2018 (6) TMI 1021 - AT - Customs

Violation of import conditions - import of Medical Equipment namely viz. Gama Camera under N/N. 64/88-Cus dt. 08.01.88 - case of appellant is that they have not intentionally avoided the compliance of condition of N/N. 64/88-Cus for the reason that due to fire in their Gama Centre the Medical Equipments i.e. Gama camera was damaged therefore the condition could not be complied with which was beyond the control of appellant. Held that - If at all there is any violation of condition of N/N. 64/88, it is not intentional as due to fire gama camera got damaged and thus condition could not be complied with, this is clearly beyond the control of Appellant. As regard redemption fine and Penalty i.e. ₹ 50,000/- & ₹ 5000/- respectively there is no reason to change this position as issue of redemption fine and Penalty was not challenged by the revenue against first adjudication order. Appeal allowed in part.

Summary

Issues:
1. Confiscation of imported medical equipment under Customs Act, 1962.
2. Imposition of penalty and redemption fine for non-compliance with Notification No. 64/88-Cus.
3. Appeal for waiver of penalty and redemption fine.
4. Consideration of circumstances leading to the damage of imported Gama Camera.
5. Assessment of the imposition of penalty and redemption fine.

Issue 1: Confiscation of imported medical equipment under Customs Act, 1962

The case involved the clearance of imported Medical Equipment, specifically Gama Camera, under Notification No. 64/88-Cus. Due to a short circuit and subsequent damage to the equipment, the Directorate General of Health Services (DGHS) was informed, leading to the withdrawal and cancellation of the CDEC Certificate. The customs seized the equipment and issued a Show Cause Notice proposing confiscation and penalty under section 112(a) of the Customs Act, 1962. The Commissioner's adjudicating order ordered confiscation, demanded duty, and imposed penalties. The Tribunal set aside the initial order due to the absence of a demand for duty in the Show Cause Notice. Subsequently, a corrigendum was issued to demand customs duty, leading to further proceedings and appeals.

Issue 2: Imposition of penalty and redemption fine for non-compliance with Notification No. 64/88-Cus

The appellant contested the imposition of a redemption fine and penalty for non-compliance with Notification No. 64/88-Cus, citing the damage caused by a fire incident as the reason for non-compliance. Despite a reduction in the demanded duty, the redemption fine was increased, and the penalty was enhanced in the impugned order. The appellant argued that the issue of redemption fine and penalty did not attain finality as the matter was remanded by the Tribunal for consideration under an alternate notification. The Adjudicating Authority was criticized for enhancing the redemption fine and penalty without valid grounds.

Issue 3: Appeal for waiver of penalty and redemption fine

The appellant filed an appeal seeking a waiver of the penalty and redemption fine imposed for non-compliance with Notification No. 64/88-Cus. The appellant's counsel argued that the damage to the Gama Camera due to a fire incident was beyond their control and not intentional. The appellant contended that the Tribunal's remand for consideration under an alternate notification should have prevented the enhancement of the redemption fine and penalty in the impugned order.

Issue 4: Consideration of circumstances leading to the damage of imported Gama Camera

The Tribunal considered the circumstances leading to the damage of the imported Gama Camera, emphasizing that the non-compliance with Notification No. 64/88 was unintentional due to the fire incident. The Tribunal noted that the issue of redemption fine and penalty was not challenged by the revenue in the initial adjudication order, and therefore, the original penalties should have been maintained.

Issue 5: Assessment of the imposition of penalty and redemption fine

After careful consideration of submissions from both parties and a review of the records, the Tribunal found that the non-compliance with Notification No. 64/88 was beyond the appellant's control due to the fire incident. The Tribunal upheld the original redemption fine and penalty imposed in the first adjudication order, reducing the fine and penalty in the impugned order to align with the Supreme Court's directives regarding an alternate notification. The appeal was partly allowed, reducing the fine and penalty accordingly.

This detailed analysis covers the various issues involved in the legal judgment, providing a comprehensive overview of the case and the Tribunal's decision.