2005 (5) TMI 213 - AT - Customs

Summary

Issues:
1. Interpretation of license for import of capital goods.
2. Clarification on the type of engines covered under the license.
3. Bona fide belief of the importer regarding the imported goods.
4. Discrepancy in terminology used for engine capacity.
5. Imposition of penalty and redemption fine.

Analysis:
1. The appellants appealed against the adjudication order passed by the Commissioner of Customs, Indore regarding the import of 522 used small diesel car engines. The license obtained was for capital goods, but the Secretariat of Industrial Approval clarified that the license was issued only for used small diesel engines, not used diesel car engines. The adjudicating authority ordered confiscation of the imported goods with a redemption fine of Rs. 55 lakhs and a personal penalty of Rs. 3 lakhs on the importer.

2. The appellants contended that they believed they could import used diesel car engines under the license granted for used small car diesel engines with accessories. They argued that the terminology of 1000 CC to 2500 CC in the license indicated the intention to import used small car diesel engines for power generation. They relied on a Supreme Court decision that set aside penalties on grounds of bona fide import. The Revenue argued that permission was granted only for used small diesel engines.

3. The Tribunal found that the appellants imported used diesel car engines, not disputing the goods' nature or value. As the license clarified that used diesel car engines were not covered, the impugned order of confiscation was upheld. The Tribunal reduced the redemption fine to Rs. 15 lakhs based on previous decisions and deemed the imposed penalty of Rs. 3 lakhs reasonable. The appellants were entitled to consequential relief as per the law.

4. The judgment emphasized the importance of adhering to the specifics of licenses granted for import, especially regarding the type and nature of goods covered. It highlighted the significance of clarity in communication between importers and competent authorities to avoid discrepancies and misunderstandings leading to penalties and confiscations. The decision also underscored the need for importers to act in good faith and within the confines of approved licenses to prevent legal repercussions.