Redemption fine and customs penalty may be reduced where EXIM policy breach lacks proper profit-element calculation.

Import in contravention of the EXIM policy was treated as liable to confiscation under Section 111(d) of the Customs Act, with penalty under Section 112 also attracted. The commentary notes that redemption fine should ordinarily correspond to the profit element in such cases, but the absence of any proper calculation in the original order supported reduction. It further states that total waiver was not justified merely because the importer suffered loss after duty was paid on the enhanced value. On the circumstances discussed, both the redemption fine and penalty were reduced, giving the importer partial relief.

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Issues: Quantum of redemption fine and penalty in respect of goods imported in contravention of the EXIM policy and liable to confiscation under the Customs Act.

Analysis: The import was accepted to be in contravention of the EXIM policy, attracting confiscation under Section 111(d) of the Customs Act, 1962 and penalty under Section 112 of the Customs Act, 1962. The tribunal held that redemption fine in such cases should ordinarily be sufficient to absorb the profit element, but the record did not disclose any calculation of the fine in the original order. At the same time, the matter did not justify total waiver of fine and penalty merely because the importer had suffered loss after payment of duty on the enhanced value. Considering the circumstances and the duty already paid on the enhanced value, reduction of both components was found appropriate.

Conclusion: The redemption fine and penalty were reduced from the amounts originally imposed, and the assessee obtained partial relief.

Ratio Decidendi: Where import is in contravention of the EXIM policy and confiscation is warranted, redemption fine should be fixed with reference to the profit element, but it may be reduced having regard to the surrounding circumstances and absence of a proper calculation.

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