2025 (2) TMI 808 - AT - Customs

Requirement of pre-deposit - appeal dismissed on the ground that pre-deposit condition was not fulfilled - importation of Peas Yellow Peas - confiscation - redemption fine - penalty - HELD THAT - Since the appellant has provided Security Deposit of Rs.91, 30, 121 this would meet the requirement of the pre-deposit when the penalty of Rs.60, 00, 000 crores is litigated. There are no provision to call for pre-deposit when the litigation is towards the Redemption Fine. Hence being satisfied with the fact the pre-deposit condition has been met we take up the case for disposal at Tribunal level itself since on identical case the issue stands decided by this Bench. It is found that against the DGFT Notifications the appellants have contested the amendment of import policy by way of a Writ Petition vide WP No. 17962w/2018 before the Hon ble High Court Calcutta wherein Commissioner of Customs Kolkata was also respondent on the ground that such an amendment in Foreign Trade policy is the sole prerogative of the Central Government as set out in section 3 5 and 6 of the FTDR Act and the trade notice did not indicate that it was issued either with the concurrence or the approval of the Central Government. As the goods were perishable in nature the appellants moved a Misc. Application MAT No. 1405 of 2018 with CAN No. 8761 of 2018 before the Hon ble Division Bench of the High Court Calcutta. After considering the factual position of the case the Honourable High Court vide their Interim Order dated 26.11.2018 granted stay on the DGFT Notifications. Accordingly goods were allowed clearance provisionally subject to the appellants keeping security deposit of 10% of the assessable value towards probable fine and 10% of duty towards penalty. For the Assessable Value component of Rs.6, 08, 67, 460 they have given security deposit of Rs.60, 86, 747 and for the Duty component of Rs.3, 04, 33, 731 they have given security of Rs.30, 43, 374. In the present case the appellant has challenged the Notifications before the Calcutta High Court. On going through that Final Order passed by the Kolkata Tribunal in the case of Rahul Agro Industries it is found that the Assessable value there was to the tune of Rs.96.65 crores and Duty was to the tune of Rs.44.83 crores. For these imports the Adjudicating authority had imposed penalty of Rs.4 crores and redemption fine of 2.10 crores. On appeal by the Revenue this Bench has considered the factual details and implication of the DGFT Notifications the Supreme Court s judgement and has taken a sympathetic view and reduced the same to Rs.25 lakhs of penalty and Rs.25 lakhs of redemption fine. In the present case the Assessable value is Rs.6.08 crores and Duty component is Rs.3.04 crores. The appellant is before the Tribunal being aggrieved with the penalty of Rs.60, 00, 000 of penalty and Rs.60, 00, 000 of redemption fine. Since the facts are identical in the present case following the same lines taken by the Tribunal in the case of Rahul Agro the ends of justice would be met if the these amounts are modified to Rs.8 lakhs of penalty and Rs.8 lakhs of Redemption fine. Conclusion - i) The pre-deposit condition was met by the appellant s security deposit allowing the appeal to proceed. ii) The confiscation of goods under section 111(d) was justified as the imports were contrary to the DGFT notifications. iii) The penalty and redemption fine reduced to Rs. 8, 00, 000 each. Appeal allowed in part.

Summary

ISSUES PRESENTED and CONSIDERED

The core legal issues considered in this judgment include:

• Whether the goods imported by the appellant should be confiscated under section 111(d) of the Customs Act, 1962 due to non-compliance with the DGFT notifications.
• Whether a penalty under section 112(a) of the Customs Act, 1962 should be imposed on the appellant for acts of omission or commission.
• Whether a redemption fine under section 125 of the Customs Act, 1962 should be levied on the goods in lieu of confiscation.
• Whether the pre-deposit condition for filing an appeal was fulfilled by the appellant.
• Whether the quantum of penalty and redemption fine imposed was disproportionate to the transactions carried out by the appellant.

