2017 (5) TMI 446 - AT - Customs

Quantum of redemption fine and penalty - import of photo copier - Since as per para 2.17 of the EXIM Policy 2004-09 import of second-hand goods except second-hand capital goods are restricted and permitted clearance only on the strength of license and since the importers failed to produce a valid license, the said goods were confiscated - What should be the percentage of redemption fine and penalty to be imposed on the importer who imports photo copier in violation of the Foreign Trade Policy? Held that - the issue of imposition of redemption fine and penalty has been settled and now various Benches of the Tribunal have consistently held that the redemption fine of 10% of the value of the goods and penalty of 5% of the value of the goods is sufficient punishment to the importer - the imposition of redemption fine to the extent of 10% of the value of the goods and penalty of 5% of the value of the goods is sufficient - appeal allowed - decided in favor of appellant.

Summary

Issues Involved:
1. Imposition of redemption fine and penalty.
2. Determination of the percentage of redemption fine and penalty for importers violating the Foreign Trade Policy by importing second-hand photocopiers without a valid license.

Issue-Wise Detailed Analysis:

1. Imposition of Redemption Fine and Penalty:
The appellants filed 17 appeals against the orders of the Commissioner of Customs (A) regarding the imposition of redemption fines and penalties on the import of second-hand photocopiers without valid licenses. The primary contention was whether the imposed fines and penalties were excessively high. The appellants argued that the fines and penalties should align with the consistent decisions of various Tribunal Benches and High Courts, which typically imposed fines of 10% and penalties of 5% of the value of the goods.

2. Determination of the Percentage of Redemption Fine and Penalty:
The Tribunal examined the relevant case laws and precedents. The appellants cited several decisions where the Tribunal and High Courts had consistently reduced the fines and penalties to 10% and 5%, respectively. Key cases referenced included:

- Navpad Enterprises vs. CC, Cochin (2009): The Tribunal imposed fines and penalties at 10% and 5%, respectively, which was upheld by the Kerala High Court.
- CC, Tuticorin vs. Sri Kamakshi Enterprises (2009): The Madras High Court observed that authorities could impose fines less than the market price of the confiscated goods.
- Maa Tara Enterprises vs. CC, Cochin (2009): The Tribunal followed a benchmark of 10% fines and 5% penalties on the value determined by the Chartered Engineer.
- Commissioner of Customs, Cochin vs. Dilip Ghelani (2009): The Tribunal maintained the fines and penalties at 10% and 5%, emphasizing consistency in similar cases.
- Omex International vs. Commissioner of Customs, New Delhi (2015): The Tribunal reiterated the imposition of fines and penalties at 10% and 5%, following the precedent set by previous cases.

The Tribunal acknowledged the appellants' argument that there was confusion during the relevant period regarding the importability of second-hand photocopiers. The Supreme Court in Atul Commodities Pvt. Ltd. vs. CC, Cochin (2009) clarified that photocopiers are capital goods and freely importable, resolving conflicting views from different High Courts.

The Tribunal also noted that no market enquiry was conducted to determine the margin of profit, which is crucial for setting the quantum of redemption fine. The Supreme Court's decision in Commissioner of Customs, Mumbai vs. Mansi Impex (2011) emphasized the need for market price determination in imposing fines.

Conclusion:
The Tribunal concluded that the consistent judicial precedent supported the imposition of redemption fines and penalties at 10% and 5% of the value of the goods, respectively. The appeals were disposed of by reducing the fines and penalties to these percentages, aligning with the established legal standards and ensuring uniformity in judicial decisions.

Order Pronouncement:
The order was pronounced in open court on 08/05/2017, affirming the reduction of redemption fines and penalties to 10% and 5% of the value of the goods, respectively.