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TMI Blog2023 (7) TMI 1192X X X X Extracts X X X X X X X X Extracts X X X X ..... he said policy change would be having any retrospective effect. The Adjudicating Authority has rightly held that on the date on which the imports were made, the goods were clearly in the prohibited category for having not met the MIP criteria and hence liable for confiscation. It is well settled law that the goods can be confiscated under Section 111(d) of the Customs Act if it is prohibited under Customs Act or any other law for the time being in force - in view of clear position stated in the EXIM policy, as pointed out by the Learned DR, any policy change has to be given prospective effect only and therefore the exemption from MIP criteria for 100% EOU in respect of Arecanut cannot be extended till the time the revised notification was issued on 14.02.2023. There is no ambiguity in the wordings of notification and therefore there is no need to look for intent or interprete the notification. Absolute confiscation of their goods - HELD THAT:- The power of Adjudicating Authority to confiscate the goods liable for confiscation is governed by Section 125 of Customs Act. It also gives a discretionary power to give importer an option to redeem the goods on payment of fine in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y, Commissioner has himself held in para 68 of his order that this is not a case of mis-declaration or misclassification and it is also not a case of deliberate attempt on the part of importer to circumvent the policy provisions. Thirdly, the importer had a bona fied belief that MIP conditions were not applicable to them in view of similar goods having the same exemptions. The fact that they approached the Ministry of Commerce, who agreed with their submissions and requested the DGFT to issue clarification also relevant. It is a different matter altogether that the DGFT did not issue any clarification/notification till 14.03.2023, which has however been held to have prospective effect only. While the tariff value is fixed in terms of Section 2(40) and Section 14(2) of the Customs Act by way of notification in the Official Gazette and such tariff value becomes the basis for charging duty, whereas the MIP is value which is determined by the DGFT for the purpose of imposing certain provision/restriction on import of goods. Therefore, these two cannot be used interchangeably. In this case, admittedly the goods were for job work by EOU on a free of cost basis and therefore a notion ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... absolute confiscation of 216MT of Arecanut covered under the Bill of Entry 9760994 and 9761044, both dated 28.07.2022. In addition, he also imposed a penalty of Rs. 10 lakhs. It is against the said impugned order the appellants are before this Tribunal. 4. The appellants have primarily relied on Ministry of Commerce and Industry office Memorandum No. ADMN/71/2022-EOU dated 31.08.2022 with reference to the representation of the firm and also on Notification No. 57/2015-2020 dated 14.02.2023, which according to them has got retrospective application. On the other hand, the Department has mainly contested that there was no exemption to EOU from the applicability of MIP in respect of Arecanut during material time and subsequent notification exempting them from MIP cannot have retrospective effect. Therefore, during the material time, the goods imported were clearly prohibited in nature and therefore rightly confiscated by the Adjudicating Authority. 5. The Learned Advocate for the appellant submitted that they are 100% EOU, which is engaged in job work contracts along with buy back agreement with one M/s Reliance Products Pte Ltd., Singapore for manufacturing and supply of Arecan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ited attention to another amending Notification No. 21/2015-2020 dated 25.07.2018 whereby, the policy condition in respect of pepper was revised in as much as the MIP condition was not to be applicable for imports under Advance Authorisation Scheme, imports by 100% export unit and units in SEZ. Learned DR submitted that there being no similar policy relaxation in respect of Arecanut, as was done in the case of pepper, the MIP condition was applicable to the imports by appellant despite them being an EOU. Since the imports were made below the MIP, the goods were in the nature of prohibited goods and liable for confiscation. 9. He has also invited attention to Foreign Trade Policy, 2023, wherein in para 1.05 i.e. transitional agreements, it was clearly indicated that whenever Government brings out a policy change of a particular item, the change will be applicable prospectively (from the date of notification) unless otherwise provided for. He has also relied in amendment to para 1.05b of Foreign Trade Policy 2015-2020, vide Notification No. 5/2015-2020, dated 25.04.2018 wherein, interalia, it has been indicted that whenever Government brings out a policy change of a particular ite ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this notification was clarificatory notification and therefore having retrospective effect, in view Ministry of Commerce having written a letter to DGFT for considering the exclusion from MIP criteria in this case, as was applicable to other goods like pepper, cashew nuts etc, the fact remains that the said notification did not have any provision for giving it retrospective application. Further, in view of clear position stated in the EXIM policy, as pointed out by the Learned DR, any policy change has to be given prospective effect only and therefore the exemption from MIP criteria for 100% EOU in respect of Arecanut cannot be extended till the time the revised notification was issued on 14.02.2023. There is no ambiguity in the wordings of notification and therefore there is no need to look for intent or interprete the notification. 