2017 (5) TMI 1326 - AT - Customs

Mis-declaration of imported goods - scrap - confiscation - Held that - in this case there was no seizure of goods because the goods were not available and it had already been consumed - confiscation cannot be ordered in the absence of seizure of goods and therefore, the imposition of redemption fine of ₹ 5,00,000/- is not sustainable in law. Once the redemption fine is not imposable, consequently penalty u/s 112(a) of the CA also cannot be imposed since there was no seizure of goods in the first place. Appeal allowed - decided in favor of appellant.

Summary

Issues:
- Imposition of redemption fine under Section 125 of the Customs Act
- Imposition of penalty under Section 112(a) of the Customs Act, 1962

Imposition of Redemption Fine under Section 125 of the Customs Act:
The appeal was against an order imposing a redemption fine of ?5,00,000 under Section 125 of the Customs Act and a penalty of ?50,000 under Section 112(a) of the Customs Act, 1962. The appellant, engaged in manufacturing lead and lead alloys ingots, imported lead scrap for production. The Customs Department alleged that the appellant imported lead scrap in unshredded, compressed, or loose form through ICD Bangalore, not a designated Customs station. The Commissioner held that the appellant mis-declared the scrap as lead strippings, leading to confiscation and penalties. The appellant argued that the impugned order ignored binding judicial precedents and that the import of metallic scrap was not prohibited. The appellant claimed to have imported shredded metallic scrap, supported by a pre-shipment certificate. The appellant contended that the goods were not available for seizure, challenging the legality of the confiscation and penalties.

Imposition of Penalty under Section 112(a) of the Customs Act, 1962:
The appellant argued that the penalty of ?50,000 under Section 112(a) was not legal as the Act requires penalties for acts or omissions rendering goods liable to confiscation. The appellant cited various judicial decisions to support their position. The AR supported the impugned order's findings. The Tribunal found the impugned order unsustainable as it held goods liable to confiscation without actual seizure, contrary to legal principles. Citing the appellant's arguments and judicial precedents, the Tribunal set aside the redemption fine and penalty. The Tribunal emphasized that confiscation cannot be ordered without goods' seizure, thus rendering the penalties invalid due to the absence of seized goods. Consequently, the Tribunal allowed the appeal, setting aside the impugned order.

This detailed analysis covers the issues of the imposition of redemption fine under Section 125 of the Customs Act and the imposition of penalty under Section 112(a) of the Customs Act, 1962, providing a comprehensive overview of the legal arguments, precedents cited, and the Tribunal's decision.