Relief for Importer: CESTAT Caps Redemption Fine at 10% and Penalty at 5% of Re-Determined Value [Read Order]

The Chandigarh Bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) provided partial relief to an importer by capping the redemption fine at 10% of the re-determined value while upholding the penalty at 5%, in line with prevailing judicial precedent.

Genuine Copier System, the appellant, imported 116 units of old and used digital multifunction devices with accessories from the United States. The goods were self-assessed under Tariff Item No. 84433100 of the Customs Tariff Act, 1975, and were subjected to a first-check examination before clearance. A chartered engineer was engaged to assess the description and value of the imported goods, and the declared value was enhanced to Rs. 31,13,620 based on his report.

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To avoid demurrage and detention charges, the appellant accepted the revised valuation but challenged the imposition of a redemption fine of Rs. 15,56,810 and a penalty of Rs. 1,00,000. The original adjudicating authority confirmed the enhanced value and upheld both the fine and penalty. The Commissioner (Appeals) rejected the appellant’s challenge.

On appeal before the CESTAT, the appellant’s counsel argued that the redemption fine and penalty were excessive and relied on the Larger Bench decision in Marque Enterprises v. Commissioner of Customs (Preventive), Amritsar – 2015 (329) ELT 307 (Tri. Del.), which held that redemption fines should generally be restricted to 10% and penalties to 5% of the value of the goods.

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The revenue counsel relied on the Commissioner’s order and argued against any reduction.

The single-member bench comprising S.S. Garg (Judicial Member) accepted the appellant’s plea in part. The tribunal held that the redemption fine was indeed excessive and reduced it to 10% of the re-determined value, amounting to Rs. 3,11,362. The tribunal found no reason to interfere with the penalty, which stood at less than 5% of the re-determined value.

The tribunal allowed the appeal in part, applying established legal precedent to provide relief proportionate to the circumstances of the case.

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