2017 (3) TMI 1559 - HC - Customs

Court quashes redemption fees & penalties due to petitioner opting for confiscation without fine.

The Court quashed the orders imposing the redemption fee and penalty, citing binding precedents that redemption fine, interest, and duty could only be ... Confiscation of Whole Body CT Scanner - option of redemption fine not chosen by petitioner - Held that: - the petitioner chose to have the article confiscated and they explicitly showed their intention not to pay fine in lieu of such confiscation. If that be so, Exts.P1, P3 and P4 cannot be find sustenance in law - Exts.P1, P3 and P4 orders quashed - petition allowed. Issues:Hospital importing Whole Body CT Scanner seeking duty exemption under Customs notification - Show cause notice for confiscation and penalty issued - Petitioner's contention on notification conditions - Order imposing redemption fee and penalty challenged in writ petition - Customs claim for duty and interest disputed - Interpretation of Section 125 of Customs Act in light of previous judgments.Analysis:The petitioner, a hospital, imported a Whole Body CT Scanner from the USA under a Customs notification dated 1.3.1988 seeking duty exemption. After several years, a show cause notice was issued for confiscation and penalty under the Customs Act. The petitioner argued that the notification required certification by the Director General of Health Sciences for duty exemption, claiming they provide free treatment to marginalized sections. Despite showing cause, an order under Section 111(o) of the Act was issued, offering redemption on payment of a fee. The petitioner's appeal was unsuccessful, leading to a writ petition challenging the order imposing a fine and penalty.During the hearing, the Customs contended that even if the petitioner opted for confiscation, they were liable for a deduction fee and duty with interest. However, the Court referred to previous judgments, including one by the Supreme Court and another by the High Court, which held that redemption fine, interest, and duty could only be imposed if the owner chose to pay a fine in lieu of confiscation under Section 125 of the Act. As the petitioner opted for confiscation without paying a fine, the orders imposing fees and penalties were deemed unsustainable in law based on binding precedents.Consequently, the Court quashed the orders imposing the redemption fee and penalty, citing the judgments in Fortis Hospital Ltd. v. Commissioner of Customs and the High Court's previous decision. The Court emphasized the importance of following established legal precedents and granted the Customs the liberty to pursue other available powers or remedies as per the law. The writ petition was thus allowed in favor of the petitioner, setting aside the contested orders while upholding the legal principles outlined in the referenced judgments.