2017 (12) TMI 1181 - AT - Customs

Redemption fine - penalty - license not obtained from D.G.F.T for export of certain consignment of graphite equipments - Held that - Imposition of redemption at the rate of 15% of the value assessed in each case may considered to be justifies - So far as the penalty is concerned, that is imposed to deter contravention of law since No such imposition shall be bonus to the evader and an incentive to break the law So far as penalty imposed on the employee of the appellant in Appeal No.C/472 is concerned he is found to be General Manager-Marketing of the appellant. Keeping in view that the main appellant was an artificial person being a Company, infraction of law is only possible with the human intervention. Accordingly, role of General Manager-Marketing in exporting goods without licence calls for levy of penalty. Ld. Authority was rightly imposed penalty on him. Appeal allowed in part.

Summary

Issues:
1. Imposition of redemption fine and penalty for export of goods without obtaining a license from D.G.F.T.
2. Appellant's contention regarding the imposition of penalties and redemption fine.
3. Justification of redemption fine and penalty under the Customs Act, 1962.
4. Consideration of redemption fine quantum and penalty imposition.
5. Penalty imposition on the employee of the appellant.

Analysis:
1. The appellant argued that despite not having a license from D.G.F.T for exporting certain consignments of graphite equipment, the exported goods should not attract redemption fine and penalties. Four show-cause notices were issued against the appellant, contesting the penalties totaling ?17,87,420 on different consignments due to the absence of deliberate breach of law during the exports.

2. The adjudicating authority classified the goods as requiring export licensing, leading to confiscation under section 113 of the Customs Act, 1962, but allowed redemption under section 125 of the Act. The authority correctly imposed penalties under Section 114 for attempting to export such goods and redemption fines.

3. The appellant's argument that no redemption fine should apply when the goods were not available was dismissed. The tribunal clarified that exporting goods without the required license constituted a deliberate breach of the law, leading to the imposition of redemption fines as the goods became smuggled goods under section 2(39) of the Customs Act, 1962. The tribunal reviewed the redemption fine quantum of ?1,02,24,680 and considered it excessive, applying a 15% redemption rate based on market value and appellant's declared value.

4. Regarding penalties, the tribunal upheld the imposition as a deterrent against contravention of the law, emphasizing that penalties should not incentivize law-breaking. The penalty imposed on the General Manager-Marketing of the appellant was justified, as human intervention was necessary for the company's infractions, leading to the penalty imposition.

5. The tribunal partially allowed the appeal of the Graphite (I) Ltd., while dismissing the appeal of the General Manager, emphasizing the role of human intervention in the company's actions and upholding penalties as a deterrent against unlawful activities.