2016 (6) TMI 954 - HC - Customs

Recovery of redemption fine from the petitioner - confiscate the goods of 22 bales which could not be located and seized - petitioners submitted that the initial action of the show cause notice was against 10 persons and since the petitioner himself was not the ultimate importer, atleast, the issue of redemption of fine cannot be proposed against him. - Held that - Neither in the body of the show cause notice, nor in the ultimate proposal noted above, there is anything to suggest that the petitioner trust was called upon to state why for non-availability of the goods for confiscation, redemption fine should not be imposed. There was no indication that the petitioner trust is liable to pay the fine of ₹ 7.25 lacs in lieu of confiscation. In absence of any proposal in the show cause notice for imposition of fine in lieu of confiscation relatable to the petitioner and in absence of any directions contained in the order-inoriginal that such fine would be borne by the petitioner, it was simply not open for the department to seek recovery thereof from the petitioner. - Decided in favor of petitioner.

Summary

Issues:
Challenge of recovery of redemption fine and declaration of non-liability to pay any amount as fine in lieu of confiscation of goods.

Analysis:
The petitioners challenged the recovery of redemption fine and sought a declaration of non-liability to pay any amount as fine in lieu of confiscation of goods. The petitioners, a charitable trust engaged in philanthropic activities, were involved in an import operation aimed at aiding earthquake victims. A show cause notice was issued, proposing confiscation of goods and imposition of fine in lieu of confiscation under the Customs Act. The adjudicating authority ordered absolute confiscation of goods and imposed a fine in lieu of confiscation. An appeal was made to the CESTAT, which set aside the penalty but did not address the redemption fine issue. Subsequently, the Department issued notices demanding payment of the redemption fine. The petitioners contended that they were not directly involved in the import and should not be held liable for the redemption fine.

The show cause notice did not specifically mention the petitioner trust's liability for the redemption fine. The order-in-original also did not indicate that the trust was responsible for paying the fine in lieu of confiscation. The lack of a proposal in the show cause notice for imposing the fine on the petitioner trust and the absence of directions in the order-in-original regarding the trust's liability rendered the Department's attempts to recover the fine from the petitioners unjustified. Consequently, the communications demanding payment of the redemption fine were quashed, and the petition was allowed to that extent and disposed of.