1990 (9) TMI 210 - AT - Customs

Summary

Issues Involved:
1. Validity of the import license and its subsequent cancellation.
2. Adequacy of the redemption fine and penalty imposed by the Additional Collector.
3. Respondents' cross objection challenging the order of confiscation and penalty.
4. Determination of market price for the purpose of redemption fine.

Issue-wise Detailed Analysis:

1. Validity of the Import License and Its Subsequent Cancellation:

The respondents, M/s. Kalpana Import & Export Agency, filed a Bill of Entry for clearance of ball bearings against a license issued to M/s. National Iron Industries. However, the license was suspended on 27-4-1985 and subsequently canceled on 5-6-1985. The respondents contended that the goods were imported on 15-2-1985 when the license was still valid, and its subsequent cancellation should not render the license non est. The Tribunal noted that the import took place when the license was valid, but the respondents did not hold a valid Letter of Authority from the license holder, and the license holder had no commercial relation with the respondents. The Tribunal found that the respondents' role was limited to acting as commission agents, and they did not have a civil right over the goods.

2. Adequacy of the Redemption Fine and Penalty Imposed by the Additional Collector:

The Additional Collector confiscated the goods but allowed redemption on payment of a fine of Rs. 1.00 lac and imposed a penalty of Rs. 50,000/-. The Central Board of Excise and Customs reviewed this order and directed the Collector to file an appeal, arguing that the redemption fine was inadequate given the substantial appreciation in the value of the goods. The Department contended that the landed cost of the goods had increased significantly, and the Additional Collector did not consider all relevant factors in determining the redemption fine.

3. Respondents' Cross Objection Challenging the Order of Confiscation and Penalty:

The respondents filed a cross objection, arguing that the order of confiscation and penalty was not sustainable because the goods were covered by a valid license at the time of import. They relied on the Supreme Court decision in East India Commercial Co., which held that a license obtained by fraud is voidable but valid until voided by law. The Tribunal, however, found that the respondents did not have any financial commitment over the goods and were only acting as commission agents. The Tribunal concluded that the respondents did not acquire a civil right over the goods, and the order of confiscation was justified.

4. Determination of Market Price for the Purpose of Redemption Fine:

The Department argued that the market price of the goods should be determined at the time of confiscation, considering the substantial increase in duty rates. The respondents contended that the market price should be determined at the time of import, as per the Tribunal's decision in Ashwin Vanaspati Industries. The Tribunal agreed with the respondents, stating that the market price should be contemporaneous with the date of import, and subsequent increases in duty rates should not affect the determination of the market price. The Department failed to provide evidence of the market price at the time of import, and thus, the Tribunal found no basis to modify the redemption fine.

Conclusion:

The Tribunal dismissed both the Department's appeal and the respondents' cross objection. It upheld the order of confiscation and penalty, finding that the respondents did not have a valid claim over the goods. The Tribunal also concluded that the redemption fine was adequate, as the Department did not provide evidence of the market price at the time of import. The Tribunal criticized the Department's handling of the case, noting the prolonged delay in issuing a show cause notice and the sudden waiver of the same, which led to the current situation.