2010 (3) TMI 622 - AT - Customs

Redemption fine Confiscation and penalty - Goods imported availing concessional duty, sold in violation of terms thereof and not available either with assessee or department. Held that no order of confiscation could be passed on such goods. Redemption fine also set aside. Confiscation and Penalty Extension of time sought to fulfill export obligation, but thereafter no progress made to fulfill it, and impugned goods not claimed to be in possession of importer. Held that Importer rendered the goods liable to confiscation and was liable to penalty.

Summary

Issues Involved:
1. Demand of duty due to non-fulfillment of export obligations.
2. Confiscation of imported goods.
3. Imposition of penalties on various individuals and the company.

Issue-wise Detailed Analysis:

1. Demand of Duty Due to Non-fulfillment of Export Obligations:
The Commissioner confirmed the demand of Rs. 1,70,25,810/- for MS scrap imported under the DEEC scheme and Rs. 3,25,787/- and Rs. 1,41,076/- under Notifications No. 203/92-Cus and 83/90-Cus respectively. KAL did not challenge the duty liability but contested the findings of clandestine clearance and import of re-rollable scrap. The Tribunal noted that KAL had failed to fulfill the export obligation due to reasons beyond its control, and thus the demand for duty was justified.

2. Confiscation of Imported Goods:
The Commissioner ordered the confiscation of 681 MTs and 1029.60 MTs of MS scrap under Section 111(o) of the Customs Act, 1962, offering redemption on payment of fines. However, the Tribunal found that the goods were not available with the assessee or the Department, making the confiscation orders unsustainable. Therefore, the redemption fines of Rs. 8 lakhs and Rs. 10 lakhs were vacated. The Tribunal emphasized that confiscation orders must be based on the availability of goods.

3. Imposition of Penalties:
- KAL: The Tribunal upheld the penalty of Rs. 60 lakhs under Section 112(a) of the Act, stating that KAL failed to fulfill export obligations and was liable for the penalty.
- Shri Athmaram Kejriwal: The penalty of Rs. 40 lakhs was set aside as the Tribunal found that he was not put on notice regarding his liability for rendering goods liable for confiscation.
- Kumari Prem Kejriwal: The penalty of Rs. 5 lakhs was vacated due to lack of evidence of her informed complicity in the fraud.
- Shri Vivek Kejriwal: The penalty of Rs. 15 lakhs was vacated as the charge against him was not proved.
- Shri Ashok Kejriwal: The penalty of Rs. 15 lakhs was upheld due to his involvement in purchasing blank invoices to cover the transport of diverted scrap.

Conclusion:
The Tribunal allowed the appeal filed by M/s. Kusum Alloys Ltd. in part, vacating the fines and penalties where appropriate, but upheld the penalty on KAL. Other appeals were allowed, setting aside the penalties imposed on individuals due to lack of sufficient evidence and proper notice. The judgment emphasized the necessity of proper notice and reliable evidence for imposing penalties and confiscation under the Customs Act.