2023 (7) TMI 593 - AT - Customs

Confiscation of imported goods - imposition of redemption fine and penalty - import of used tyres - mis-declaration of the country of origin - allegations regarding involvement of appellant in producing fraudulent documents for clearance - HELD THAT - The reliance of the appellant in the matter of M/s Baby Marine Seafood Retail Pvt. Ltd. 2021 (4) TMI 1089 - CESTAT BANGALORE this Tribunal set aside the order of redemption fine and penalty imposed by the Adjudication Authority on entirely different circumstances and ratio of the said finding is not applicable in appellant s case. Similarly in the matter of Allen Bradley India ltd. 1991 (8) TMI 192 - CEGAT NEW DELHI this Tribunal has set aside the fine and penalty imposed by the Adjudicating Authority and permitted the appellant to re-export the goods. Similarly in the matter of Agarwal Industries Corporation Ltd.(Supra) omission on the part of the appellant was regarding the mis-declaration of the country of origin and subsequently the appellant had taken effective steps and cleared the goods on furnishing license for clearance of goods. In the present case there is no evidence to substantiate the allegations regarding involvement of appellant in producing fraudulent documents for clearance and adjudication authority categorically stated that appellant was not knowingly involved in the creation of false DGFT license. Thus appellant can be treated only as a victim of fraud committed by the co-noticee Shri Ravi Shekhar Jha. For that reason no penalty can be imposed on him under Section 112 A of the Customs Act 1962. Redemption fine - HELD THAT - Though the appellant is not involved in the fraudulent activity the goods imported by the appellant is illegally imported without valid license and for that reason goods are liable for confiscation. There is no allegation of undervaluation and also there is no finding regarding the margin of profit earned by the appellant through such import. The goods were detained since 25.03.2019 and only after the directions by the Hon ble High Court vide order dated 24.07.2019 it was released. Thus the appellant had faced financial loss due to delay in clearance of goods. Considering the fact that the goods are not prohibited to import the redemption fine of Rs.5 lakhs is considered reasonable for the omission on the part of appellant to produce valid import license for clearing the goods - Order of confiscation is upheld. However the redemption fine imposed by the Adjudication Authority is reduced to Rs. 5 lakhs and penalty imposed to the appellant under Section 112 of the Customs Act 1962 is set aside. Thus appeal is partially allowed.

Summary

Issues involved: Confiscation of imported goods, imposition of fine and penalty, validity of import license, involvement in fraudulent activity, appeal against Order-In-Original, consideration of past record, financial loss due to delay in clearance of goods.

Confiscation of Goods and Imposition of Fine and Penalty: The appellant imported goods based on a special import license obtained from DGFT, which was later found to be forged. Investigations revealed that the consultant had fabricated the license. Criminal proceedings were initiated, but the appellant was exonerated from fraudulent activity. The Adjudicating Authority ordered confiscation of goods, redemption fine of Rs.18,72,000, and penalty of Rs.3,78,000. The Commissioner (Appeals) upheld this decision, leading to the present appeal.

Appellant's Submission and Legal Precedents: The appellant argued that they were not knowingly involved in the fraud and were misled by the consultant. The appellant cited legal precedents where fines and penalties were set aside in similar cases. The appellant suffered financial loss due to the delay in goods clearance after the High Court's intervention.

Department's Position and Tribunal's Analysis: The Department supported the previous decisions, stating that the appellant benefited from the fraud. However, the Tribunal noted that there was no evidence implicating the appellant in producing fraudulent documents. The Tribunal found the appellant to be a victim of the fraud committed by the consultant. As the goods were illegally imported without a valid license, confiscation was upheld, but the penalty under Section 112 of the Customs Act was set aside. A redemption fine of Rs.5 lakhs was deemed reasonable, considering the circumstances and the fact that the goods were not prohibited for import.

Conclusion: The Tribunal partially allowed the appeal, upholding the confiscation of goods but reducing the redemption fine to Rs.5 lakhs. The penalty under Section 112 of the Customs Act was set aside. The appellant was considered a victim of fraud and faced financial loss due to the delayed clearance of goods.