2018 (3) TMI 278 - AT - Customs

Valuation of export goods - validity of advance licence - whether the appellant had overvalued the export goods and consequently obtained the advance license and whether the appellant is liable to pay redemption fine on import made by M/s Mdhu Overseas and consequent penalty, whether the appellant is liable for penalty under section 114(i) of Customs Act, 1962 for charge of over valuation of the export goods? Held that - it was admitted by the Learned Commissioner that the goods are not available . In such a situation he should not have imposed the redemption fine as held by the Larger Bench in the case of Shiv Kripa Ispat Pvt Ltd v. Commissioner of Central Excise & Customs, Nasik (supra). Accordingly, we set aside the redemption fine of ₹ 55 lakhs. Similarly, a redemption fine of ₹ 2.5 lakhs will also not sustain since the goods were not available for confiscation and the said redemption fine is also set aside. As regards the demand of duty of ₹ 9,83,400/- from the appellant under section 28(1) of the Customs Act, 1962 and interest @ 20% under section 28AB of the Customs Act, 1962 and imposition of penalty of ₹ 9,83,400/- under section 114A upon the appellant, we find that the appellant is not importer of the goods. Penalty u/s 114(i) of the CA 1962 - Held that - the appellant have transferred only two licences wherein the duty involvement is ₹ 2,83,400/-. As regards the 15 licences, the appellant have surrendered those licences without use thereof. Taking into consideration over all facts and circumstances of the case and the duty involved in the two license, the penalty of ₹ 25 lakhs is very harsh which needs to be reduced - quantum of penalty reduced. Appeal allowed in part.

Summary

Issues:
1. Alleged overvaluation of export goods leading to fraudulent obtainment of advance licenses.
2. Confiscation of goods and imposition of fines and penalties under various sections of the Customs Act, 1962.
3. Transfer of licenses to another entity and subsequent liability for duty, interest, and penalties.

Issue 1: Alleged Overvaluation of Export Goods:
The case revolved around the appellant allegedly overvaluing export consignments to fraudulently obtain advance licenses. The adjudicating authority imposed fines and penalties based on this overvaluation. The appellant contested these allegations, arguing that the overvaluation claims were unfounded. The appellant's counsel referenced several judgments to support their defense, emphasizing that the partner's admission of a 110% profit did not necessarily indicate overvaluation. However, the tribunal upheld the findings of the Commissioner, concluding that there was indeed overvaluation based on various investigative findings and statements recorded under the Customs Act, 1962.

Issue 2: Confiscation, Fines, and Penalties:
The adjudicating authority had confiscated goods valued at a significant amount and imposed fines and penalties on the appellant under various sections of the Customs Act, 1962. However, the tribunal noted that the goods were not available for confiscation, leading to the setting aside of redemption fines totaling &8377; 55 lakhs and &8377; 2.5 lakhs. Additionally, the tribunal found that the appellant, as a transferor of licenses, was not liable for duty, interest, and penalties demanded under sections 28(1) and 28AB of the Customs Act, 1962. The tribunal set aside these demands, highlighting the absence of provisions during the relevant period to hold the transferor liable for duty.

Issue 3: Transfer of Licenses and Penalty Reduction:
Regarding the penalty imposed on the appellant under section 114(i) of the Customs Act, 1962, the tribunal acknowledged that the appellant had transferred only two licenses, resulting in a reduced duty involvement. Considering this, the tribunal deemed the initial penalty of &8377; 25 lakhs as excessive and reduced it to &8377; 10 lakhs. The tribunal's decision reflected a balanced approach, taking into account the specific circumstances of the case and the duty implications of the licenses involved.

In conclusion, the tribunal partially allowed the appeal, modifying the impugned order by setting aside certain fines, penalties, and duty demands while reducing the penalty amount. The judgment underscored the importance of a thorough analysis of facts and legal provisions in cases involving alleged overvaluation, transfer of licenses, and imposition of fines and penalties under customs laws.