13. Coming to another aspect of appeal, wherein the appellants have contested the absolute confiscation of their goods, it is noted that they had been pursuing the matter relating to their being not covered by MIP criteria with the Ministry of Commerce and were also having a bonafide belief that the policy changes or clarification etc would take pl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of discretion and has ordered absolute confiscation with enhancement of the amount of penalty. This takes us to the principles to be applied for exercise of the discretion so available in the first part of Section 125(1) of the Customs Act. 71 . Thus, when it comes to discretion, the exercise thereof has to be guided by law; has to be according to the rules of reason and justice; and has to be based on the relevant considerations. The exercise of discretion is essentially the discernment of what is right and proper; and such discernment is the critical and cautious judgment of what is correct and proper by differentiating between shadow and substance as also between equity and pretence. A holder of public office, when exercising discretion conferred by the statute, has to ensure that such exercise is in furtherance of accomplishment of the purpose underlying conferment of such power. The requirements of reasonableness, rationality, impartiality, fairness and equity are inherent in any exercise of discretion; such an exercise can never be according to the private opinion. 71.1 It is hardly of any debate that discretion has to be exe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ting Authority should have given an option to the importer to redeem the goods on payment of fine in lieu of confiscation, as provided in the Section 125 of the Customs Act. The Adjudicating Authority has analysed the provisions and analysed the word may as provided under Section 125 of the Customs Act to come to the conclusion that the said discretion cannot be exercised for giving option to redeem the goods in the given facts of the case. He has relied on certain case laws in support of his not giving an option and going in for absolute confiscation namely: i) Abdul Razak Vs Union of India [2012 (275) ELT 300 (ker)] ii) T.S. Sivagnanam, J.Kamal Sarbudeen Vs Addl. Commissioner of Customs(Air) Chennai-I [2017 (356) ELT 563 (Mad)] iii) Commissioner of Customs(Air) Chennai-I Vs P. Sinnasamy [2016 (344) ELT 1154 (Mad)] iv) Nickunj Shah Vs Commissioner of Customs (Exp) ACC, Mumbai [2015 (316) ELT 291 (Tri-Mumabi)] v) Nine Star Exports Vs Commissioner of Customs (Ports), Chennai [2003 (151) ELT 265 (Mad)] 17. The essential part of all these judgments are that authorities were not bound to grant any option for redemption in the case of prohibited goods in the given se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tecting farmers interest etc. This is not the case where the imports are only for the purpose of re-export by an EOU without payment of duty, following the exemption notification meant for duty free import by EOU. Therefore, facts are not on all fours in so far as this case is concerned. Further, while it is correct that he has relied on Raj Grow Impex for justifying absolute confiscation, he has not appreciated that in the said order the Hon ble Supreme Court, interalia, held that discretion has to be exercised to further the purpose of such law and therefore all pros and cons have to be weighed before the final decision for giving option or absolute confiscation of prohibited goods are taken. Essentially, it observed that it is the discretion of Adjudicating Authority to give the option, however, the discretion has to be based on facts of the case and cannot be done mechanically, either ways. 19. I find that in so far as his basis for denying the option is concerned he has presumed that the Arecanut was some sort of sensitive commodity used in the manufacture of Gutka and there must be some policy decision for not to allow exemption of MIP condition for 100% EOU. This presumpt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ommercial value, is also relevant. Similarly, irrespective of any value declared, even higher than MIP, duty was not payable in view of exemption available to EOU. 22. Therefore, having regard to the several mitigating factors and the facts of the case, it is obvious that the Commissioner has erred in not giving the option by not excersising his discretion in favour of the appellant under Section 125 of the Customs Act 1962. In so far as the issue of penalty is concerned in the light of Commissioner s observation that there was no malafide intention nor any mis-declaration/mis-classification, the penalty appears to be excessive and perhaps based on the value indicated in the SCN i.e. Rs. 12,35,32,938/. However, this value is erroneous in as much as the declared value had not been re-determined by Customs, in as much as there is no indication in the SCN as to how the assessable value has been arrived at. It appears that they have indicated the assessable, value based on tariff value at the rate of 7.065 USD/kg. This is not correct as the MIP is not same as tariff value , as both are different concepts. While the tariff value is fixed in terms of Section 2(40) and Section 14(2) ..... X X X X Extracts X X X X X X X X Extracts X X X X
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