2017 (3) TMI 1114 - AT - Customs

Valutaion - licence fee - inclusion of licence fee in assessable value - confiscation - redemption fine - penalty - quantum of redemption fine and penalty proper or not? Held that - the impugned order has imposed a redemption fine of approximately 20% and penalty of 15% of the re-determined assessable value - The redemption fine imposed is correct - the penalty imposed seems to be excessive. In the interest of justice, the penalty reduced from ₹ 4 lakhs to ₹ 1 lakh - appeal disposed off - decided partly in favor of appellant.

Summary

Issues:
1. Correct penalization under Section 112(a) of the Customs Act, 1962
2. Confiscation of goods and imposition of redemption fine
3. Quantum of redemption fine and penalty

Analysis:

Issue 1: Correct penalization under Section 112(a) of the Customs Act, 1962
The appeal challenged the penalization of the appellant under Section 112(a) of the Customs Act, 1962. The appellant imported pre-recorded cassettes with a declared value that was considered low. Upon investigation, it was revealed that a contract with the supplier/original right holders required payment of a license fee in addition to the declared value. The goods were provisionally released with an enhanced assessable value, followed by a show cause notice for re-determination of value, confiscation of goods, and imposition of penalty. The appellant's defense was based on their lack of awareness regarding including the license fee in the valuation of imported goods. The adjudicating authority re-determined the assessable value, ordered confiscation under section 111(m) of the Customs Act, 1962, with an option for redemption on payment of a fine and imposed a penalty under Section 112(a).

Issue 2: Confiscation of goods and imposition of redemption fine
The appellant contested the quantum of redemption fine and penalties imposed, arguing that they were excessive. Citing a Tribunal decision, the appellant claimed that the redemption fine should range between 5 to 10% of the re-determined value. The impugned order imposed a redemption fine of approximately 20% and a penalty of 15% of the re-determined assessable value. The Tribunal found the redemption fine to be correct but deemed the penalty excessive. In the interest of justice, the penalty was reduced from ?4 lakhs to ?1 lakh, and the appeal was disposed of accordingly.

Issue 3: Quantum of redemption fine and penalty
Upon careful consideration, the Tribunal acknowledged the appellant's grievance regarding the redemption fine and penalties. While affirming the correctness of the redemption fine, the Tribunal deemed the penalty to be excessive. Consequently, the penalty was reduced to ?1 lakh, reflecting a more just outcome. The decision was made in line with the appellant's arguments and the Tribunal's assessment of the situation.

This comprehensive analysis of the judgment highlights the key legal issues, the facts of the case, the arguments presented, and the Tribunal's decision on each issue.