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2016 (12) TMI 1025 - AT - CustomsQuantum of redemption fine - M/s. Nitu Enterprises imported two consignments of Bearings of third country origin from M/s.Kumar Trading Co.Ltd. (LLC), Dubai and sought transit of the same to Nepal - consignments were found to be of Russian/Japanese/Police/Romanian origin - on overseas enquiries the addresses of the importer was found to be fictitious - whether the redemption fine imposed is adequate or is needed to be enhanced? - Held that - It is observed from the case records that declared value of the two consignments, intended to be cleared to Nepal against Customs Transit Declaration(CTD) was ₹ 24,13,642/-. At the time of seizure department estimated the market value of Bearings to be ₹ 1,93,09,139/-. At the time of disposal of the said goods as per the direction of Hon ble Apex Court an amount of ₹ 1,01,05,990/- was realized and deposited with State Bank of India, Main Branch, Kolkata. Even if the sale proceeds of ₹ 1,01,05,990/- is taken to be the market value of the seized goods then also the margin of profit will be more than 300%. Accordingly Bench is of the considered view that redemption fine imposed by the Adjudicating authority is highly inadequate. In the interest of justice redemption fine is enhanced from ₹ 1.00 Lakh to ₹ 25.00 Lakhs under Section 125 of the Customs Act, 1962 - quantum of redemption fine enhanced - appeal allowed - decided in favor of Revenue.
Issues:
1. Adequacy of redemption fine imposed by the Adjudicating authority. Analysis: The Appeals were filed by the Revenue against the Order-in-Original passed by the Commissioner of Customs(Port), Kolkata, confiscating two consignments under Section 111 (d) and (o) of the Customs Act, 1962. The Adjudicating authority gave the Respondents an option to pay a redemption fine of &8377; 1.00 Lakh in view of the confiscation under Section 125 of the Customs Act, 1962. The Revenue contended that the redemption fine imposed was inadequate given the significant profit margin realized from the sale of the seized goods compared to the declared value of the consignments. The main issue in the proceedings was whether the redemption fine of &8377; 1.00 Lakh imposed by the Adjudicating authority was sufficient or needed to be increased. The declared value of the consignments was &8377; 24,13,642/-, while the market value estimated by the department at the time of seizure was &8377; 1,93,09,139/-. Upon the sale of the seized goods, an amount of &8377; 1,01,05,990/- was realized and deposited. Even considering this amount as the market value, the profit margin exceeded 300%. The Tribunal found the redemption fine of &8377; 1.00 Lakh to be grossly inadequate and enhanced it to &8377; 25.00 Lakhs under Section 125 of the Customs Act, 1962, in the interest of justice. The Tribunal, after hearing the arguments of the learned AR and examining the case records, concluded that the redemption fine imposed by the Adjudicating authority was insufficient given the substantial profit margin obtained from the sale of the seized goods. Therefore, the Tribunal enhanced the redemption fine from &8377; 1.00 Lakh to &8377; 25.00 Lakhs under Section 125 of the Customs Act, 1962. The Appeals filed by the Revenue were allowed by increasing the redemption fine to ensure appropriate penalties in line with the Customs Act, 1962.
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