2024 (6) TMI 780 - AT - Customs

Imposition of fine and penalty, more than 10% / 5% - violation of condition of DGFT in importing the second hand Digital Multi-function Printers - HELD THAT - The issue is covered by the decision of this Tribunal in the case of SRI SAI GRAPHICS VERSUS COMMISSIONER OF CUSTOMS, BANGALORE 2023 (6) TMI 422 - CESTAT BANGALORE , wherein the Tribunal observed that ' the Tribunal in a series of judgments referred to by the learned counsel consistently held that when the value has been enhanced on the basis of certificate by the Chartered Engineer without market enquiry, the imposition of fine and penalty @ 10% and 5% taking note of the enhanced value would meet the ends of justice.' The impugned order is modified and the fine and penalty are reduced to 10% and 5% respectively - Appeal disposed off.

Summary

Issues:
- Imposition of fine and penalty exceeding 10% / 5% in a case involving the import of second-hand Digital Multi-function Printers in violation of DGFT conditions.

Analysis:
The appeal was filed against an Order-in-Original passed by the Commissioner of Customs, Cochin, concerning the clearance of goods declared as old and used Digital Multi Function Printers. The Chartered Engineer assessed the value of the goods at Rs.95,38,626, leading to the confiscation of the goods under relevant customs and foreign trade regulations. A fine of Rs.17.00 lakhs and a penalty of Rs.7.00 lakhs were imposed on the appellant. The main issue revolved around whether the imposition of fine and penalty exceeding 10% / 5% was justified in light of the violation of DGFT conditions related to importing second-hand goods. The Tribunal referred to previous decisions, including the case of Shri Sai Graphics Vs. CC, Bangalore, where it was established that in cases where the value of goods is enhanced based on a Chartered Engineer's certificate without market inquiry, a fine of 10% and a penalty of 5% of the enhanced value would suffice.

Furthermore, the Tribunal cited the Navpad Enterprises case, emphasizing that if there is no evidence showing that the appellant paid more than the declared value to customs, fine and penalty should be fixed at 10% and 5% of the value determined by the Chartered Engineer. The Tribunal upheld this approach in various cases, leading to a consistent application of the 10% / 5% rule. The Karnataka High Court also upheld this precedent, as evidenced by the Omex International case. Consequently, the Tribunal modified the impugned order, reducing the fine and penalty to 10% and 5% of the enhanced value, in line with the established legal principles.

In conclusion, the Tribunal modified the original order, reducing the fine and penalty to 10% and 5% of the enhanced value, respectively. The appeal was disposed of accordingly, adhering to the consistent application of the 10% / 5% rule established in previous judgments and upheld by higher courts.