2017 (4) TMI 203 - AT - Customs

Imposition of penalty u/s 114 of the CA - quantum of redemption fine and penalty - illegal export of drug formulations - N/N. 35/2008-Cus (NT) dt.02.04.2008 - Held that - Section 114 of the Act, 1962, provides penalty for attempt to export goods improperly etc., Clause (iii) of Section 114 provides that any person, who, in relation to any goods does or omits to do any act which act or omission would render such goods liable to confiscation u/s 113 or abates the doing or omission of such an act, shall be liable to a penalty not exceeding the value of the goods as declared by the exporter or the value as determined under this Act, whichever is greater - the imposition of penalty u/s 114 of the Act, 1962 is justified - the quantum of redemption fine and penalty are excessive, redemption fine reduced to ₹ 10,00,000/- and penalty reduced to ₹ 5,00,000/- each - appeal allowed - decided in favor of appellant.

Issues:
1. Confiscation of goods under the Customs Act, 1962.
2. Imposition of redemption fine and penalty.
3. Consideration of voluminous records by the Adjudicating Authority.
4. Justification of penalty under Section 114 of the Act, 1962.
5. Reduction of redemption fine and penalty.

Analysis:
1. The judgment revolves around the confiscation of goods under the Customs Act, 1962. The case involved the recovery of a large quantity of Eskuff Cough Syrup from a godown, with multiple parties claiming ownership. A Show Cause Notice was issued proposing confiscation and penalties. The Commissioner confiscated the goods, imposed a redemption fine, and penalties on the claimants. The Adjudicating Authority examined the evidence and found deliberate manipulation in the transaction of the goods, leading to illegal export, justifying the confiscation under Section 113 of the Act.

2. The issue of imposition of redemption fine and penalty was raised by the appellants. The appellants contended that voluminous records were produced to substantiate legal transactions, which were not considered by the Adjudicating Authority. The penalty was imposed under Section 114 of the Act, justifying the penalty amount based on the value of the goods. The judgment upheld the penalty under Section 114 but reduced the redemption fine and penalty amount considering the excessive quantum initially imposed.

3. The consideration of voluminous records by the Adjudicating Authority was a point of contention. The appellants argued that the records were not adequately evaluated. However, the judgment noted that the Authority provided detailed reasoning for discarding the documents. The Central Government's notification regarding the illegal export of drug formulations was also referenced to support the Authority's findings.

4. The justification of penalty under Section 114 of the Act, 1962 was crucial in this case. The judgment highlighted that the penalty for attempting to export goods improperly, as per Section 114, was justified based on the actions of the parties involved. The deliberate manipulation of transactions leading to illegal export warranted the penalty under this section, emphasizing the seriousness of the offense.

5. Finally, the judgment concluded by reducing the redemption fine and penalty imposed on the appellants. While upholding the impugned order, the fine was reduced to ?10,00,000 and the penalty to ?5,00,000 each on both appellants. This reduction was based on the excessive quantum of the initial penalty and fine, ensuring a fair and proportionate outcome in light of the circumstances presented during the case.

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