2015 (8) TMI 1224 - HC - Customs

Tribunal rules redemption fine cannot be imposed without available goods

COMMR. OF CUS., EXPORT Versus NATIONAL LEATHER CLOTH MFG. CO.

The Tribunal held that redemption fine cannot be imposed when goods are not available for confiscation, as supported by a Division Bench judgment. The ... Imposition of redemption fine when goods not available – Tribunal vide impugned order partly allowed appeal of respondent by dropping redemption fine as goods were not seized and were not available – Whether tribunal was legally justified in dropping redemption fine – Held that:- Availability of goods is one of criteria which has been evolved in reported decision of current Court in case of Commissioner of Customs (Import), Mumbai v. Finesse Creation Inc. [2009 (8) TMI 115 - HIGH COURT OF JUDICATURE AT BOMBAY] – It was held that redemption fine is concept which arises in event goods are available and are to be redeemed – If goods are not available there is no question of redemption of goods – View of Tribunal in given facts and circumstances, considering language of Section 125(1) does not suffer from such serious legal infirmity or perversity which would warrant interference – Section 125 speaks of option to pay fine in lieu of confiscation – Appeal dismissed – Decided against revenue. Issues Involved:1. Imposition of redemption fine when goods are not available for confiscation.2. Violation of Notification No. 203/92-Cus., dated 19th May, 1992.3. Allegation of wrongful declaration and availment of duty-free benefits.4. Applicability of bond or legal undertaking as per the Notification.5. Interpretation and application of Section 125 of the Customs Act, 1962.Issue-wise Detailed Analysis:1. Imposition of Redemption Fine When Goods Are Not Available for Confiscation:The Tribunal's order stated that 'as the goods have not been seized and are not available, redemption fine is not imposable.' The revenue challenged this finding, arguing that the Tribunal's decision was contrary to law. The revenue contended that even if the goods were not available, a bond or legal undertaking could be enforced, allowing the imposition of a redemption fine. The Tribunal, however, concluded that if the goods are not available for confiscation, the redemption fine could not be imposed. This view was supported by the Division Bench judgment in the case of Commissioner of Customs (Import), Mumbai v. Finesse Creation Inc., which held that if the goods are not available, there is no question of redemption of the goods.2. Violation of Notification No. 203/92-Cus., Dated 19th May, 1992:The show cause notice alleged that the assessee violated Condition No. (v)(a) of the Notification by availing input stage credit, which was not admissible. The Notification required that the export obligation be discharged by exporting goods manufactured in India without availing input stage credit. The Tribunal found that the goods were imported duty-free under the advance licence, and once the condition was violated, the goods would attract duty and further consequences under the Customs Act, 1962.3. Allegation of Wrongful Declaration and Availment of Duty-Free Benefits:The show cause notice alleged that the importers made a wrongful declaration on the export documents, stating that no input stage credit had been availed, while in fact, such credit was availed. This led to the wrongful availment of duty-free benefits against the said licence. The adjudication order confirmed the duty demand and imposed a redemption fine, which the Tribunal later set aside, stating that the goods were not available for confiscation.4. Applicability of Bond or Legal Undertaking as per the Notification:The revenue argued that a bond or legal undertaking was implicit in terms of the Notification and could be enforced even if the goods were not available. The Tribunal, however, did not find any reference to a bond or legal undertaking in the adjudication order or the show cause notice. The Tribunal concluded that the Notification required the importer to produce proof of having executed a bond or legal undertaking, but in this case, no such bond or undertaking was found to have been executed.5. Interpretation and Application of Section 125 of the Customs Act, 1962:The Tribunal's decision was based on the interpretation of Section 125 of the Customs Act, 1962, which provides for an option to pay a fine in lieu of confiscation. The Tribunal found that since the goods were not available for confiscation, the question of redemption fine did not arise. The Tribunal's view was that the availability of goods is a criterion for imposing redemption fine, as supported by the Division Bench judgment in Finesse Creation Inc.Conclusion:The Tribunal's order was upheld, and the appeal was dismissed. The Tribunal's view that redemption fine is not imposable when the goods are not available for confiscation was found to be a possible interpretation based on the facts and circumstances of the case. The larger question of law raised by the revenue was left open for consideration in an appropriate case.