Redemption fine on re-exported imported goods was set aside, and customs penalty was reduced for lack of commercial gain.

Redemption fine is not leviable where imported goods are not cleared for home consumption and are directed to be re-exported, because the importer derives no domestic sale benefit. The Tribunal also held that penalty under Section 112(a) of the Customs Act should be proportionate to the facts, including the absence of commercial gain and the financial burden of demurrage, detention and freight in re-export situations. On that basis, the redemption fine was deleted and the penalty was further reduced.

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Issues: (i) whether redemption fine could be sustained where the imported goods were directed to be re-exported; (ii) whether the penalty imposed under Section 112(a) of the Customs Act, 1962 called for further reduction.

Issue (i): whether redemption fine could be sustained where the imported goods were directed to be re-exported

Analysis: The imported goods were not permitted for clearance for home consumption and were directed to be re-exported. In such circumstances, the legal position applied by the Tribunal was that no redemption fine is leviable when the goods are released only for the purpose of re-export, since the importer does not derive the benefit of sale in the domestic market.

Conclusion: Redemption fine was not sustainable and was set aside.

Issue (ii): whether the penalty imposed under Section 112(a) of the Customs Act, 1962 called for further reduction

Analysis: The penalty was examined in the light of the absence of profit from the import, the burden of demurrage, detention and freight charges, and the fact that the goods were being re-exported. These circumstances justified a further reduction of the penal amount from the figure fixed in appeal.

Conclusion: The penalty was reduced to Rs. 1,00,000.

Final Conclusion: The impugned order was modified by deleting the redemption fine and reducing the penalty, leaving the appellant liable only to the reduced penalty amount.

Ratio Decidendi: Redemption fine is not exigible where imported goods are ordered to be re-exported, and the penalty must be proportionate to the circumstances of the import, including the absence of commercial gain and the financial burden of re-export.

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