ISSUE-WISE DETAILED ANALYSIS

Confiscation of Goods under Section 111(d)

• Legal Framework and Precedents: Section 111(d) of the Customs Act, 1962 deals with the confiscation of goods that are imported or exported in violation of any prohibition imposed by law.
• Court's Interpretation and Reasoning: The Tribunal noted that the appellant had contested the validity of the DGFT notifications, which restricted the import of peas, by filing a writ petition. However, the Supreme Court upheld the notifications, making the imports contrary to the law.
• Key Evidence and Findings: The appellant had imported 11 consignments of peas after the DGFT notifications had imposed restrictions on such imports.
• Application of Law to Facts: The Tribunal found that the imports were indeed contrary to the notifications and thus fell under the purview of section 111(d).
• Treatment of Competing Arguments: The appellant argued that the imports were made under an interim stay order from the High Court, but the Supreme Court's final judgment superseded this.
• Conclusions: The Tribunal upheld the confiscation of goods under section 111(d).

Imposition of Penalty under Section 112(a)

• Legal Framework and Precedents: Section 112(a) provides for penalties on persons involved in improper importation of goods.
• Court's Interpretation and Reasoning: The Tribunal considered the appellant's argument that the penalty imposed was disproportionate and referenced a similar case involving Rahul Agro Industries.
• Key Evidence and Findings: The Tribunal acknowledged the appellant's security deposit and the fact that similar cases had resulted in reduced penalties.
• Application of Law to Facts: The Tribunal applied the precedent from Rahul Agro Industries to reduce the penalty.
• Treatment of Competing Arguments: The Revenue argued the appellant benefited from free imports knowingly, but the Tribunal found the penalty excessive.
• Conclusions: The Tribunal reduced the penalty from Rs. 60,00,000 to Rs. 8,00,000.

Levy of Redemption Fine under Section 125

• Legal Framework and Precedents: Section 125 allows for the imposition of a fine in lieu of confiscation.
• Court's Interpretation and Reasoning: The Tribunal considered the proportionality of the redemption fine in light of similar cases.
• Key Evidence and Findings: The Tribunal noted the appellant's compliance with security deposit requirements and referenced the Rahul Agro Industries case.
• Application of Law to Facts: The Tribunal applied the reasoning from previous cases to determine a fair redemption fine.
• Treatment of Competing Arguments: The appellant argued for a reduction based on precedent, which the Tribunal accepted.
• Conclusions: The Tribunal reduced the redemption fine from Rs. 60,00,000 to Rs. 8,00,000.

Fulfillment of Pre-deposit Condition

• Legal Framework and Precedents: Section 129E of the Customs Act requires a pre-deposit for filing an appeal.
• Court's Interpretation and Reasoning: The Tribunal found that the appellant's security deposit met the pre-deposit requirement.
• Key Evidence and Findings: The appellant had deposited Rs. 91,30,121, which exceeded the required pre-deposit amount.
• Application of Law to Facts: The Tribunal concluded that the pre-deposit condition was satisfied.
• Treatment of Competing Arguments: The Tribunal noted the Revenue's acknowledgment of the deposit's sufficiency.
• Conclusions: The appeal was admitted, and the case was taken up for disposal.

SIGNIFICANT HOLDINGS

• The Tribunal held that the confiscation of goods under section 111(d) was justified as the imports were contrary to the DGFT notifications.
• The Tribunal reduced the penalty and redemption fine to Rs. 8,00,000 each, citing the precedent set in the Rahul Agro Industries case.
• The Tribunal confirmed that the pre-deposit condition was met by the appellant's security deposit, allowing the appeal to proceed.
• Verbatim Quote: "In the present case, the Assessable value is Rs.6.08 crores and Duty component is Rs.3.04 crores. The appellant is before the Tribunal, being aggrieved with the penalty of Rs.60,00,000 of penalty and Rs.60,00,000 of redemption fine. Since the facts are identical in the present case, following the same lines taken by the Tribunal in the case of Rahul Agro, we take a view that the ends of justice would be met if the these amounts are modified to Rs.8 lakhs of penalty and Rs.8 lakhs of Redemption fine."