Redemption Fine And Penalty Can Be Imposed On Re-export Of Prohibited Goods: CESTAT
Mariya Paliwala
9 Jun 2024 12:01 PM IST
The Chennai Bench of Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) has held that a redemption fine and penalty can be imposed on the re-export of prohibited goods. Section 125 enables the Customs Officer to grant an option to the owner or the person from whose possession the goods have been seized to pay a fine in lieu of confiscation. In an adjudication proceeding as in...
The Chennai Bench of Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) has held that a redemption fine and penalty can be imposed on the re-export of prohibited goods. Section 125 enables the Customs Officer to grant an option to the owner or the person from whose possession the goods have been seized to pay a fine in lieu of confiscation. In an adjudication proceeding as in the present case these are the provisions which would come into play. If the owner gets the goods released after payment of redemption fine, he may either clear it for home consumption or re-export the same subject to the relevant rules. A permission granted for re-export on the basis of a request made by the owner of the goods is outside the purview of the adjudication proceedings.
The bench of M. Ajit Kumar (Technical Member) has observed that a penalty is the result of a breach of statutory duty. The main object behind the imposition of penalties is deterrence. Re-export of the goods does not cure the breach of statutory duty already committed. While a fine is imposed on the redemption of offending goods imported in breach of law, a penalty is levied on a person responsible for the breach of statutory duty. No interference should ordinarily be made by an appellate body in the discretionary order passed by a lower authority just because another view might be possible, except on grounds of mala fides or extreme arbitrariness.
The appellant/assessee has an automobile manufacturing facility in Narasapura, Karnataka. The appellant is specialized in the manufacture of trucks, buses, automobile engines, etc. The appellant filed Bills of Entry (BE) for the import of eight diesel engines and one industrial engine for home consumption and deposited customs duty, which was self-assessed provisionally in view of the import being from a related party supplier.
The imported engines were found not to be supported by the Type Approval Certificate and the Certificate of Conformity of Production as prescribed under the Environmental Protection Rules, 1986 (EPR 1986). Since the appellant could not furnish the certificates from the supplier, they, in their communication dated March 30, 2022, opted for an amendment of the BE from home consumption to warehousing in terms of Section 49 of the Customs Act, 1962 (CA 1962) and requested the re-export of the diesel engines.
The appellants requested the adjudicating authority to adjudicate the subject issue and waived the issuance of a show cause notice. After due process of law, the adjudicating authority confiscated the 8 diesel engines and one industrial engine imported and allowed redemption of the goods on payment of a fine of Rs. 8 lakhs for the purpose of re-export as requested within a period of 60 days. The adjudicating authority also imposed a penalty of Rs. 3 lakh on the appellant.
The appellants paid the redemption fine and penalty under protest as they were incurring heavy demurrage charges. The appellants filed an appeal before the Commissioner (Appeals), who rejected the appeal and allowed 30 days' time for re-exporting the goods.
The assessee contended that when the goods have been re-exported, the question of confiscation of goods under Section 111(d) of the Customs Act, 1962, does not arise, and when there is no question of confiscation, a redemption fine under Section 125 and a penalty under Section 112(a) cannot be imposed.
The tribunal, while rejecting the assessee's plea, noted that goods become liable to confiscation if the importer or exporter contravenes any of the provisions of the CA 1962 or any other Act for the time being in force in relation to the importation and exportation of goods. In this case, the goods were imported in contravention of the provisions of the EPR of 1986. They were hence 'prohibited goods'.
Counsel For Appellant: S. Ganesh Aravindh
Counsel For Respondent: M. Selvakumar
Case Title: M/s. Scania Commercial Vehicles India Pvt. Ltd. Versus Commissioner of Customs
Case No.: Customs Appeal No.40256 of 2023
