2002 (2) TMI 152 - AT - Customs

Summary

Issues:
- Import of Electrical Steel Sheets below prescribed value
- Confiscation of goods under Customs Act
- Determination of redemption fine based on market price

Import of Electrical Steel Sheets below prescribed value:
The appellants imported Electrical Steel Sheets below the prescribed value of US $763 per MT, which required a specific license for import post-11-12-98 as per DGFT Notification No. 35. The goods were shipped from Russia to India in December 1998, and the appellants sought clearance under OGL, which was objected to by Customs authorities. The authorities maintained that the goods were liable for confiscation under Section 111(d) of the Customs Act. The Commissioner ordered confiscation with an option for redemption on payment of a fine of Rs. 10 lakhs, which the appellants paid and cleared the goods.

Confiscation of goods under Customs Act:
The appellants challenged the quantum of redemption fine imposed by the Commissioner, arguing that it exceeded the market price of the goods less the duty chargeable, as per the proviso to Section 125(1) of the Customs Act. They contended that no market enquiry was conducted to determine the Indian market price of the goods. The Commissioner based the redemption fine on the minimum CIF value fixed by DGFT, which the appellants argued was not a valid criterion for determining market price. The Tribunal noted that the Commissioner did not conduct any enquiry to ascertain the market price and observed that the DGFT notification's purpose was different from the proviso to Section 125(1). The Tribunal emphasized that the redemption fine should not exceed the Indian market price less duty chargeable, and the Commissioner's decision lacked consideration of contemporaneous market price.

Determination of redemption fine based on market price:
The Tribunal set aside the Commissioner's order and allowed the appeal by remand, directing the Commissioner to determine the redemption fine afresh in accordance with the law after ascertaining the contemporaneous market price of the goods through appropriate enquiries. The appellants were granted the opportunity to provide admissible evidence of the market price, emphasizing the importance of considering the actual market value for imposing redemption fines. The Tribunal highlighted the discretionary nature of determining redemption fines based on sound judicial principles and the need for a thorough assessment of market prices before imposing fines.