2008 (4) TMI 320 - HC - Customs

Redemption fine - Whether redemption fine under Section 125 of the Customs Act, 1962 can be imposed even if goods are neither available for confiscation nor cleared on undertaking/bond? Held that - Reading of the judgment/order of the Hon ble Apex Court in M/s. Weston Components Ltd. v. Commissioner of Customs, New Delhi (2000 (1) TMI 45 - SUPREME COURT OF INDIA), would show that redemption fine can be imposed even in the absence of the goods as the goods were released to the appellant on an application made by it and on the appellant executing a bond. Since the goods were released on a bond the position is as if the goods were available. The ratio of the above decision cannot be understood that in all cases the goods were permitted to be cleared initially and later proceedings were taken for under-valuation or other irregularity, even then redemption fine could be imposed. We are, therefore, not inclined to accept the contention raised by the appellant on this issue and set aside the redemption fine. Reliance of revenue upon the provisions of Section 125 of the Act is also misconceived. Section 125 of the Act is applicable only in those cases which have been cleared by the concerned authorities subject to furnishing undertaking/bond etc. However, in the present case, admittedly, the goods were cleared by the respondent-authorities without execution of any bond/undertaking by the assessee. Thus, in view of the fact and circumstances of the case, we find no error in the impugned orders. No substantial question of law arises for our determination in the present appeal and the same is hereby dismissed.

Issues involved:
1. Confiscation of imported goods under Customs Act, 1962.
2. Imposition of redemption fine and penalty for mis-declaration of value.
3. Validity of orders passed by appellate authorities.
4. Interpretation of Section 125 of the Customs Act, 1962.

Analysis:

Issue 1: Confiscation of imported goods under Customs Act, 1962
The case involved the import of used computer monitors in contravention of Foreign Trade Policy, leading to a show cause notice for confiscation under Section 111 of the Customs Act, 1962. The Adjudicating Authority initially ordered confiscation, but the Commissioner of Customs found the proceedings invalid as the goods had been released and were not available for confiscation. The Commissioner held that confiscation cannot be maintained when goods were released unconditionally and not seized, as per precedents like M/s. Weston Components Ltd. v. Commissioner of Customs, New Delhi. The Tribunal upheld this view, emphasizing that confiscation cannot be ordered if goods are not available, citing relevant judgments.

Issue 2: Imposition of redemption fine and penalty for mis-declaration of value
The department imposed a redemption fine and penalty due to mis-declaration of the value of the imported goods. However, the Commissioner of Customs set aside the redemption fine, stating that no fine could be imposed where goods were neither seized nor cleared on undertaking. The Tribunal also supported this decision, referring to the case law. The judgment highlighted that Section 125 of the Customs Act applies only when goods are cleared with an undertaking, which was not the case here, leading to the dismissal of the redemption fine.

Issue 3: Validity of orders passed by appellate authorities
The department challenged the orders of the Commissioner of Appeals and the Tribunal, arguing that the judgments were not in line with the provisions of the Customs Act. However, both the Commissioner of Appeals and the Tribunal based their decisions on established legal principles and Supreme Court judgments, including M/s. Weston Components Ltd. The High Court found no error in the decisions of the appellate authorities and dismissed the appeal.

Issue 4: Interpretation of Section 125 of the Customs Act, 1962
The department contended that Section 125 of the Customs Act allows for the imposition of redemption fine even if goods are not physically available for confiscation. However, the High Court clarified that Section 125 applies only when goods are cleared with an undertaking, which was not the situation in this case. The Court emphasized that the power to levy redemption fine is not absolute and must align with the circumstances of each case, as established in legal precedents.

Overall, the High Court dismissed the appeal, finding no substantial question of law and upholding the decisions of the appellate authorities based on established legal principles and interpretations of relevant provisions of the Customs Act.

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