2012 (9) TMI 386 - HC - Customs

Levy redemption fine - Held that - When the authorities imposed redemption fine on the ground that the said goods are liable for confiscation without verifying as to the existence of the goods and the seizure of the goods, the imposition of redemption fine was illegal - redemption fine could be imposed only in respect of goods seized but not held liable for confiscation.

Summary

Issues:
- Imposition of redemption fine only on goods seized but not held liable for confiscation under Section 125 of the Customs Act, 1962.

Analysis:
The appeal before the Karnataka High Court involved a dispute regarding the imposition of a redemption fine on vitrified tiles under Section 125 of the Customs Act, 1962. The Commissioner had imposed a fine of Rs. 24,00,000 on a quantity of 19520.36 sq. mts. of tiles, claiming they were liable for confiscation under Sections 111(m) and 111(l) of the Act. However, the Tribunal set aside this order, stating that redemption fine could only be imposed on goods that were actually seized and provisionally released. The Tribunal held that the fine could not be imposed on goods not seized but held liable for confiscation. Consequently, the matter was remanded for imposing the fine only on the seized tiles.

The High Court, comprising N. Kumar and Ravi Malimath, JJ., examined the case and highlighted the conditions for levying a redemption fine - the goods must have been seized and be liable for confiscation. In this instance, only 11094.60 sq. mts. of tiles were seized, confiscated, and provisionally released after paying the fine. The remaining 8425.76 sq. mts. were neither seized nor available to the authorities. The Court emphasized that imposing a redemption fine on goods not seized or available was illegal. The authorities erred in imposing the fine without verifying the existence of the goods and their seizure. Therefore, the Tribunal's decision to set aside the redemption fine and remand the matter was deemed lawful and in accordance with the provisions of the Act.

In conclusion, the High Court ruled in favor of the assessee, holding that the imposition of the redemption fine on goods not seized was unjustified and illegal. The substantial questions of law were answered in favor of the assessee, resulting in the dismissal of the Revenue's appeal.