Whether redemption fine can be enhanced without evidencing the fact that market price of imported goods was higher?

PJ/Case Law/2014-15/2144

Case:-M/s ASR MULTIMETALS PVT LTD Vs COMMISSIONER OF CUSTOMS, KANDLA

Citation:- 2014-TIOL-388-CESTAT-AHM

Brief facts:-This appeal has been filed by the appellant against OIA No.436/2013/Cus/Commr(A)/KDL dtd 25/6/2013 under which redemption fine of Rs.70,000/- imposed by the Adjudicating Authority under Sec. 125 of the Customs Act 1962 was enhanced to Rs.1,50,000/- on an appeal filed by the Revenue.

Appellant’s contentions:-Shri R Subramanya (Adv.) appearing of behalf of the appellant argued that both stay and appeal should be simultaneously disposed of as there is no justification given in OIA for imposing higher redemption fine imposed by the Adjudicating Authority. It was also his case that imported goods are not available for confiscation and no further redemption fine can be imposed in view of the following case laws:

i) M/s R. S. Trade Link & Others = (2010-TIOL-918-CESTAT-DEL)

ii) M/s Shiv Krupa Ispat Pvt Ltd = (2009-TIOL-388-CESTAT-MUM-LB)

Respondent’s contentions:-Shri S J Nair (AR) appearing on behalf of the Revenue argued that as per Sec. 125 of the Customs Act 1962 redemption fine upto the market price minus duty can be imposed upon the goods once confiscated and accordingly defended the order of the First Appellate Authority.

Reasoning of judgment:- The issue involved in the present proceedings lies in a narrow compass whether redemption fine once imposed while allowing clearance of imported goods can be enhanced subsequently. Therefore, after allowing the stay application, the appeal itself is taken up for disposal. Relevant Sec 125(1) of the Customs Act 1962 under which redemption with respect to confiscated goods is imposed is allowed is reproduced below:

"SECTION 125. Option to pay fine in lieu of confiscation - Whenever confiscation of any goods is authorized by this Act, the officer adjudging it may, in the case of any goods, the importation or exportation whereof is prohibited under this Act or under any other law for the time being in force, and shall, in the case of any other goods, give to the owner of the goods or, where such owner is now known, the person from whose possession or custody such goods have been seized, an option to pay in lieu of confiscation such fine as the said officer thinks fit: Provided that, without prejudice to the provisions of the proviso to sub-section (2) of section 115, such fine shall not exceed the market price of the goods confiscated, less in the case of imported goods the duty chargeable thereon."

From the above provisions of Sec. 125 of the Customs Act 1962, the quantum of redemption fine, cannot exceed the market price of the confiscated goods less the duty chargeable on the imported goods. In actual practice while imposing redemption fine, the margin of profit of the import is also taken into consideration by the Adjudicating Authority at the time of adjudication. For the purpose of determining the quantum of redemption fine, therefore it is essential to determine the market price of the confiscated goods adjudicated upon. It is possible that adjudicating authority may not have determined the Margin Of Profit (MOP) properly and actual MOP could be more. Under such circumstances theoretically redemption fine could be enhanced. However, to arrive at such an opinion of enhancing redemption fine concerned authorities need to determine the market price of the imported goods around the time of import and determine the Market Price and the MOP. In the instant case there is no evidence at all that after adjudication a higher MOP with respect to the imported goods was determined by the Appropriate Authorities. In the absence of any such evidence on record, there is no justification for enhancing the redemption fine imposed by the Adjudicating Authority.

Decision:- The appeal is allowed.

Comment:- The essence of the case is that quantum of redemption fine cannot exceed the market price of the confiscated goods less the duty chargeable on the imported goods . In actual practice while imposing redemption fine, the margin of profit (MOP) of the import is also taken into consideration by the Adjudicating Authority at the time of adjudication. For determining the quantum of redemption fine, it is essential to determine the market price of the confiscated goods. There is a need to determine the market price of the imported goods around the time of import and the MOP. In the instant case, as there was no evidence at all that after adjudication, a higher MOP with respect to the imported goods was determined, the enhancement of redemption fine was held to be improper.

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PJ/Case Law/2014-15/2144

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