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2017 (9) TMI 138 - HC - CustomsJurisdiction - Penalty u/s 112(a) of the Customs Act - Whether the order of the Tribunal directing levy of penalty under Section 112(a) of the Customs Act, is without jurisdiction and amounts to trenching upon the powers of the adjudicating authority, inasmuch as the power to levy penalty is vested with the adjudicating authority under the Customs Act and the definition under Section 2(1) of the Customs Act, 1962, expressly excludes the Tribunal? - Whether the order of the Tribunal directing levy of penalty under Section 112(a) is bad for want of jurisdiction, inasmuch as the above direction amounts to enhancement, for which there is no power under Section 129-B of the Customs Act, 1962? - Held that - the penalty under Section 114-A could not have been imposed on the appellant-assessee-Company, inasmuch as they did not file the Bill of Entry as required under Section 46 of the Act, but however, without levying any duty thereon at the first instance, the proper officer has allowed them to be cleared. It is the appellant-Company, the importer himself has discovered the error and brought it to the notice of the proper officer by way of written representation and they have made the payment of duty leviable on such goods together with interest under Section 28 thereon. Therefore, there is no manifest intention on the part of the importer to evade duty - The present case is not a case where the goods have been imported in excess of their numbers mentioned in the Bill of Entry. The import manifest has not been filed covering certain goods amongst other goods imported. However, they were cleared without levying any duty on them. The lapse is equally on the part of the proper officer, who cleared those goods, without verifying as to whether an appropriate Bill of Entry is lodged or not and then they have suffered the incidence of duty or not - The role and jurisdiction assigned to the Tribunal is specified under Section 129-B of the Act. It would be open for the Tribunal, if it thinks fit, to pass an order confirming or modifying or annulling the decision appealed against or may refer the case back to the authority with such direction as it may think fit for fresh adjudication or a decision, and hence, the power of determination or imposition of penalty on an importer under Section 112(a), is not available to the Tribunal. This jurisdictional limitation has not been borne in mind by the Tribunal while passing the impugned order - answered against Revenue. Whether the order of the Tribunal confirming the redemption fine in respect of goods which were not even available for confiscation, is contrary to the following decisions of the Tribunal, which are binding and thus bad for want of jurisdiction? - Held that - insofar as the prohibited goods are concerned, they are prevented from being imported either absolutely or conditionally and consequently, the question of making an offer for payment of fine under Section 125 of the Act, would not arise, without studying the implication of such import - for improper importation of the dutiable goods or the prohibited goods, the importer is liable to be proceeded against under Section 112 of the Act by subjecting him to a penalty. Therefore, the fine proposed to be imposed under Section 125 of the Act is directed against the goods, in addition to the one that was already provided for under Section 112 of the Act. The fine contemplated is for redeeming the goods, whereas, the importer is sought to be penalised under Section 112 for doing or omitting to do any act which rendered such goods imported by him, liable to be confiscated under Section 111 of the Act and for that act or omission, the appellant is liable to be penalised - The power to impose redemption fine springs from the authorisation of confiscation of goods provided for under Section 111 of the Act. When once power of authorisation for confiscation of goods gets traced to the said Section 111 of the Act, we are of the opinion that the physical availability of goods is not so much relevant. The redemption fine is in fact to avoid such consequences flowing from Section 111 only. Hence, the payment of redemption fine saves the goods from getting confiscated. Hence, their physical availability does not have any significance for imposition of redemption fine under Section 125 of the Act. Appeal allowed - decided partly in favor of appellant.
Issues Involved:
1. Jurisdiction of the Tribunal to levy penalty under Section 112(a) of the Customs Act. 2. Validity of the Tribunal's order directing the levy of penalty under Section 112(a) without enhancement power under Section 129-B of the Customs Act. 3. Legitimacy of the Tribunal confirming the redemption fine in respect of goods not available for confiscation. Detailed Analysis: Issue 1: Jurisdiction of the Tribunal to Levy Penalty under Section 112(a) of the Customs Act The appellant challenged the Tribunal's jurisdiction to levy a penalty under Section 112(a) of the Customs Act. The appellant argued that the power to levy penalties is vested exclusively with the adjudicating authority as defined under Section 2(1) of the Customs Act, which expressly excludes the Tribunal. The Tribunal's imposition of a penalty under Section 112(a) was deemed ultra vires as it overstepped its jurisdictional bounds. The court agreed with the appellant, emphasizing that the Tribunal does not possess the authority to adjudicate penalties at the first instance, as it falls outside the scope of "adjudicating authority" under Section 2(1) of the Act. Consequently, the Tribunal's imposition of the penalty under Section 112(a) was not sustainable. Issue 2: Validity of the Tribunal's Order Directing Levy of Penalty under Section 112(a) Without Enhancement Power under Section 129-B of the Customs Act The appellant contended that the Tribunal's direction to levy a penalty under Section 112(a) amounted to an enhancement, which is not permissible under Section 129-B of the Customs Act. The court noted that the Tribunal's role is limited to confirming, modifying, or annulling the decision appealed against or referring the case back to the authority with directions for fresh adjudication. The court held that the Tribunal overstepped its jurisdiction by imposing a penalty, as the power to enhance penalties must be explicitly provided, which is not the case under Section 129-B. Therefore, the Tribunal's direction to impose a penalty under Section 112(a) was invalid. Issue 3: Legitimacy of the Tribunal Confirming the Redemption Fine in Respect of Goods Not Available for Confiscation The appellant argued that the redemption fine under Section 125 of the Customs Act is contingent upon the physical availability of the goods. Since the goods were not available for confiscation, the imposition of the redemption fine was deemed illegitimate. The court examined Section 125, which provides for an option to pay a fine in lieu of confiscation. The court clarified that the fine under Section 125 is directed against the goods and not the conduct of the importer. The court also noted that the physical availability of goods is not a prerequisite for imposing a redemption fine. The power to impose a redemption fine arises from the authorization of confiscation under Section 111 of the Act. Therefore, the court concluded that the physical availability of goods is irrelevant for the imposition of a redemption fine under Section 125. The Tribunal's confirmation of the redemption fine was upheld. Conclusion: The court partly allowed the appeal, setting aside the Tribunal's imposition of a penalty under Section 112(a) due to lack of jurisdiction and enhancement power. However, the court upheld the Tribunal's confirmation of the redemption fine, stating that the physical availability of goods is not necessary for imposing a redemption fine under Section 125 of the Customs Act. The appeal was thus partly allowed with no costs, and the miscellaneous petition was closed.
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