2024 (12) TMI 415 - AT - Customs

Export of rice - Basmati rice or other than Basmati rice i.e. non Basmati rice - whether the penalty under Section 114 (iii) and 114 AA of the Custom Act, 1962 are imposable if the rice is found other than the Basmati rice? - whether in absence of the availability of the goods since the same has been exported whether redemption fine of Rs. 6,00,000/- in lieu of confiscation under Section 125 of the Customs Act, 1962 is correct or otherwise? - HELD THAT - The adjudicating authority and the first appellate authority have concluded that the rice exported by the appellant is not Basmati rice, only on the basis of the percentage of the other rice, however, it prima facie appears that the only criteria to decide whether it is Basmati rice or other rice, is length and breadth of the rice which as per test report in the present case, length and breadth of the rice is in accordance with the parameter fixed by the foreign trade policy. As regard the issue whether the redemption fine of Rs.6,00,000/- is correct or otherwise, it is found that admittedly the goods had been exported and was not available either at the time of issuing the show cause notice and at the time of adjudicating thereof. In such condition, the confiscation of goods cannot be ordered and consequential redemption fine cannot be imposed. The imposition of redemption fine is conditional as when the assessee wants to take the redemption of goods, he needs to pay the redemption fine. In the present case, when the goods are not available, there is no question of redemption of said goods. Consequently, no redemption fine requires to be paid. Accordingly, the imposition of redemption fine is absolutely incorrect and illegal. This issue has been considered in various judgments relied upon by the Ld. Counsel. The redemption fine is not imposable. Accordingly, the redemption is set aside - the matter is remanded to the adjudicating authority for reconsideration thereof - Appeal allowed by way of remand.

Summary

Issues:
1. Whether the exported rice is Basmati or non-Basmati rice and the imposition of penalties under the Custom Act.
2. Whether the redemption fine of Rs. 6,00,000/- is correct when the goods have been exported and are not available for redemption.

Analysis:
1. The main issue in this case is determining whether the rice exported by the appellant is Basmati or non-Basmati rice and the consequent imposition of penalties under the Custom Act. The appellant argues that the rice meets the length and breadth parameters set by the foreign trade policy, making it Basmati rice. The appellant cites various judgments to support this claim, emphasizing that the criteria for classification should be based on the physical characteristics of the rice. However, the revenue authority contends that more than 82% of the rice exported was found to be non-Basmati rice, justifying the penalties imposed. The tribunal notes that the length and breadth of the rice, as per the test report, align with the parameters specified by the foreign trade policy. The tribunal also references previous judgments to support the appellant's argument, suggesting a reconsideration of the classification of the exported rice.

2. The second issue pertains to the correctness of imposing a redemption fine of Rs. 6,00,000/- when the goods have been exported and are not available for redemption. The appellant argues that redemption fine cannot be imposed when the goods are not available for redemption, citing relevant judgments to support this claim. The tribunal concurs with this argument, stating that the imposition of a redemption fine is contingent upon the availability of goods for redemption. Since the goods in question were exported and not present for redemption, the tribunal deems the imposition of the redemption fine as incorrect and illegal. Consequently, the tribunal sets aside the redemption fine and remands the matter to the adjudicating authority for further consideration.

In conclusion, the tribunal finds that the classification of the exported rice as Basmati or non-Basmati needs to be reassessed based on the criteria laid out in the foreign trade policy and supported by relevant judgments. Additionally, the tribunal rules that the redemption fine is not applicable when the goods have been exported and are unavailable for redemption, leading to the setting aside of the redemption fine. The matter is remanded for further review by the adjudicating authority.