2024 (12) TMI 1322 - AT - Customs

Imposition of redemption fine and penalty on re-export of goods - perishable goods or not - violation of import policies - HELD THAT - The Larger Bench relied upon by the Revenue in the case of Hemant Bhai R. Patel Vs Commissioner of Customs, Ahmedabad 2003 (2) TMI 87 - CEGAT, NEW DELHI observed that ' it is open to the adjudicating authority to impose redemption fine as well as penalty even when permission is granted for re-exporting the goods . Thus, the Bench was only answering the question whether redemption fine and penalty can be imposed while ordering for re-export of goods.' In the case of Commissioner of Customs Vs Elephanta Oil and Inds. 2003 (1) TMI 108 - SUPREME COURT , the Hon ble Supreme Court observed that ' I n this view of the matter, it is apparent that respondent knowing fully well the import policy imported prohibited goods i.e. import of canalised item namely beef tallow and, therefore, the Collector was fully justified in imposing the penalty under Section 112 of the Customs Act.' In the present case, the products imported are perishable and have to meet the standards specified by the Animal Quarantine Authority. The order of the original authority clearly held that the Animal Quarantine authority vide letter dated 05.01.2023 on testing the consignment was found to be positive for OIE pathogen, hence, could not be released. It is a fact that at the time of import, the appellant had produced Veterinary Health Certificate from the country of import, which stated that the product is free from all relevant OIE listed pathogens for fin fishes - The Board Circular No.100/2003-Cus dated 28.11.2003 (reproduced below) clearly states that depending upon the facts and circumstances of the case, the Commissioner has the discretion to impose redemption fine and penalty, thus, implying that it is not necessary that in all cases redemption fine and penalties needs to be imposed. Conclusion - In cases where goods are allowed to be re-exported due to testing failures or other reasons beyond the importer's control, the imposition of redemption fine and penalty may not be justified. The impugned order is set aside - Consequently, the Appeal is allowed.

Summary

ISSUES PRESENTED and CONSIDERED:

1. Whether redemption fine and penalty should be imposed when goods are allowed to be re-exported.

ISSUE-WISE DETAILED ANALYSIS:

Relevant legal framework and precedents:

The case involves the imposition of redemption fine and penalty on imported goods that were found to be in violation of import policies. The appellant argues that redemption fine and penalty are not warranted in cases of re-exporting goods due to bona fide mistakes. Precedents cited include judgments that support both the imposition and non-imposition of fines and penalties in similar situations.

Court's interpretation and reasoning:

The court considered the conflicting arguments regarding the imposition of fines and penalties in cases of re-exporting goods. It analyzed relevant judgments and circulars to determine the applicability of redemption fines and penalties in the present case.

Key evidence and findings:

The key evidence includes the testing of imported goods by Animal Quarantine Authorities, which found the goods to be positive for OIE pathogen, leading to the rejection of the consignment. The appellant had produced a Veterinary Health Certificate at the time of import, stating that the goods were free from relevant pathogens.

Application of law to facts:

The court applied the Customs Act, 1962, and relevant circulars to assess whether redemption fine and penalty were justified in this case. It considered the circumstances of the import, the testing results, and the appellant's compliance with import regulations.

Treatment of competing arguments:

The appellant argued against the imposition of fines and penalties, citing bona fide mistakes and compliance with import regulations. The Respondent supported the imposition based on previous decisions and import policy violations.

Conclusions:

The court concluded that in cases where goods are allowed to be re-exported due to testing failures or other reasons beyond the importer's control, the imposition of redemption fine and penalty may not be justified. It relied on previous judgments and circulars to support its decision to set aside the fines and penalties imposed on the appellant.

SIGNIFICANT HOLDINGS:

1. The court held that redemption fine and penalty may not be warranted when goods are allowed to be re-exported due to factors beyond the importer's control.

2. The court referenced relevant circulars and judgments to support its decision to set aside the fines and penalties imposed on the appellant.