2005 (1) TMI 156 - AT - Customs

Summary

Issues:
1. Liability to confiscation of goods restricted for import.
2. Determination of Margin of Profit (MOP) under Section 125 of the Customs Act, 1962.
3. Imposition of redemption fine and penalty.

Analysis:

1. The Appellants were engaged in dredging and laying pipelines under sea water as subcontractors for a project. They imported equipment and spares for the project but faced delays in obtaining the required Import License. Customs found the goods to be restricted items requiring a specific Import License. The Commissioner confiscated the goods under Section 111(d) of the Customs Act, 1962, with an option to redeem on payment of a fine. The Reserve Bank of India approved re-export, and an Addendum allowed re-export after payment of the fine and penalty. The Tribunal upheld the liability to confiscation but noted the absence of MOP determination under Section 125. As the goods were not for sale, a commercial margin of profit was not applicable. The heavy redemption fine was reduced to a token amount of Rs. 1,000 for re-export.

2. The issue of MOP determination under Section 125 of the Customs Act, 1962 was raised during the appeal. The Tribunal observed that the MOP determination was not seen to have been arrived at, as required by law. Since the imported goods were not intended for sale, calculating a commercial margin of profit was deemed unnecessary. Consequently, the Tribunal reduced the redemption fine to a nominal amount of Rs. 1,000, considering the permission granted for re-export. The Tribunal found the clearance of goods on the fine imposed to be unjustifiable due to the absence of MOP determination.

3. Regarding the penalty imposed by the Commissioner, the Tribunal upheld the penalty liability at the level determined by the Commissioner. The Appellants' appeal was partly allowed, with the confiscation upheld but the redemption fine significantly reduced. The Tribunal's decision considered the circumstances of the case, including the nature of the imported goods and the approval for re-export granted by the Reserve Bank of India.