2006 (6) TMI 18 - AT - Central Excise

Central Excise - Second hand photocopier having been imported without specific import license - High Court s decision upholding the confiscation of goods is binding on Tribunal - Reduction in quantum of fine and penalty is justified

Summary

Issues:
1. Import of second-hand photocopying machines without specific import license and misdeclaration of value.
2. Confiscation of goods under Section 111(d) of the Customs Act and imposition of penalty under Section 112.
3. Discrepancy in classification of machines as capital goods or consumer goods.
4. Appeal against the decision of the original authority regarding assessable value, confiscation, and penalty.
5. Conflict of decisions between the Tribunal's Larger Bench and the High Court regarding the nature of imported machines.
6. Determination of reasonable fine and penalty considering the change in legal position post the High Court judgment.

Analysis:

1. The case involved the import of second-hand photocopying machines without a specific import license, leading to a dispute over the declared value. The department proposed to enhance the value based on an engineer's assessment, alleging misdeclaration by the importer.

2. The original authority upheld the proposals, fixing the assessable value, confiscating the goods under Section 111(d), and imposing a penalty under Section 112. The appeal by the assessee resulted in the machines being classified as capital goods, leading to the setting aside of confiscation and penalty.

3. The department appealed against the decision, citing a High Court judgment that deemed similar machines as consumer goods, not freely importable. The Tribunal considered conflicting decisions and held that the machines were imported in breach of licensing provisions, justifying confiscation.

4. The Tribunal addressed the issue of modifying the quantum of redemption fine and penalty, emphasizing the discretion in determining these factors. It noted the department's practice and the change in legal position post the High Court judgment, leading to a reduction in the fine and penalty imposed.

5. The Tribunal acknowledged mitigating circumstances, such as the historical classification of machines as capital goods and the lack of market enquiry for second-hand goods. It deemed the revised fine and penalty amounts as meeting the ends of justice, setting aside the impugned order except for the assessable value determination.

6. Ultimately, the Revenue's appeal was allowed to the extent of modifying the fine and penalty, considering the evolving legal landscape and the specific circumstances of the case.