2004 (7) TMI 122 - AT - Customs

Summary

Issues:
1. Customs valuation of imported second-hand goods.
2. Confiscation and penalty under the Customs Act, 1962.
3. Reduction of redemption fine and penalty.

Customs Valuation of Imported Second-Hand Goods:
The judgment revolves around the valuation of imported second-hand goods, specifically "Second-hand used diesel engines." The appellant, a registered S.S.I. unit, engaged in reconditioning and engineering work on these goods. The customs authorities noted discrepancies in the declared value of the imported goods compared to contemporaneous imports, leading to an enhancement of the value as per Rule 5 of the Customs Valuation Rules, 1998. This enhancement resulted in the imposition of a redemption fine and penalty by the authorities.

Confiscation and Penalty under the Customs Act, 1962:
The Joint Commissioner of Customs & Central Excise, Goa, opined that imported second-hand goods can only be cleared under specific conditions, and in the absence of compliance, they are subject to confiscation under section 111(2) of the Customs Act, 1962, along with penalties under section 112. The Commissioner of Customs (Appeal) at Chattrapati Shivaji International Airport, Mumbai, upheld this view, leading to the imposition of a redemption fine and penalty on the appellant.

Reduction of Redemption Fine and Penalty:
During the appeal, the appellant argued for a reduction in the redemption fine and penalty, citing discrepancies between the enhanced valuation and the actual benefit derived. The appellant referred to previous decisions by different benches to support their case. The appellate authority acknowledged the appellant's argument and reduced the redemption fine to 30% and the penalty to 5% of the CIF value of the imported goods. This reduction was based on the principle that the fine and penalty should be proportionate to the benefit expected by the appellant in saving the duty payable.

In conclusion, the appellate tribunal partially allowed the appeal, reducing the redemption fine and penalty in consideration of the appellant's arguments and the principles observed in previous decisions.