2018 (11) TMI 193 - AT - Customs

Imposition of redemption fine and penalty - Confiscation of imported frozen Cuttlefish - confiscation on the ground that the appellant has failed to produce the required certificate from the Department of Animal Husbandry and Dairying, Govt. of India and also failed to produce NOC from competent Quarantine / Veterinary officer before clearance - permission is granted for re-export of goods - whether redemption fine and penalty imposable? Held that - Larger Bench decision in the case of Hemant Bhai R. Patel is squarely applicable in the facts and circumstances of the present case. The Larger Bench of the Tribunal in the said case has held that Section 111 of the Customs Act gives power to customs officer to confiscate the goods imported, if any, all the provisions contained in sub-clauses is specific and Section 112 authorises the imposition of penalty. The Larger Bench has categorically held that it is open to the adjudicating authority to impose redemption fine as well as penalty even when permission is granted for re-exporting the goods. The adjudicating authority has the power to impose redemption fine and penalty - however, imposition of fine of ₹ 10 lakhs and penalty of ₹ 1 lakh, appears to be on the higher side and same is reduced - appeal allowed in part.

Summary

Issues:
- Confiscation of goods for re-export and imposition of redemption fine and penalty under Customs Act, 1962.

Analysis:
1. Confiscation of Goods for Re-export:
- The appeal challenged the impugned order of the Commissioner of Customs, which confiscated goods for re-export due to the importer's failure to produce necessary certificates from the Department of Animal Husbandry and Dairying, Govt. of India, and NOC from the competent Quarantine/Veterinary officer before clearance. The goods in question were 27000 kgs of Frozen Cuttlefish whole, imported under the Advance Authorisation Scheme. The absence of required documents rendered the goods liable for confiscation under Section 111(d) of the Customs Act, 1962, read with Section 3(3) of the Foreign Trade (Development & Regulations) Act, 1992.

2. Imposition of Redemption Fine and Penalty:
- The Commissioner imposed a redemption fine of ?10 lakhs and a penalty of ?1 lakh on the importer under Section 112(a) of the Customs Act, 1962. The appellant contended that the goods were not prohibited, and the confiscation was unwarranted. The appellant argued that any lapse was on the part of the supplier for not providing necessary test reports. Additionally, the appellant cited Circular No.100/2003-Cus, instructing discretion in allowing re-export without imposing fines or penalties in cases of genuine mistakes. Various legal precedents were relied upon to support the appellant's argument against the imposition of redemption fine and penalty.

3. Judicial Analysis and Decision:
- The Tribunal, after considering submissions from both parties and reviewing the relevant legal provisions, referred to the Larger Bench decision in Hemant Bhai R. Patel Vs. CC, Ahmedabad. The Larger Bench concluded that the Customs authorities have the power to confiscate goods and impose redemption fines and penalties even when permission for re-export is granted. The Tribunal upheld this interpretation and ruled that the adjudicating authority can impose fines and penalties in such cases. However, considering the circumstances, the Tribunal found the imposed fines excessive and reduced the redemption fine to ?5 lakhs and the penalty to ?50,000. The appeal was dismissed with the modified fines.

This detailed analysis outlines the issues of confiscation, redemption fine, and penalty under the Customs Act, 1962, the arguments presented by both parties, legal precedents cited, and the final decision of the Tribunal based on the applicable legal provisions and precedents.