Computation of Quantum of Redemption Fine

PJ/Case Laws/2011-12/1327

Case: Commissioner of Customs, Mumbai v/s Mansi Impex

Citation: 2011 (270) E.L.T. 631 (S.C.)

Issue:- Quantum of redemption fine – always depends on determination of market price of goods confiscated.

Reduction of redemption fine and penalty – Tribunal has to give proper and cogent reasons for the same.

Brief Facts:- Respondent had imported rough marble blocks without any licence and, therefore, their goods which were sought to be imported illegally without valid licence were confiscated with option to redeem the goods on payment of different amounts of fine and penalties. The question raised was regarding what will be the redemption fine payable, if any. The Commissioner considered the question and thereafter imposed redemption fine in lieu of confiscation and also penalty in term of provision of Section 125 and 112 of the Customs Act, 1962 respectively.

In appeal, The Tribunal reduced the quantum of redemption fine and also the amount of penalty. The judgment is reported at [2003 (160) E.L.T. 632 (Tri.- Mumbai)]. Revenue filed appeal before the High Court. The High Court rejected the appeal on the ground that no question of law arises.

Hence, Revenue is in appeal before the Supreme Court.

Appellant’s Contention:- Revenue contended that the Tribunal was not justified in reducing the amount of redemption fine imposed on the parties as also the quantum of penalty imposed, without giving strong and cogent reasons for differing with the order of Commissioner.

Respondent’s Contention:- Respondent-assessee contended that since the Tribunal has exercised the discretion as vested on it, there should not be any interference with the impugned judgment and order passed by the Tribunal as also by the High Court.

Reasoning of Judgment:- The Supreme Court perused the provisions of Section 125 which provides for “Option to pay fine in lieu of confiscation” and Section 112 of the Act deals with the provision of imposition of penalty for improper importation of goods.

It was noted that from records it appeared that the Commissioner had imposed redemption fine in lieu of confiscation without making any market enquiry and survey regarding the market price of the goods confiscated at the relevant point of time. It was held that the quantum of redemption fine which could be imposed is always dependent on the determination of the market price of the goods confiscated. In the case where not even a sample market survey was done for determining the market price of goods, it could not have been possible for the Commissioner to arrive at a legally justified and correct quantum of redemption fine to be imposed. Any such determination would also be without following the procedure prescribed under the Act.

It was further held that the quantum of the redemption fine would depend upon the facts and circumstances of the each case. In the present case importer (Respondent) although were experienced person and well versed in the policies and procedure in regards to the import and export brought certain goods in the question without a license, which was a prerequisite under the law. The issue whether absolute waiver or any waiver of redemption fine and also of fine would be justified, are required to be considered on the basis of facts of each case.

It was further held that the Tribunal is required to give proper, valid and cogent reasons for passing order with regard to the quantum of redemption fine as also the penalty. Accordingly, matter remanded to the Tribunal.

Decision:- Appeal partly allowed.

Comment:- It is very important decision which says that the quantum of fine will depend on the market price of the goods and the survey should be done by the department for the same. But this procedure is normally not followed by the department.

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PJ/Case Laws/2011-12/1327

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