2020 (6) TMI 262 - AT - Customs

Levy of Redemption Fine and Penalty - re-export of goods - goods are in the nature of food items - HELD THAT - The Tribunal in the case of M/S. ARIHANT GROUPS VERSUS COMMISSIONER OF CUSTOMS 2019 (9) TMI 1290 - CESTAT CHENNAI had considered the very same issue with regard to redemption fine imposed for direction of re-export of goods. In para 5 of the said order, the Tribunal relied upon the decision of the jurisdictional High Court in SANKAR PANDI VERSUS UNION OF INDIA 2001 (12) TMI 83 - MADRAS HIGH COURT , which was upheld by the Supreme Court in UNION OF INDIA VERSUS SANKAR PANDI 2010 (3) TMI 1247 - SC ORDER - Thus, the redemption fine imposed for re-export of the goods cannot sustain and requires to be set aside. Levy of Penalty - HELD THAT - Taking into consideration that the goods have been re-exported, the penalty of ₹ 2,00,000/- imposed is on the higher side, which requires to be reduced. Appeal allowed in part.

Summary

Issues:
Redemption fine and penalty imposed on imported goods.

Analysis:
The appellants imported 10,000 kgs of Cloves of Indonesian origin, valued at ?52,95,790, and were assessed duty of ?5,70,621. After inspection, the goods did not conform to FSSAI standards, leading to a direction for re-export with a redemption fine of ?5,00,000 and a penalty of ?5,00,000 under section 112(a) of the Customs Act, 1962. The Commissioner (Appeals) reduced the redemption fine to ?3,00,000 and the penalty to ?2,00,000. The appeal before the Tribunal focused on contesting the redemption fine and penalty imposed, not challenging the re-export order (para 1).

The appellant's counsel argued that based on a previous Tribunal order, no redemption fine could be imposed when goods are directed for re-export. Regarding the penalty, it was highlighted that the appellant suffered losses due to the goods not being cleared for home consumption, requesting leniency (para 2).

The department's Authorized Representative supported the impugned order, emphasizing the justification of the redemption fine and penalty due to the nature of the goods as food items (para 3).

In considering the issue, the Tribunal referred to a previous case involving redemption fine for re-export of goods, where the High Court and Supreme Court decisions were cited. Following this precedent, the Tribunal concluded that the redemption fine imposed for re-export could not be sustained and was set aside. Additionally, the penalty of ?2,00,000 was deemed excessive, considering the re-export of goods, leading to a reduction to ?50,000 (para 4-5).

In conclusion, the Tribunal partly allowed the appeal by setting aside the redemption fine and reducing the penalty to ?50,000. The impugned order was modified accordingly (para 5).