1992 (12) TMI 57 - AT - Customs

Summary

Issues Involved:
1. Determination of the appropriate market price for fixing the quantum of redemption fine.
2. Consideration of extenuating circumstances and bona fide conduct of the importer in determining the redemption fine.
3. Judicial discretion in the imposition of redemption fines under Section 125 of the Customs Act.

Detailed Analysis:

1. Determination of the Appropriate Market Price for Fixing the Quantum of Redemption Fine:
The primary issue in this case is whether the market price for fixing the quantum of redemption fine should be the price at the time of importation or at the time of passing the adjudication order. The Tribunal had previously upheld the confiscation but remanded the case for determination of the redemption fine, noting that the adjudicating authority had not disclosed the details of market enquiries to the appellants. The Tribunal's earlier decision in Ashwin Vanaspati Industries (P) Ltd. v. C.C., Ahmedabad, emphasized that the market price should be considered at the time of importation. However, the referring Bench argued that this conclusion does not flow from Section 125 and is incapable of implementation. The adjudicating authority must consider the market price at the time of passing the order to ensure the option to clear the goods on payment of a fine is real and not illusory. The Tribunal's majority view, supported by various case laws, concluded that the market price at the time of importation should be adopted for fixing the redemption fine.

2. Consideration of Extenuating Circumstances and Bona Fide Conduct of the Importer in Determining the Redemption Fine:
The appellants argued that the redemption fine should consider the expenses incurred, such as demurrage and interest, and should not exceed the margin of profit. They cited several decisions where the Tribunal had taken into account the bona fide conduct of the importer. The Supreme Court in Jain Exports Pvt. Ltd. v. Union of India highlighted the importance of considering extenuating circumstances and bona fide conduct in determining the quantum of redemption fine. The Tribunal's majority view acknowledged these considerations, emphasizing that the fine should be fixed based on the market price at the time of importation, reflecting the gravity of the offence.

3. Judicial Discretion in the Imposition of Redemption Fines under Section 125 of the Customs Act:
The Tribunal examined the discretionary power vested in the adjudicating authority under Section 125 of the Customs Act. The Calcutta High Court in S.S. Kothari's case emphasized that the exercise of discretion must be judicial and not arbitrary. The Tribunal's majority view reiterated that the discretion in fixing the redemption fine must be exercised fairly, considering the market price at the time of importation. The dissenting opinion, however, argued that the market price should be determined at the time of passing the order to avoid rendering the option illusory.

Final Order:
The Tribunal, by majority view, directed the adjudicating authority to recalculate the redemption fine based on the market price prevalent on the date of importation of the goods, in accordance with the law. The appeal was disposed of with this directive.