The Chennai Bench of the Customs, Excise and Service Tax Appellate Tribunal(CESTAT) has reduced the redemption fine considering the loss occurred for the assessee as the order of re-export of undervalued KIWI Fruit was delayed.
M/s. Ram Prasath, the appellant filed four Bills of Entry dt. 24.11.2022 and 03.12.2022 at M/s.Kern ICD, Madurai for the import of Kiwi Fruits which was stated to be of Chile Origin. An alert from NCTC, Mumbai was received in respect of Bill of Entry No.3457434 dt. 24.11.2022 informing that the origin of the said Kiwi fruits might be in Iran and the import of Kiwis from Iran has been suspended w.e.f November 2021 as per the Agriculture Ministry’s Order No.18/23-2015-PP II (e-16587) dated 07.12.2021. Further, it appeared that the goods were undervalued. Hence thorough examination of the documents and the goods were ordered to be carried out in respect of all the Bills of Entry filed by the importer.
It was found that the 86 crates of Kiwi fruits had Iranian markings on the plastic material covering the crates and 7 wooden pallets used for packing the said kiwis were having Iranian fumigation markings. On further examination of the records and documents submitted by the importer, it was seen that the importer had purchased said cargo on a High Sea sale basis from M/s. Ochelle International LLP, Chennai, who had in turn imported the same from M/s.Ochelle General Trading LLC, Dubai.
It was found that the Phytosanitary certificates in respect of all the cargo in 8 containers under the above three Bills of Entry have been forged and manipulated. The original 5 certificates downloaded from the official website of the Chile Government showed that these certificates were issued to importers from different countries such as the USA, China, Brazil, France, and Costa Rica and for different fruits such as Apples and Grapes.
The imported goods were undervalued, and the values of the same were enhanced during the assessment of bills of entry. The Plant Protection Officer, Madurai after verifying the imported goods had given an order to the importer on 23.12.2002 to the effect that the consignments should be deported within 15 days for the reason that all the details in the Phyto Sanitary certificates are forged. The appellant also requested for re-export of the cargo vide letter dt. 06.01.2023 and waived the issuance of the show cause notice.
After due process of law, the original authority ordered for confiscation of imported goods, “Kiwi Fruits” totally valued at Rs.1,21,15,314/- under Section 111 (d) of Customs Act, 1962 and also ordered for re-export of the said goods on payment of redemption fine of Rs.20,00,000/-. A penalty of Rs.10 lakhs was imposed on Shri Ram Prasath, Proprietor of M/s.Ram Traders ( appellant- importer) under Section 112 (a) of the Customs Act, 1962. A separate penalty of Rs.10 lakhs was imposed under Section 114AA of the Act ibid. On appeal, the Commissioner (Appeals) reduced the redemption fine to Rs.5 lakhs and also reduced the penalty imposed under Section 112 (a) and Section 114AA to Rs. 5 lakhs and Rs.10 lakhs respectively.
It was submitted that the delay in passing the impugned order by the Commissioner (Appeals) has caused much hardship to the appellant as the appellant has been prevented from reexporting the goods at the earliest. The goods have now been completely deteriorated and cannot be sold in the market.
The counsel submitted that as the goods have deteriorated and are not in a saleable condition, the imposition of a redemption fine is not justified. The Commissioner (Appeals) that there is no margin of profit as the goods are ordered to be re-exported and as the goods are perishable. It is submitted that the appellant has incurred huge demurrage charges and the redemption fine imposed may be set aside.
It was argued that the appellant was unaware of the non-genuineness of the documents furnished by the supplier. It is submitted that the Commissioner (Appeals) in para-9 of the order has noted that the contention of the appellant that they were not aware of the forgery of documents cannot be brushed aside completely, though there is room to doubt the bonafides of the importers.
The Commissioner (Appeals) has reduced the redemption fine from Rs.20 lakhs to Rs.5 lakhs and the penalty imposed under Section 112 (a) from Rs.10 lakhs to Rs.5 lakhs. The penalty imposed under Section 114AA is reduced from Rs.20 lakhs to Rs.10 lakhs. In para-9 of the impugned order the Commissioner (Appeals) has noted that there is no margin of profit as the goods are ordered to be re-exported. Further, it is also to be seen that the appellant has incurred huge loss due to demurrage charges etc. as the goods have been ordered to be reexported.
The goods are perishable. Since they are ordered to be re-exported, the redemption fine imposed is without any basis and requires to be set aside. A single member bench of Ms Sulekha Beevi C S, Member (Judicial) held that a redemption fine of Rs.5 lakhs imposed under Section 125 for redeeming the goods for re-export only requires to be set aside.
It was observed that the penalty imposed under Section 112 (a) (i) can be reduced from Rs.5 lakhs to Rs.4,00,000 lakhs (Rupees Four lakhs only). The Tribunal reduced the penalty imposed under Section 114AA of the Act from Rs.10 lakhs to Rs.8,00,000/- (Rupees eight lakhs only).
The impugned order was modified to the extent of setting aside a redemption fine of Rs.5 lakhs without disturbing the order to re-export the goods.
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