2022 (2) TMI 631 - AT - Customs

Levy of redemption fine and penalty - misdeclaration of imported goods - misuse of facilities extended to FTWZ so as to avoid customs examination of undeclared goods - contention raised by appellant in the appeal before the Commissioner (Appeals) was that when the adjudicating authority allowed re-export of the goods, there was no requirement to impose any redemption fine - mens rea against the importer existing or not - HELD THAT - Even though there was no appeal filed by the department, after going into the merits of the case, the Commissioner (Appeals) has set aside the order passed by the adjudicating authority allowing the appellant to re-export the goods. This conclusion arrived at by the Commissioner (Appeals) to set aside the order of the adjudicating authority is highly erroneous in absence of an appeal filed by the department. The said order passed by the Commissioner (Appeals) to confiscate the goods without option to redeem the goods for re-export requires to be set aside. The Tribunal has held that when the goods are allowed to be re-exported, the imposition of redemption fine cannot sustain. In the present case, the adjudicating authority has also imposed penalty of ₹ 2 lakhs. The adjudicating authority after considering the submissions made by the appellant that the goods were intended to be supplied to another customer of another country has allowed the request for re-export. On such score, when the goods have not been intended to be imported by the appellant, no penalty can be imposed. The impugned order cannot sustain. The same is set aside - Appeal allowed - decided in favor of appellant.

Summary

Issues: Misdeclaration of goods, imposition of redemption fine, imposition of penalty, re-export of goods

Misdeclaration of Goods:
The appellant's imported goods were examined based on specific intelligence, revealing undeclared items alongside declared ones. The importer was suspected of misdeclaration to avoid customs examination and evade duty. The adjudicating authority ordered confiscation of the goods but allowed redemption on payment of a fine. The Commissioner (Appeals) later set aside the re-export option, leading to the current appeal before the Tribunal.

Imposition of Redemption Fine:
The appellant argued that as the goods were intended for re-export, no redemption fine should be imposed, citing precedents where re-exported goods were exempt from such fines. The Tribunal's decision in Siemens Public Communication Networks Ltd. v. CC supported this stance. The appellant contended that redemption fines are for goods cleared for home consumption, not for re-exported items.

Imposition of Penalty:
Regarding the penalty imposed, the appellant claimed lack of mens rea due to the intended re-export to another customer. The penalty was deemed excessive and harsh since the re-export was allowed based on the appellant's explanation. The Tribunal noted that penalties are typically for deliberate violations of the law, not for situations like the present case where re-export was permitted.

Re-export of Goods:
The adjudicating authority accepted the appellant's request for re-export due to the goods being intended for another customer in a different country. The Commissioner (Appeals) overturned this decision despite no appeal from the department, leading to the Tribunal's intervention. Precedents highlighted that when goods are allowed for re-export, redemption fines and penalties are not justified, as seen in the Siemens case and other tribunal decisions.

In conclusion, the Tribunal found the Commissioner (Appeals) erred in setting aside the re-export option without a departmental appeal. The Tribunal set aside the order, allowing the appeal with consequential relief. The judgment emphasized that redemption fines and penalties are not applicable when goods are re-exported, especially in cases where there is no mens rea for deliberate non-compliance with customs regulations.