The Chennai Bench of Customs, Excise, and Service Tax Appellate Tribunal ( CESTAT ) has held that a redemption fine and penalty can be imposed on the re-export of prohibited goods.
Further held that if the owner gets the goods released after payment of the redemption fine, he may either clear it for home consumption or re-export the same subject to the relevant rules. Permission granted for re-export based on a request made by the owner of the goods is outside the purview of the adjudication proceedings.
M/s. Scania Commercial Vehicles India Pvt. Ltd, the appellant/assessee specialized in the manufacture of trucks, buses, automobile engines, etc. The appellant filed Bills of Entry (BE) for the import of eight diesel engines and one industrial engine for home consumption and deposited customs duty, which was self-assessed provisionally given the import being from a related party supplier.
The imported engines were found not to be supported by the Type Approval Certificate and the Certificate of Conformity of Production as prescribed under the Environmental Protection Rules, 1986 (EPR 1986).
Since the appellant could not furnish the certificates from the supplier, they, in their communication dated March 30, 2022, opted for an amendment of the BE from home consumption to warehousing in terms of Section 49 of the Customs Act, 1962 and requested the re-export of the diesel engines.
Before the adjudicating authority, it was requested to adjudicate the subject issue and waive the issuance of a show cause notice. After due process of law, the adjudicating authority confiscated the 8 diesel engines and one industrial engine imported and allowed redemption of the goods on payment of a fine of Rs. 8 lakhs for re-export as requested within 60 days. The adjudicating authority also imposed a penalty of Rs. 3 lakh on the appellant.
The appellants paid the redemption fine and penalty under protest as they were incurring heavy demurrage charges. The appellants filed an appeal before the Commissioner (Appeals), who rejected the appeal and allowed 30 days for re-exporting the goods.
It was contended that when the goods have been re-exported, the question of confiscation of goods under Section 111(d) of the Customs Act, does not arise, and when there is no question of confiscation, a redemption fine under Section 125 and a penalty under Section 112(a) cannot be imposed.
The two-member bench of M. Ajit Kumar (Technical Member) has observed that a penalty is the result of a breach of statutory duty. While a fine is imposed on the redemption of offending goods imported in breach of law, a penalty is levied on a person responsible for the breach of statutory duty.
While rejecting the assessee’s plea, the Tribunal held that goods become liable to confiscation if the importer or exporter contravenes any of the provisions of the Customs Act or any other Act for the time being in force to the importation and exportation of goods.
Since the goods were imported in contravention of the provisions of the EPR of 1986, they were ‘prohibited goods’. S. Ganesh Aravindh appeared for the appellant and M. Selvakumar appeared for the respondent.
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