2020 (6) TMI 126 - AT - Customs

Restriction on import of Palm oil through Kochi Port - Notification 39(RE-2007)/2004-09 dated 16th October 2007 - Confiscation - penalty - HELD THAT - The importer has not made out any case to show the compelling circumstances under which they could not either cancel the Contract or alter the Port of discharge - the importer was required to comply with the Notification dated 16.10.2007, inasmuch as they could not produce an irrevocable commercial letter of credit as required by the Notification. Therefore, the impugned goods are liable for confiscation in terms of Section 111 (d) of Customs Act, 1962. The Learned Commissioner erred in holding that no redemption fine could be levied as the goods were not physically available. The goods were provisionally released in terms of a bond submitted by the importers - redemption fine upheld, but the quantum is reduced. The impugned order is modified to the extent of reducing penalty from ₹ 80,00,000/- to ₹ 38,00,000/- - Appeal allowed in part.

Summary

Issues:
1. Import of Palm oil through Kochi Port in violation of Notification
2. Imposition of penalty under Section 112 of Customs Act, 1952
3. Applicability of transition period provisions
4. Validity of contract in relation to import restrictions
5. Effect of High Court judgment on stay of operation
6. Principles of doctrine of merger, unjust enrichment, and promissory estoppel
7. Imposition of redemption fine

Analysis:

1. The case involved the import of Palm oil through Kochi Port by M/s Liberty Oils Ltd. in violation of a Notification prohibiting such imports. The High Court initially stayed the operation of the Notification but later dismissed the Writ Petition. Subsequently, a Show Cause Notice (SCN) was issued seeking confiscation of the imported goods and imposition of penalty under Section 112 of the Customs Act, 1952.

2. The Commissioner imposed a penalty of &8377; 80 Lakhs on M/s Liberty Oils Ltd., refraining from imposing a redemption fine as the goods were already released. Appeals were filed by both the appellant against the penalty and the revenue against the non-imposition of redemption fine.

3. The appellant argued that a firm contract was established before the import restriction came into effect, invoking transition period provisions to contest the penalty imposition. Various case laws were cited in support of this argument.

4. The Commissioner contended that the importer failed to comply with the Notification requirements as they did not open an irrevocable commercial letter of credit, making the import impermissible. The Commissioner emphasized the strict construction of the law and cited relevant case laws to support their stance.

5. The Commissioner further argued that with the High Court's final order quashing the Writ Petition, the stay of operation was rendered non est, leading to the restoration of the pre-stay position. The principles of doctrine of merger, unjust enrichment, and promissory estoppel were highlighted to support the imposition of redemption fine.

6. The Tribunal found that the importer did not demonstrate compelling circumstances to justify non-compliance with the import restrictions. The High Court's decision restored the pre-import position, necessitating compliance with the Notification. The penalty was reduced to &8377; 38 Lakhs, considering the legal process undergone by the appellants. The redemption fine of &8377; 5 Lakhs was imposed in line with the Weston Components Ltd. case.

7. The impugned order was modified to reduce the penalty and impose the redemption fine, aligning with the legal principles and precedents discussed during the proceedings.

This detailed analysis covers the key issues and arguments presented in the judgment, highlighting the legal reasoning behind the Tribunal's decision.