2009 (1) TMI 124 - AT - Central Excise

Redemption fine under Rule 25 read with Section 34 cannot be imposed when excisable goods unavailable for confiscation

CESTAT held that where excisable goods were not available for confiscation and had been allowed to be cleared without execution of any bond or ... Demand duty - Removal of the excisable goods clandestinely - MS bars of different sizes valued - confiscation - Whether goods not available for confiscation can be confiscated and redemption fine imposed - HELD THAT:- As rightly pointed by the learned counsel; the Hon'ble High Court of Punjab & Haryana, in Raja Impex case [2008 (4) TMI 320 - HIGH COURT OF PUNJAB & HARYANA AT CHANDIGARH], has rendered decision on identical issue. One of the substantial questions of law placed before the High Court by the department was whether redemption fine under Section 125 of the Customs Act could be imposed where the goods were neither available for confiscation nor cleared under bond/undertaking. The Hon'ble High Court followed the ratio of the Apex Court's judgment in Weston Components case [2000 (1) TMI 45 - SC ORDER], held that, as the goods in question had been allowed to be cleared without execution of any bond/under taking by the importer, no redemption fine could be imposed under Section 125 of the Customs Act in lieu of confiscation. It is nobody's case that a binding judicial authority on the question of imposability of fine under Section 125 of the Customs Act in lieu of confiscation of goods not available for confiscation would not be applicable where the similar question arises as to whether a fine could be imposed under Rule 25 of the Central Excise Rules, 2002 (read with Section 34 of the Central Excise Act) in lieu of confiscation of excisable goods not available for confiscation. In the result, the issue referred to us in either of the two appeals is held against the Revenue in the light of the High Court's decision in Raja Impex case [2008 (4) TMI 320 - HIGH COURT OF PUNJAB & HARYANA AT CHANDIGARH]. Issues Involved:1. Whether goods not available for confiscation can be confiscated and redemption fine imposed.2. Whether the same principle applies under both the Central Excise Rules and the Customs Act.Issue 1: Whether goods not available for confiscation can be confiscated and redemption fine imposed.The appellants in the Excise Appeal were engaged in the manufacture of MS/CTD bars and were found to have clandestinely removed goods without paying Central Excise duty. The jurisdictional Assistant Commissioner proposed to demand duty, confiscate the goods, and impose a penalty. The appellants contested the confiscation, arguing that goods not physically available for confiscation could not be confiscated, nor could redemption fine be imposed. This argument was rejected by the adjudicating authority, which ordered confiscation and imposed a fine and penalty. The appeal to the Commissioner (Appeals) was dismissed, leading to the present appeal before the Tribunal. The Tribunal noted conflicting decisions on whether goods not available for confiscation could be confiscated and redemption fine imposed, leading to a referral to a larger bench.In the Customs Appeal, the respondent imported an old vessel with remnant oil on board. After assessment and clearance, the customs authorities detained a tanker-lorry carrying the oil, finding the fuel oil to be 'off specification material/waste oil.' The adjudicating authority ordered confiscation and imposed a fine and penalty. The Commissioner (Appeals) set aside the confiscation, reducing the penalty, leading to the Revenue's appeal. The Tribunal noted conflicting decisions on the imposition of redemption fine when goods were not available for confiscation, leading to a referral to a larger bench.Issue 2: Whether the same principle applies under both the Central Excise Rules and the Customs Act.The Tribunal considered submissions from both sides. The respondent's counsel in the Customs Appeal cited the case of Commissioner of Customs, Amritsar v. Raja Impex (P) Ltd., where the Punjab & Haryana High Court held that redemption fine could not be imposed if goods were not available for confiscation unless cleared under bond/undertaking. The Tribunal also noted the Supreme Court's dismissal of the Civil Appeal in Chinku Exports, affirming the Tribunal's decision that redemption fine could not be imposed if goods were not available for confiscation and no bond/security was furnished.The learned Jt. CDR argued that the Tribunal's decision in Venus Enterprises, upheld by the Madras High Court, supported the imposition of fine even if goods were not available for confiscation. However, the Tribunal noted that the Supreme Court's dismissal of the SLP in Venus Enterprises did not enhance its precedent value. The Tribunal found the decision in Raja Impex binding and applicable to both the Central Excise Rules and the Customs Act.Conclusion:The Tribunal concluded that redemption fine could not be imposed under Section 125 of the Customs Act or Rule 25 of the Central Excise Rules if goods were not available for confiscation and were not cleared under bond/undertaking. The issue was held against the Revenue, following the binding precedent set by the Punjab & Haryana High Court in Raja Impex. The conflicting decision of the Madras High Court in Venus Enterprises was not considered good law on this point.(Pronounced in Court)