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TMI Blog2014 (6) TMI 159X X X X Extracts X X X X X X X X Extracts X X X X ..... (i) could be invoked even in a case where the purported action of an employee was unauthorized? (iv) What are the principles of law and how is discretion to be exercised for determining fine in lieu of confiscation under section 125 of the Customs Act, 1962?" 2. During the pendency of the present reference petition the petitioner re-framed its questions of law and amended the petition raising the following questions. (i) Can the Tribunal impose a heavy redemption fine of Rs.20 lacs on the owner of the goods, once it holds:- (a) that the owner of the goods had acted in a bona fide manner; (b) that it does not want to hold the owner of the goods vicariously liable to penalty; and (c) it refrains from imposing any penalty upon the owner of the goods? (ii) What are the principles of law and how is discretion to be exercised for determining redemption fine under Section 125 of the Customs Act,1962 and whether in the facts and circumstances of the case the Tribunal was justified in levying any fine in respect of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Officers of Customs posted at the gate of SEEPZ, stopped a fiat car in which one - Mr. Manish Parekh, the petitioner's Manager (herein after referred to as 'Manager') was traveling along with a plastic bag. On examination of the plastic bag, it was found that the Manager was carrying 587.92 carats of cut and polished diamonds. The Manager was unable to produce any documents in support of his attempt to remove the 587.92 carats of diamonds from the export processing zone. Consequently, the 587.92 carats of cut and polished diamonds were seized. Statements were recorded not only of the Manager but also of the others. On completion of the investigation, a show cause notice dated 19 November 1990 was issued to the petitioner and others including its Manager. The above notice inter alia called upon the petitioner to show cause why duty of Rs.37.36 lacs on the seized goods should not be recovered and also confiscated. Besides calling upon the petitioner and its Manager why penalty should not be imposed upon them; (f) By an order dated 16th December 1991, the Collector of Central Excise, Bombay dropped the show cause notice dated 19 November 1990 so far as it was issued t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Tribunal and therefore, no referable question of law arises. So far as Question (iii) is concerned, the Tribunal dismissed the Reference Application on the ground that the same does not give rise to question of law as it is a question of fact. (i) As the petitioner's application to the Tribunal to make a reference to this Court was rejected the petitioner filed the present Petition under Section 130(3) of the Act. By this petition the petitioner requires the High Court to direct the Tribunal to refer the questions of law framed herein above along with the statement of case to this Court for its decision thereon. 4. The present petition was filed under Section 130(3)of the Act, as then existing in the year 1997. This application was filed on the refusal of the Tribunal to refer the questions of law to this Court as sought by the petitioner under Section 130(1) of the Act. In terms of Section 130(3) of the Act, when the Tribunal refuses to refer the question of law to the High Court for its decision as sought by the assessee or the revenue then in such a case the applicant before the Tribunal can apply to the High Court to consider and if thought fit to direct the Tribuna ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... visions of Section 130D of the Act will give effect to the same. 7. The following undisputed facts in the order of the Tribunal dated 4 December 1995 passed on merits may be noted as under:- (a) That cut and polished diamonds were attempted to be removed unauthorizedly by the Manager of the Petitioner-Company from SEEPZ; (b) The cut and polished diamonds were seized at the gate of SEEPZ i.e. just before removal to the DTA; (c) No prior permission has been taken by the Petitioner or by its Manager for taking the cut and polished diamonds out of the SEEPZ area for sale or for approval or for export; (d) The Manager of the petitioner was aware of the procedural requirements to be satisfied, before taking the cut and polished diamonds outside SEEPZ's area; (e) In his first statement made during the seizure of diamonds, on 31 May 1990 the Manager does not state that the diamonds are being taken out of SEEPZ for being showing to a Japanese buyer, so as to obtain an order for export. This version of the goods being removed to be shown to a Japanese's buyer, was put forth later; (f) There is no entry regarding removal of seized cut and polished diamonds on 31 May 1990 by its ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... petitioner to remove the cut and polished diamonds from SEEPZ's area; and (e) Redemption fine of Rs.20 lacs on diamond valued at Rs.35.5 lacs is harsh and excessive, keeping in mind the bona fide conduct of the petitioner. 10. As against the above, Mr. Rao, learned Counsel for the Revenue-Respondent in support of the impugned order submits as under:- (a) No question of law arises in the present case from the order of the Tribunal dated 4th December 1995; (b) The imposition of redemption fine of Rs.20 lacs by the Tribunal was admittedly within the permissible limit provided under Section 125 of the Act which provides that the redemption fine should not exceed the market price of the goods confiscated less the duty payable on the imported goods; (c) The Tribunal has come to a finding of fact that the action of the petitioner's Manager was done so as to benefit the Petitioner. Therefore, the redemption of the confiscated diamonds can only be done on payment of the redemption fine; (d) The quantum of redemption fine has been arrived at by the Tribunal on appreciation of facts relating to the conduct of the parties. Therefore, the imposition of redemption fine at Rs.20 la ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Jain Exports -II (supra) decision, there can be no dispute that redemption fine is imposable on confiscated goods even if the conduct of the parties is bona fide. 12. Therefore the issue to be examined is within a very narrow compass namely the quantum of redemption fine to be imposed in the peculiar facts and circumstance of the present case. The Tribunal in the impugned order has held that the goods are liable for confiscation. The emphasis of the petitioner before us was that in view of its bona fide conduct, no redemption fine or in the alternative, a token redemption fine would meets the ends of justice. Once the goods are liable for confiscation, redemption fine was imposable. The petitioner before us sought to emphasize the bona fide conduct of its manager by pointing out that diamonds were being taken out to show to the Japanese buyer who was leaving the country next day. This excuse or reason for not recording the removal of diamonds in petitioner's record was found on facts by the Tribunal to be an after thought as it was not so mentioned by its manager when the diamonds were seized on 31 May 1990 at the gate of SEEPZ. In this case, the market value of the goods is R ..... X X X X Extracts X X X X X X X X Extracts X X X X
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