The Chandigarh Bench of Customs, Excise, and Service Tax Appellate Tribunal ( CESTAT ) has held that a redemption fine is not imposable when the minimum import price paid on prime pre-painted steel coils and quashed the penalty under the Customs Act, 1962.
M/s Hindustan Distributors, the appellant/assessee filed six bills of entry for the import clearance of ‘Prime Pre-painted Steel Coils (Non Alloy)’ falling under tariff item 72107000 of the Customs Tariff, declaring the CIF price of USD 485 per MT (including a discount of USD 2400 for the consignment) through their Customs Broker. The goods were imported from M/s Zhejiang Huada New Materials Co., Ltd., China.
The DGFT issued Notification No. 38/2015-2020 amending the import policy conditions of iron and steel falling under Chapter 72 of the ITC (HS) by fixing the MIP. In view of the notification, imports of iron and steel products, namely prime pre-painted steel coils (non alloy), falling under tariff item 72107000 of the Customs Tariff could be freely made when the CIF value per MT in USD is 752 or more.
The importer declared the transaction value of the goods at USD 485 per MT on CIF terms only, which was less than the minimum import price, i.e., USD 752 per MT, as fixed. Therefore, as per the department, the goods had been imported in contravention of provisions of Foreign Trade Policy 2015–20, and hence the goods were liable to confiscation under Section 111(d) of the Customs Act, 1962.
It was contended that the goods have been held liable for confiscation under Section 111(d) of the Act, which states that the goods shall be liable to confiscation if such goods are imported or attempted to be imported contrary to any prohibition imposed by or under this Act or any other law for the time being in force. The goods can be seized under Section 110 of the Act. As per Section 110(1), if the proper officer has reason to believe that any goods are liable to confiscation under this Act, he may seize such goods.
It is a settled law that confiscation of the goods is sustainable in cases of malafide intention only. The goods have been held liable for confiscation under Section 111(d), wherein the goods were not imported against any prohibition. It was a simple case of reassessment where seizure, confiscation, and consequent fines and penalties were not warranted.
The single bench of S. S. Garg (Judicial Member) has observed that the appellant has already paid the Minimum Import Price (MIP) for the goods as fixed vide Notification No. 38/2015-2020 dated 05.02.2016 issued by the DGFT, by which impugned goods cannot be imported with a value less than the MIP.
The CESTAT held that in the order passed by the Commissioner (Appeals), sufficient reasons have not been given for imposing the redemption fine and penalty. There was no attempt by the appellant to mis-declare the description or transaction value. Once the confiscation is set aside, the question of the imposition of a penalty under Section 112(a) does not arise.
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