2019 (11) TMI 906 - AT - Customs

Tribunal Allows Redemption of Imported Printers with Reduced Fine; Managing Director's Penalty Unchanged.

The Tribunal overturned the confiscation of imported Digital Multifunction Printers/Devices and permitted their redemption upon payment of a Rs. 50 lakh ... Valuation of imported goods - prohibited goods or not - import of old and used Digital Multifunction Printers/Devices - hazardous goods or not - rejection of transaction value -Confiscation - imposition of redemption fine and penalty - HELD THAT:- The issue decided in the case of PARAG DOMESTIC APPLIANCES, ATUL AUTOMATION PVT LTD, KETAN KAMDAR DIRECTOR VERSUS COMMISSIONER OF CUSTOMS COCHIN-CUS [2017 (10) TMI 812 - CESTAT BANGALORE] where it was held that the importation of the impugned goods is in violation of Import Policy of the relevant time and also of some of the conditions of Hazardous Waste Rules 2016. The violation of Hazardous Waste Rules is with reference to country of origin certificate. The impugned order confiscating the MFDs is not sustainable in law and therefore, we set aside the same and the impugned goods are allowed to be redeemed on payment of redemption fine. Quantum of redemption fine - HELD THAT:- In the case of Parag Domestic Appliances and Atul Automation Pvt. Ltd., the Tribunal imposed redemption fine of 10% of the value of the goods - By considering the precedent decisions and by following the same, we also hold that the appellant is liable to pay redemption fine of ₹ 50 lakhs for the consignments imported by them. Imposition of penalties - HELD THAT:- This Tribunal in the earlier case have imposed the penalty of 5% of the assessable value under Section 112(a) of the Customs Act, 1962. Keeping in view the consistent practice followed as held in various cases as discussed by the Tribunal in the case of Parag Domestic Appliances and Atul Automation pvt. Ltd.. Therefore applying the ratio of those decisions, we find that the ends of justice shall be met if the penalty imposed under Section 112(a) is reduced to ₹ 25 lakhs (Rupees twenty five lakhs only) for the appellant M/s. Pypye Techserve Private Ltd.. Penalty on the Managing Director Shri Pratik Babaria - HELD THAT:- We uphold the penalty of ₹ 5 lakhs (Rupees five lakhs only) imposed under Section 112(a) of the Customs Act, 1962. Appeal disposed off. Issues Involved:1. Confiscation of imported Digital Multifunction Printers/Devices.2. Re-fixation of value and compliance with valuation rules.3. Imposition of penalties on the importing company and its Managing Director.4. Violation of Import Policy and Hazardous Waste Rules, 2016.5. Eligibility for redemption of confiscated goods.6. Applicability of precedent decisions and statutory interpretations.Detailed Analysis:Confiscation of Imported Digital Multifunction Printers/Devices:The Commissioner of Customs ordered the confiscation of old and used Digital Multifunction Printers/Devices imported by M/s. Pypye Techserve Pvt. Ltd. under Section 111(d) and (m) of the Customs Act, 1962, read with Section 3(3) of the Foreign Trade (Development and Regulation) Act, 1992, and Schedule III of Rule 13(4) of the Hazardous and Other Wastes (Management and Transboundary Movement) Rules, 2016. The goods were deemed 'prohibited' under Section 2(33) of the Customs Act, 1962, and could not be allowed for home consumption without clearance from competent authorities. The Commissioner refrained from granting the option of redemption under Section 125 at this stage due to the absence of a specific request from the importer for re-export.Re-fixation of Value and Compliance with Valuation Rules:The Commissioner found the re-fixation of the value to be premature as the procedures prescribed by the valuation rules were not complied with. For considering penal liabilities, the transaction value declared in the Bills of Entry was accepted.Imposition of Penalties:A penalty of Rs. 55,00,000 was imposed on M/s. Pypye Techserve Pvt. Ltd. under Section 112(a) of the Customs Act, 1962. Additionally, a penalty of Rs. 5,00,000 was imposed on Shri Pratik Babaria, Managing Director of the company, also under Section 112(a). The Commissioner refrained from imposing penalties under Section 114AA of the Customs Act, 1962.Violation of Import Policy and Hazardous Waste Rules:The Department's investigation concluded that the imported goods were in violation of mandatory requirements under the Hazardous and Other Wastes (Management and Transboundary Movement) Rules, 2016, and the Foreign Trade Policy 2015-2020. The goods were considered illegal imports, and a show-cause notice was issued under Section 124 of the Customs Act, 1962. The appellant argued that the used MFDs in working condition did not fall under the definition of waste as per Rule 3(38) of the Hazardous and Other Wastes Rules, 2016, and that all required documents were produced but not properly appreciated by the Commissioner.Eligibility for Redemption of Confiscated Goods:The Tribunal found that the issue of confiscation and redemption of similar goods had been settled in previous cases, such as Parag Domestic Appliances and Atul Automation Pvt. Ltd., where the goods were allowed to be released on payment of redemption fine and penalties. The Tribunal noted that the imported items could not be considered waste, as they were functional and had a certified residual life. The Tribunal held that the appellant was entitled to redeem the goods on payment of a redemption fine of Rs. 50 lakhs, following the precedent decisions.Applicability of Precedent Decisions and Statutory Interpretations:The Tribunal referred to the precedent decisions, including those upheld by the High Court of Kerala and the Supreme Court, which allowed the release of similar confiscated goods on payment of redemption fines. The Tribunal emphasized the consistent practice of imposing penalties and redemption fines based on the value of the goods and the nature of the violations. The Tribunal reduced the penalty on M/s. Pypye Techserve Pvt. Ltd. to Rs. 25 lakhs and upheld the penalty of Rs. 5 lakhs on the Managing Director, applying the ratio of previous decisions.Conclusion:The Tribunal set aside the confiscation of the MFDs and allowed their redemption on payment of a redemption fine of Rs. 50 lakhs. The penalty on M/s. Pypye Techserve Pvt. Ltd. was reduced to Rs. 25 lakhs, while the penalty on the Managing Director was upheld at Rs. 5 lakhs. The appeal was disposed of in these terms.