1988 (12) TMI 260 - AT - Customs

Summary

Issues Involved:
1. Legality and propriety of the Department's appeal under Section 129-D(2) of the Customs Act, 1962.
2. Validity of the redemption fine and penalty imposed by the Collector (Appeals).
3. Classification of the imported goods under the Import Trade Control (ITC) Policy.
4. Reliance on market price data and the margin of profit for determining redemption fine.

Issue-wise Detailed Analysis:

1. Legality and Propriety of the Department's Appeal under Section 129-D(2) of the Customs Act, 1962:

The appellants contended that the Department's appeal before the Collector (Appeals) was not maintainable, arguing that the Collector's direction for review under Section 129-D(2) was issued without a formal order and based on a gist of the order, which is not permissible. They cited the requirement for a speaking order in writing and compliance with Rule 4 of the Customs (Appeals) Rules, 1982, which mandates that an application under Section 129-D(2) be accompanied by two copies of the decision or order passed by the adjudicating authority.

The Tribunal found that the Collector had called for and examined the records of the adjudication proceedings, including the Deputy Collector's order dated 9-11-1987, which was on record and despatched on 11-12-1987. The Tribunal held that the Collector's review under Section 129-D(2) does not depend on the communication of the order to the respondents and that the procedural formality of filing the appeal with the required copies was not fatal to the appeal itself. The Tribunal also noted that the appellants had participated in the appeal proceedings after receiving the Deputy Collector's order.

2. Validity of the Redemption Fine and Penalty Imposed by the Collector (Appeals):

The appellants argued that the Collector (Appeals) had no power to impose a penalty for the first time at the appeal stage and that the quantum of redemption fine fixed by the Deputy Collector should not be a ground for review. They cited previous Tribunal decisions to support their contention that the quantum of redemption fine is discretionary and should not be reviewed unless there is bad faith or mala fide.

The Tribunal rejected this argument, noting that the Collector (Appeals) has the power to enhance the penalty and redemption fine under Section 128-A(3) of the Customs Act, which allows for confirming, modifying, or annulling the decision or order appealed against. The Tribunal found that the Collector (Appeals) had rightly enhanced the redemption fine to 200% of the c.i.f. value and imposed a penalty of Rs. 10,000/- on each appellant under Section 112(a) of the Customs Act, 1962, based on the deliberate attempt to mis-declare the goods and the high margin of profit.

3. Classification of the Imported Goods under the ITC Policy:

The appellants contended that the imported goods were almond seeds and not dry fruits, and thus, were covered under the REP licence for seeds. They relied on the Horticulturist's opinion that the seeds were viable for sowing.

The Tribunal upheld the Collector (Appeals)'s finding that the goods were dry fruits and consumer items as per commercial parlance and the ITC Policy. The Tribunal noted that almonds are classified as dry fruits under Appendix 2 Part B of the ITC Policy, and there is no significant commercial cultivation of almonds in India. The Tribunal also referred to the clarification from the Chief Controller of Imports and Exports, which supported the classification of almonds as dry fruits.

4. Reliance on Market Price Data and the Margin of Profit for Determining Redemption Fine:

The appellants argued that the reliance on Economic Times for determining the market price was erroneous and that the margin of profit should be based on local market inquiries. They contended that their own sales data showed a lower margin of profit.

The Tribunal found that Economic Times is a recognized commercial newspaper providing reliable data on commodity prices. The Tribunal held that the Collector (Appeals) rightly relied on the published prices in Delhi, a major market for dry fruits, rather than the appellants' own transaction data, which was inconsistent. The Tribunal also noted that the margin of profit calculated by the appellants was not reliable, as one group showed a profit of 83% while another claimed a loss.

Conclusion:

The Tribunal concluded that the Department's appeal was maintainable, the enhanced redemption fine and penalty imposed by the Collector (Appeals) were justified, the imported goods were correctly classified as dry fruits under the ITC Policy, and the reliance on Economic Times for market price data was appropriate. The appeals were rejected, and the order of the Collector (Appeals) was upheld.