2009 (12) TMI 429 - HC - Customs

Redemption fine and penalty- the adjudicating authority has passed an Order-in-Original communicating to the appellant on with regard to confiscation of 1,20,000 pieces of scarves and giving option to redeem the confiscated goods on payment of redemption fine of Rs.14 lacs in lieu of confiscation under provisions of Section-125 of the Act and also imposed penalty of Rs.5 lacs on the appellant under Section-114 of the Act and also imposed penalty of Rs.2 lacs on the partner of the appellant firm. The CESTAT vide its order reduced the redemption fine of Rs.14 lacs to Rs.5 lacs and penalty from Rs.5 lacs to Rs.4 lacs. The separate penalty levied on the partner of M/s.Cosmos was deleted. Being aggrieved by the said order of the Tribunal the present Tax Appeal is preferred. Held that- Tribunal noting that misdeclaration and inflation of value of scarves with intent to earn fraudulently NFE and confiscation sustainable. Penalty reduced from 5 lakh to 4 lakh by Tribunal. Evidence considered and finding of fact given by Tribunal. Substantial question of law not arise.

Summary

Issues:
1. Justification of redemption fine and penalty without findings on the value of exported products.
2. Reliance on belated statement for penalizing the appellant.

Issue 1:
The appellant challenged the imposition of a redemption fine and penalty by the tribunal without the Commissioner determining the value of the exported products. The High Court noted that the adjudicating authority had confiscated 1,20,000 pieces of scarves and imposed a redemption fine of Rs.14 lakhs and penalties under Sections 114 and 125 of the Customs Act, 1962. The CESTAT later reduced the fine and penalties. The High Court observed that the authorities had found sub-standard goods meant for export, leading to the imposition of fines and penalties. The tribunal, despite the absence of a specific valuation by the Commissioner, reduced the redemption fine based on the condition of the scarves. The Court concluded that no substantial question of law arose from the tribunal's decision, leading to the dismissal of the appeal.

Issue 2:
The second issue raised by the appellant concerned the reliance on a belated statement by the tribunal to penalize them. The appellant argued that the statements of the directors of the supplier company were contradictory, and the authorities had not followed the principles of natural justice. The High Court, after considering the submissions, found that the tribunal had thoroughly examined the evidence and arrived at its findings based on the facts and records. The Court noted the mis-declaration by the appellant and the inflated value of the scarves. Despite this, the tribunal reduced the penalty imposed. The High Court concluded that the tribunal's decision was based on a proper appreciation of the evidence, and no substantial question of law was found. Therefore, the appeal was dismissed.

In summary, the High Court upheld the tribunal's decision to impose fines and penalties on the appellant for exporting sub-standard goods, despite the absence of a specific valuation by the Commissioner. The Court found no violation of natural justice in the tribunal's reliance on evidence and dismissed the appeal, stating that no substantial question of law arose from the tribunal's order.