such as table tops - Declared value on higher side and there is variation in import prices, so the goods are taken back to town - as goods are liable for confiscation, redeem them on payment of fine and penalty of ₹ 1,00,000/- and ₹ 10,000/- respectively but after department being gone into appeal, the fine and penalty increased to ₹ 4,00,000/- and ₹ 7,50,000/- respectively - Held that - the earlier adjudicating Commissioner vide his order-in-original has found the market value of the goods around 30/- to 70/- per sq.m. and the realistic value could not be more than ₹ 8 to 10 lakhs in each case and the exporter had accepted this adjudication order. It is pertinent to mention that the declared value of the marble i.e. US 650/- per sq.m. is extremely high, considering the fact that import prices of the goods during the relevant period varied from 30/- to 70/- per sq.m. In the impugned order, the learned Commissioner has also observed that by overvaluation, the appellant would have got the benefits of customs duty to the tune of ₹ 11,17,402.73 (approx.) by showing the export towards fulfilment of export obligation under the EPCG licence dated 21.3.1996. As per the remand order of the Tribunal, the learned Commissioner redetermined the redemption fine and revised it to ₹ 4,00,000/- which, according to our opinion, is not excessive and therefore, upheld. However, the learned Commissioner has revised the penalty from ₹ 20,000/- to ₹ 7,50,000/- which, is on the higher side and, therefore, reduced to ₹ 5,00,000/- and there is no change in in value of redemption fine. - Decided partly in favour of appellant

Summary

Issues:
- Excessive fine and penalty imposed by the Commissioner of Customs
- Discrepancy in declared value of exported goods
- Redetermination of quantum of fine and penalty by the Commissioner
- Appeal against the order of the Commissioner

Analysis:

1. Excessive fine and penalty imposed by the Commissioner of Customs:
The appellant challenged the fine and penalty imposed by the Commissioner as excessive and disproportionate to the offense committed. The appellant argued that they did not receive any undue benefit as the goods were not exported against the EPCG license and were taken back to town. It was emphasized that the export obligation had already been fulfilled before the filing of the shipping bills. The Commissioner's decision to impose a fine of Rs. 4,00,000 and a penalty of Rs. 7,50,000 was contested as being based on an assumed benefit that the appellant never obtained.

2. Discrepancy in declared value of exported goods:
The Tribunal noted that the declared value of the marble at US$ 650 per sq.m. was significantly higher than the market value, which ranged from $30 to $70 per sq.m. The Commissioner had previously determined the realistic value to be around Rs. 8 to 10 lakhs in each case. The Tribunal observed that the overvaluation of the goods could have resulted in the appellant gaining customs duty benefits amounting to approximately Rs. 11,17,402.73. This discrepancy in valuation was a crucial factor in the case.

3. Redetermination of quantum of fine and penalty by the Commissioner:
Following a remand order from the Tribunal, the Commissioner re-evaluated the redemption fine, increasing it to Rs. 4,00,000. The Tribunal deemed this revised amount to be appropriate and upheld it. However, the penalty was revised from Rs. 20,000 to Rs. 7,50,000, which the Tribunal considered excessive. Consequently, the penalty was reduced to Rs. 5,00,000, taking into account the circumstances of the case.

4. Appeal against the order of the Commissioner:
The Tribunal partially allowed the appeal, maintaining the redemption fine at Rs. 4,00,000 but reducing the penalty from Rs. 7,50,000 to Rs. 5,00,000. The decision was pronounced on 10.3.2016, providing a resolution to the dispute regarding the excessive fine and penalty imposed by the Commissioner of Customs.

This detailed analysis highlights the key issues addressed in the judgment, focusing on the discrepancies in valuation, the Commissioner's decision-making process, and the Tribunal's assessment of the fine and penalty imposed.