2021 (3) TMI 122 - AT - Customs

Levy of Redemption fine and penalty - import of superior kerosene oil - authorization to import kerosene - HELD THAT - From the judgment of the Hon'ble jurisdictional High Court in Sankar Pandi 2001 (12) TMI 83 - MADRAS HIGH COURT , it is seen that when the goods are re-exported no redemption fine can be imposed. The said decision was affirmed by the Hon'ble Supreme Court in UNION OF INDIA VERSUS SANKAR PANDI 2010 (3) TMI 1247 - SC ORDER . The Tribunal in the decisions relied by the ld. Counsel for appellant has followed the said decisions to hold that redemption fine cannot be imposed when the goods are released only for the purpose of re-export. Penalty u/s 112(a) of the Customs Act - HELD THAT - The Commissioner (Appeals) has already taken a lenient view by reducing the penalty from ₹ 4 lakhs to ₹ 2 lakhs. However, it is noted that the appellant has suffered huge charges towards demurrage and detention besides having to incur freight charges on the re-export. Taking this into consideration and also the fact that the appellant has not profited from the import as the goods were re-exported, the penalty can be reduced from ₹ 2 lakhs to ₹ 1,00,000/-. The impugned order is modified to the extent of setting aside the redemption fine totally and reducing the penalty from ₹ 2 lakhs to ₹ 1,00,000/- - Appeal allowed in part.

Summary

Issues:
1. Misdeclaration of imported goods as 'Petroleum Hydrocarbon Solvent' when they were actually 'Kerosene.'
2. Imposition of redemption fine and penalty by the original authority.
3. Appeal against the order of the Commissioner (Appeals) regarding the redemption fine and penalty.

Analysis:
1. The appellant imported goods declared as 'Petroleum Hydrocarbon Solvent' but were found to be 'Kerosene' through test reports. As per the policy, import of kerosene is restricted to State Trading Enterprises (STEs) unless authorized by the Directorate General of Foreign Trade (DGFT). The appellant lacked the necessary authorization, making the import unauthorized.

2. The original authority directed the re-export of the goods and imposed a redemption fine of ?6 lakhs and a penalty of ?4 lakhs under section 112(a) of the Customs Act, 1962. The Commissioner (Appeals) upheld the finding but reduced the redemption fine to ?3 lakhs and the penalty to ?2 lakhs. The appellant contested the imposition of the redemption fine and penalty.

3. The appellant argued that no redemption fine should be imposed upon re-export as per relevant case laws. The Tribunal referred to the judgment in Sankar Pandi and upheld that no redemption fine can be imposed when goods are re-exported. The penalty was reduced to ?1,00,000 considering the appellant's incurred charges and lack of profit from the import.

In conclusion, the Tribunal set aside the redemption fine entirely and reduced the penalty from ?2 lakhs to ?1,00,000. The appeal was partly allowed based on the above modifications to the impugned order.