Redemption fine and penalty are discretionary when re-export is allowed and import restrictions were unclear at entry.

When re-export is permitted and the import policy was unclear at the time of import, redemption fine and penalty are not automatic. The DGFT circulars clarified that Air Conditioners containing HCFC-22 gas already landed but not cleared for home consumption were to be treated as free imports, and that clarification came after the relevant import. On those facts, the adjudicating authority retained discretion on whether to impose fine and penalty, rather than being bound to do so. The order allowing re-export without such levy was therefore upheld.

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Issues: Whether, on permitting re-export of the imported goods, redemption fine and penalty were mandatorily required to be imposed when the import restriction was unclear at the time of import.

Analysis: The import was made during a period when the position regarding Air Conditioners containing HCFC-22 gas was not free from doubt. The relevant DGFT policy circulars clarified that such imports were to be treated as free for goods already landed and not cleared for home consumption, and the subsequent clarification came only after the import in question. The importer had also sought re-export and rectification of the goods. The earlier Larger Bench view only recognised that fine and penalty may be imposed even when re-export is allowed, which means that their imposition remains discretionary and not compulsory in every case.

Conclusion: Redemption fine and penalty were not mandatory on the facts, and the order allowing re-export without such levy was upheld.

Ratio Decidendi: When re-export is permitted and the statutory or policy position was unclear at the time of import, the adjudicating authority retains discretion whether to impose redemption fine and penalty; such levy is not automatic.

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