1987 (2) TMI 245 - AT - Customs

Summary

Issues Involved:
1. Liability for confiscation of goods.
2. Quantum of redemption fine.
3. Discretion in the imposition of fines.
4. Determination of market price for confiscated goods.
5. Principles guiding the exercise of discretion in adjudication.

Issue-wise Detailed Analysis:

1. Liability for Confiscation of Goods:
The core issue in this appeal arises from an adjudication order dated 1.4.1983 by the Collector of Customs and Central Excise, Ahmedabad, which directed the confiscation of 1231.508 M/Tonnes of Refined Industrial Coconut Oil imported by the appellant. The confiscation was ordered under Section 111(d) of the Customs Act, 1962, due to the import licenses produced by the appellant not covering the imports, thereby violating the Import Policy AM-80-81, 81-82, and 82-83, and Section 3(1) of the Imports and Exports (Control) Act, 1947 as amended.

2. Quantum of Redemption Fine:
The appellant contested the imposed fine of Rs. 85,00,000/- in lieu of confiscation, arguing for a reduction to 35% of the landed cost, as was held in similar cases of M/s. Jayanth Oil Mills and M/s. Allena Impex. The appellant's counsel argued that the fine should be representative of the value of the confiscated goods and not penal, and that the exercise of discretion in determining the fine should not be arbitrary.

3. Discretion in the Imposition of Fines:
The respondent argued that the discretion in imposing a fine in lieu of confiscation need not necessarily conform to the quantum levied in other cases, even if the facts are identical. The respondent cited the case of Sheikh Mohd. Omar v. Collector of Customs to support the argument that the exercise of discretion by a quasi-judicial authority should not be interfered with unless it is shown that the discretion was exercised improperly.

4. Determination of Market Price for Confiscated Goods:
The judgment emphasized the necessity of determining the ceiling for the fine, which should not exceed the market price of the confiscated goods less the duty chargeable. The market price should be ascertained based on the price a willing purchaser would pay a willing seller, evidenced by prices in a plurality of transactions of sales and purchases occurring on the relevant date and place.

5. Principles Guiding the Exercise of Discretion in Adjudication:
The judgment highlighted that the adjudicating officer's discretion in fixing the fine is not absolute and must conform to well-settled principles, including natural justice. The exercise of discretion must not be arbitrary, vague, or fanciful but should be legal and regular. The judgment referenced several legal precedents, including the Indo-China Steam Navigation Co. v. Jasjit Singh case, which held that the officer must consider all relevant and material circumstances in determining the fine.

Conclusion:
The appeal was allowed in respect of the fine in lieu of confiscation, which was required to be re-determined by the Collector on remand. The judgment directed the Collector to complete the enquiry within three months, considering the guidelines provided. The fine already realized need not be refunded until the re-determination. If any part of the fine is to be refunded or additional amounts are to be realized, appropriate actions should be taken based on the re-determined fine.