2016 (7) TMI 148 - CGOVT - Customs

Smuggling of goods from Hong Kong via Bangkok in connivance with certain staff deployed at the IGI Airport. - Commissioner (Appeal) has ordered revaluation of goods by allowing 40% abatement instead of 25% allowed by the Adjudicating Authority. Further he reduced the redemption fine from ₹ 4 lakhs to ₹ 1.50 lakhs and penalty from ₹ 2.50 lakhs to 1.50 lakhs, imposed under Sections 125 & 112(a) of the Act, ibid upon Shri Surinder Singh Arora. - Revenue filed this revision application. Held that - The modus operandi attempted by the pax to clear the impugned seized goods clearly reveal the intention of the Notices. The abatement of 25% on the market value of the goods already given is not on the lower side as tariff rate of duty on memory card is 15.033% and the pax cannot be allowed to make profit out of his act of attempted smuggling. The Commissioner (Appeals) on the other hand has allowed abatment of 40% on the ground that no market enquiry was conducted in the instant case. However as is seen from proceeding para market enquiry was conducted in a similar case and the same has not been taken into consideration in the appellate order. Government therefore finds that the abatment of 40% on market value allowed by Commissioner(Appeals) is on the higher side and the Order-in-Original allowing abatment of 25% is upheld. Further, Government finds that Appellate Commissioner s decision to reduce the quantum of redemption fine and penalty as a result of re-determination of value for duty purpose is thus also incorrect. Government therefore, restores quantum of redemption fine under Section 125 and penalties under Section 112 as imposed under the Order-in-Original. Decided partly in favor of revenue.

Summary

Issues Involved:
1. Valuation of seized goods.
2. Abatement percentage on market value.
3. Quantum of redemption fine.
4. Quantum of penalty.

Issue-wise Detailed Analysis:

1. Valuation of Seized Goods:
The case revolves around the interception of a passenger carrying 8020 memory cards valued at Rs. 12,03,000 after a 25% abatement on the market value. The passenger, along with an accomplice, was caught at the IGI Airport, New Delhi, attempting to smuggle these goods. The adjudicating authority initially valued the goods based on market enquiry conducted in a similar case, which the passenger's counsel accepted during the hearing. The valuation was deemed appropriate as it was based on quotations from market dealers.

2. Abatement Percentage on Market Value:
The original adjudicating authority allowed a 25% abatement on the market value of the goods, considering the high profit margin in the grey market and the intention to evade duty. However, the Commissioner (Appeals) increased this abatement to 40%, arguing that no market enquiry was conducted specifically for this case. The government found this excessive, noting that a market enquiry had indeed been conducted in a similar case and should have been considered. The government upheld the original 25% abatement, as it was consistent with the facts and previous similar cases.

3. Quantum of Redemption Fine:
The original order imposed a redemption fine of Rs. 4,00,000 under Section 125 of the Customs Act, 1962. The Commissioner (Appeals) reduced this fine to Rs. 1,50,000, following the increased abatement percentage. The government found this reduction incorrect, as it was based on an erroneous abatement percentage. Consequently, the original quantum of the redemption fine was restored.

4. Quantum of Penalty:
Penalties were initially imposed as follows: Rs. 2,50,000 on the passenger, Rs. 1,00,000 on the accomplice, and Rs. 50,000 on another involved individual, under Section 112 of the Customs Act. The Commissioner (Appeals) reduced these penalties to Rs. 1,50,000 for the passenger and Rs. 75,000 for the accomplice, again following the increased abatement. The government found this reduction incorrect due to the improper abatement percentage and restored the original penalties.

Conclusion:
The government allowed the revision application, restoring the original order's abatement percentage of 25%, and consequently, the original quantum of redemption fine and penalties. The decision emphasized the importance of consistent valuation methods and appropriate penalty measures in cases of smuggling to uphold the integrity of customs regulations.