The Ahmedabad bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) reduced the redemption fine to 4 lakhs since it was imposed without market inquiry.
Mgm Tradelink Pvt Ltd, the appellant filed a refund claim for a refund of Rs. 2,90,212/- which was rejected vide Order-in-Original by Assistant Commissioner (Refund), Mundra who held that the goods CTH 72163200 are eligible for concessional rate of duty @5% as per Sr. 190B of Notification No.21/2002 but since the appellant did not challenge the assessment order which has become final the Refund is not admissible.
The appellant filed an appeal before Commissioner of Customs(Appeal), Kandla who rejected the appeal holding that the assessment of the subject bill of entry being unchallenged has attained finality and the assessment cannot be reopened.
The declared value was rejected and re-determined and fixed as USD 550 PMT (Rs. 47,35,574/-) and ordered for confiscation of imported goods and imposed redemption fine of Rs.17,00,000/- under Section 125(1) of Customs Act, 1962 and confirmed the demand for differential duty of Rs. 9,25,427/- and impose the penalty of Rs 9,25,427/- under section 114A of the Customs Act, 1962.
The appellant filed an appeal with Commissioner(Appeal) held that there was no mens rea and that it was a case where the appellant had not exercised due diligence to ensure that misdeclaration is not affected; and reduced Redemption Fine from Rs. 17 Lakh to Rs. 12 Lakh and held that adjudicating authority has wrongly imposed penalty under Section 114A and modified the penalty imposed on the appellant from Rs 9,25,427/- under Section 114A of Customs Act, 1962 to Rs. 4 Lakh under Section 112(a) of the Customs Act, 1962.
It was contended that imposition of a fine of Rs. 12 Lakhs on the ground that market inquiry to check whether the redemption fine exceeded the market price as reduced by duty chargeable thereon, has not been conducted and therefore without such inquiry high arbitrary redemption fine could not have been imposed.
Since the goods imported were offending goods having been misdescribed in the Bill of Entry, the action in rem is still required to be legally scrutinised. It was evident that while imposing a redemption fine no market inquiry to arrive at the correct quantum was done.
The higher side of the imposable redemption fine as per Section 125 of the Customs Act, 1962 is dependent upon such determination. However, within this highest limit, a redemption fine as a norm can be imposed to nullify profit likely to be earned through goods held liable to be confiscated.
A two-member bench of Mr Raju, (Technical) and Mr Somesh Arora(Judicial) observed that the facts of the matter indicate a wrong dispatch, but the goods were eventually cleared at the behest of the appellants who agreed to take the release of goods even at the enhanced value, indicates that margin of profit even after paying duty was present.
The CESTAT reduced the redemption fine while upholding the confiscation of offending goods and set aside the penalty of Rs. 4 Lakhs imposed under Section 112(a) by the order of the Commissioner (Appeals).
Subscribe Taxscan Premium to view the JudgmentSupport our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates
