2017 (10) TMI 367 - AT - Customs

Confiscation - Diamonds - smuggling - Baggage Rules - quantum of redemption fine and penalty - Held that - smuggling of the diamonds has not been controverted. Contumacious conduct is definitely been proved in respect of the appellant. Without doubt, imposition of redemption fine and penalty under sections 125 and 114 of the Customs Act is definitely justified - the interests of justice would be met adequately by reducing the redemption fine imposed u/s 125 to ₹ 3,50,000/- and penalty imposed u/s 114 to ₹ 1,50,000/- - appeal allowed in part.

Summary

Issues: Smuggling of diamonds, imposition of redemption fine and penalty under Customs Act, actual value of purchased diamonds, reduction of redemption fine and penalty.

Issue 1: Smuggling of diamonds and imposition of redemption fine and penalty under Customs Act
The appellant was intercepted while attempting to board a flight to Bangkok with cut and polished diamonds valued at &8377; 34,76,000. The diamonds were confiscated absolutely, and the goods used to conceal them were also confiscated under the Customs Act, 1962. A penalty of &8377; 3,50,000 was imposed on the appellant. The Tribunal in a previous order set aside the absolute confiscation and remanded the matter. In the subsequent adjudication, the authority allowed redemption of the diamonds on payment of &8377; 8,50,000 and imposed a penalty of &8377; 3,50,000. The appellant appealed on the quantum of redemption fine and penalty, arguing that the actual value of the diamonds was &8377; 24 lakhs, not &8377; 34.76 lakhs as appraised by the department. The Tribunal acknowledged the smuggling and contumacious conduct but considered reducing the redemption fine to &8377; 3,50,000 and the penalty to &8377; 1,50,000 based on the actual purchase value of the diamonds.

Issue 2: Actual value of purchased diamonds
The appellant contended that the department had appraised the diamonds at a higher value than the actual purchase price of &8377; 24 lakhs, as stated in the show cause notice. The Tribunal noted that this assertion was not disproved by the department. Considering this discrepancy, the Tribunal reduced the redemption fine and penalty to align with the actual purchase value. The reduction was deemed sufficient to meet the interests of justice adequately, leading to the decision to lower the redemption fine to &8377; 3,50,000 and the penalty to &8377; 1,50,000.

Conclusion
The Tribunal partially allowed the appeal by reducing the redemption fine and penalty imposed on the appellant under the Customs Act. The decision was based on the discrepancy between the appraised value of the diamonds and the actual purchase price, aiming to ensure justice while maintaining penalties for smuggling and contumacious conduct.