2017 (2) TMI 51 - HC - Customs

Enhancement of redemption fine and penalty - non-declaration of MRP on the packaged goods - importer claim that since there was no mala fide intention on the part of the appellant/importer to evade duty and since there is no revenue loss to the Government, redemption fine and penalty should be reduced - Held that - The display of MRP on the packaged carton is for the knowledge of the public so that they are not taken for a ride by charging exorbitant amounts and cheated by unscrupulous elements. Therefore, there is no question of revenue loss to the Government, but it is only for the better knowledge of the public at large so that they are abreast of the price which they would be required to pay on purchase of a product. Therefore, the reasoning given by the Commissioner of Customs (Appeals) for reducing the redemption fine and penalty is not justifiable - The Tribunal had followed the rule of law in fixing the reasonable fine and penalty, which would be a deterrent for persons, who indulge in exploiting people - enhancement of fine and penalty justified.

Summary

Issues:
Violation of Standards of Weights and Measures (Packaged Commodities) Rules, 1977 - Non-declaration of MRP on packaged goods - Enhancement of redemption fine and penalty by Tribunal.

Analysis:

Issue 1: Violation of Standards of Weights and Measures Rules
The case revolved around the violation of the Standards of Weights and Measures (Packaged Commodities) Rules, 1977, specifically the non-declaration of Maximum Retail Price (MRP) on the packaged goods, which is a mandatory requirement to prevent misleading the public by charging excessive prices. The appellant/importer faced penalties and redemption fines due to this violation.

Issue 2: Commissioner of Customs (Appeals) Decision
The Commissioner of Customs (Appeals) initially reduced the redemption fine and penalty imposed on the appellant/importer, citing no mala fide intention to evade duty and no revenue loss to the government. The Commissioner considered a Board circular and reduced the fines significantly.

Issue 3: Tribunal's Decision and Appeal
The Revenue appealed the Commissioner's decision to the Tribunal, which increased the redemption fine and penalty substantially due to the violation of rules regarding MRP declaration on imported goods. The Tribunal found that the appellant/importer had imported mobile phones without affixing MRP on the cartons, justifying the increased fines based on the gravity of the offense.

Issue 4: Appellant's Arguments
The appellant/importer contended that there was no mis-declaration, as the declared Retail Selling Price (RSP) formed the basis for duty calculation. They argued that the Tribunal wrongly assumed all profits would accrue to the importer without considering retailer profits. The appellant also highlighted the Legal Metrology Rules provision for prosecution deferment, which they claimed the Tribunal overlooked.

Issue 5: Revenue's Justification
The Revenue argued that MRP disclosure is crucial to prevent cheating and misleading the public regarding prices. They asserted that failure to display MRP, though not a prohibited import, still warranted action under Section 125 of the Act, justifying the fines and penalties imposed.

Final Decision
The High Court upheld the Tribunal's decision, dismissing the appellant's appeal. The Court emphasized the importance of MRP disclosure for consumer protection, rejecting the appellant's arguments regarding profit distribution and prosecution deferment. The Court found the Tribunal's fines reasonable and necessary to deter exploitation and uphold public interest.

In conclusion, the High Court affirmed the Tribunal's decision, emphasizing the significance of MRP disclosure to protect consumers and deter exploitation, thereby upholding the fines imposed on the appellant/importer for violating the Standards of Weights and Measures Rules.