2017 (3) TMI 830 - AT - Customs

Tribunal reduces redemption fine and penalty amounts, modifies impugned order, partially allowing appeal

The Tribunal reduced the redemption fine to Rs. 13 lakhs and the penalty to Rs. 6 lakhs, without altering the duty demand or enhanced value. The impugned ... Redemption fine - Penalty for breach of Foreign Trade Policy conditions - Market enquiry to determine margin of profit - Appellate reduction of penalties as disproportionateRedemption fine - Penalty for breach of Foreign Trade Policy conditions - Market enquiry to determine margin of profit - Appellate reduction of penalties as disproportionate - Whether the redemption fine and penalty imposed for import in contravention of Foreign Trade Policy conditions were excessive and required reduction. - HELD THAT: - The appellant did not dispute the enhanced assessable value or the differential duty determined by the adjudicating authority. The original order records that a market enquiry was undertaken and a profit margin of 37.8% was applied to fix the redemption fine and penalty, but no documentary data of that market enquiry was placed on record or produced to the appellant. The Tribunal found the quantum of redemption fine and penalty, as imposed and as partly reduced by the Commissioner (Appeals), to be excessive in the circumstances of the case. Exercising appellate discretion, and without disturbing the enhanced value or duty demand, the Tribunal reduced the redemption fine and penalty to amounts it considered meet the ends of justice.Redemption fine and penalty held excessive; redemption fine reduced to Rs. 13 lakhs and penalty reduced to Rs. 6 lakhs, without disturbing the enhanced value or duty demand; appeal partly allowed.Final Conclusion: The Tribunal accepted that the enhanced value and duty were not disputed but found the redemption fine and penalty excessive on the record and, exercising appellate discretion, reduced the redemption fine to Rs. 13 lakhs and the penalty to Rs. 6 lakhs while upholding the enhanced value and duty demand. Issues: Redemption fine and penalty imposed on imported second hand Multi-Functional Device (MFD) Copiers cum printers without license and in contravention of Foreign Trade Policy.Analysis:1. The appellants imported second hand MFD Copiers cum printers without a license, leading to the imposition of a redemption fine and penalty. The department assessed the value based on a Chartered Engineer Certificate, increasing it from Rs. 35,50,593 to Rs. 59,95,260. The adjudicating authority imposed a redemption fine of Rs. 20 lakhs and a penalty of Rs. 10 lakhs for contravening the conditions of the Foreign Trade Policy, 2009-2014.2. The Commissioner (Appeals) reduced the redemption fine to Rs. 18,50,000 and the penalty to Rs. 8,50,000. The appellant, not disputing the enhanced value, contested the redemption fine and penalty as being excessive. The appellant argued that the profit margin of 37.8% used to calculate the fines was unreasonably high. The appellant sought a reduction in the fines as they exceeded 25% of the enhanced value.3. The appellant's counsel contended that no data from the market enquiry, which determined the profit margin, was provided to the appellant. The appellant maintained that the fines were disproportionately high. The department, represented by the Ld. AR, defended the findings of the adjudicating authority, stating that a proper market enquiry was conducted to ascertain the profit margin.4. The Tribunal, after hearing both sides, noted that while the appellant did not challenge the enhanced value, they disputed the redemption fine and penalty. The adjudicating authority's decision to impose fines based on a profit margin of 37.8% was deemed excessive. The Tribunal reduced the redemption fine to Rs. 13 lakhs and the penalty to Rs. 6 lakhs, without altering the duty demand or enhanced value. The impugned order was set aside and modified accordingly, partially allowing the appeal in favor of the appellant.