2023 (8) TMI 563 - AT - Customs

Member directs release of goods after challenge to absolute confiscation order, subject to payment of duties and penalties.

The Member (Judicial) directed the Revenue to release 128 units of used Multifunction machines upon payment of custom duty on the enhanced value, ... Levy of redemption fine and penalty u/s 112(a)(i) of the Customs Act, 1962 - import of 128 units of used Multifunction machines - enhancement of value as per the Chartered Engineer’s certificate - violation of import conditions - HELD THAT:- It is seen from the records that there have been number of orders issued by this Tribunal and various High Courts accepting the fact that the impugned MFDs are not liable for absolute confiscation. Considering lack of indigenous facility for manufacturing Multi Function Machines, lenient view is taken on such import and imported used MFD are released on payment of redemption fine of 10% & penalty of 5%. From the decision in ACCORD DIGITECH VERSUS C. C-BANGALORE [2020 (12) TMI 647 - CESTAT BANGALORE] passed by this Tribunal, it is clearly evident that the used Digital Multifunction Printing and Copying Machine were released on payment of redemption fine of 10% and penalty of 5% of the enhanced value of the imported goods - This was also followed by this Bench in the case of SR ENTERPRISES AND DIGITAL EXPRESS VERSUS COMMISSIONER OF CUSTOMS, BANGALORE [2021 (9) TMI 1251 - CESTAT BANGALORE] wherein the redemption fine and penalty was 10% and 5% respectively. Thus, in the interest of justice since 06 years have already been lapsed, the present appeal is partially allowed by reducing the redemption fine and penalty by 10% and 5% respectively of the enhanced value - appeal allowed in part. ISSUES PRESENTED AND CONSIDERED 1. Whether imported used digital multi-function printing and copying machines (MFDs) are liable to absolute confiscation under the Customs Act when imported without proper compliance. 2. Whether the assessable value of such imported used MFDs may be redetermined by a Chartered Engineer's report and treated as enhanced assessable/market value for purposes of duty, confiscation and penalty. 3. Whether an appellate order remanding adjudication for quantification of redemption fine and penalty, without specifying the quantum, is implementable or sustainable. 4. Appropriate quantum of redemption fine and penalty for released used MFDs where absolute confiscation is not upheld. 5. Whether undue delay in adjudication and release (approx. six years) supports relief in the form of waiver of detention/demurrage charges or other equitable relief. ISSUE-WISE DETAILED ANALYSIS Issue 1 - Liability for absolute confiscation of imported used MFDs Legal framework: Provisions permitting confiscation under the Customs Act, and the discretion of adjudicating authority to order absolute confiscation for contraventions. Precedent Treatment: Multiple Tribunal and High Court decisions, and a controlling Supreme Court pronouncement addressing identical imports, have repeatedly held that imported used MFDs are not ordinarily liable to absolute confiscation where lack of indigenous manufacture and other factors are relevant. Interpretation and reasoning: The Tribunal considered the corpus of prior authoritative decisions recognizing that imported used MFDs merit a lenient approach given absence of domestic manufacturing capacity and established practice in similar cases. The adjudicating authority's original finding of absolute confiscation was revisited in light of these precedents. Ratio vs. Obiter: The determination that used MFDs are not liable to absolute confiscation, in circumstances similar to those decided earlier, constitutes the ratio applied by the Tribunal in disposing of the present appeal. Conclusion: Goods are not subject to absolute confiscation; release on payment of duties/fines was held appropriate. Issue 2 - Reliance on Chartered Engineer's re-determination as enhanced assessable/market value Legal framework: Customs valuation principles permit re-determination of assessable value by competent technical/valuation reports when the declared value is disputed. Precedent Treatment: Prior Tribunal orders accepted re-determined values by DGFT-approved Chartered Engineers as the basis for enhanced assessable value when market value is not otherwise readily available. Interpretation and reasoning: The respondent accepted the enhanced value as per the Chartered Engineer's certificate and there was no challenge to re-determination; the Tribunal therefore treated the enhanced amount as the assessable value for duty, redemption fine and penalty calculations. Ratio vs. Obiter: The use of the engineer's re-determination as the operative assessable value (when unchallenged) is treated as ratio for computing monetary consequences in this adjudication. Conclusion: The enhanced value fixed by the Chartered Engineer (Rs. 21,98,071 in the record) stands as the assessable/enhanced value for computing duty, redemption fine and penalty. Issue 3 - Validity of remand without specification of fine/penalty quantum Legal framework: Appellate authorities may remand matters for de novo adjudication where factual determination (e.g., market value) is required; however, remand that leaves implementation impracticable because quantum is unspecified raises issues of administrative efficacy. Precedent Treatment: The Tribunal and High Courts have criticized remands that merely direct further proceedings without quantifying consequences when ample precedent and factual materials exist to permit immediate determination. Interpretation and reasoning: Both Revenue and respondent challenged the impugned appellate order for failing to quantify fine/penalty, making implementation by the original authority impossible. Given existing precedents and prior determinations on similar goods, the Tribunal found the remand without specified quantum unsustainable in the circumstances. Ratio vs. Obiter: The holding that an appellate remand must be practicable and not leave core monetary consequences unspecified (where prior jurisprudence permits specific determination) is a practical ratio applied to dispose the appeal. Conclusion: The remand without specification of fine and penalty is not sustainable here; the Tribunal determined the applicable quantum instead of leaving it to re-adjudication. Issue 4 - Appropriate quantum of redemption fine and penalty for release Legal framework: Customs law empowers imposition of redemption fines and penalties; quantum is guided by precedents, proportionality, and the nature of contravention. Precedent Treatment: A consistent line of Tribunal decisions (and a relevant High Court view) established practice in like cases to permit release of used MFDs on payment of redemption fine at 10% and penalty at 5% of the enhanced assessable value when absolute confiscation is disallowed. Interpretation and reasoning: Applying the established practice and recognizing the respondent's acceptance of the enhanced value, the Tribunal adopted redemption fine of 10% and penalty of 5% of the enhanced value as fair and consistent with prior decisions. The Tribunal relied on the cumulative authority and administrative acceptance of identical treatment in earlier matters. Ratio vs. Obiter: The adoption of 10% redemption fine and 5% penalty for such imports (given the factual matrix and precedent) functions as the operative ratio for resolution of monetary liability in this case. Conclusion: Goods to be released on payment of duty on enhanced value, redemption fine 10% of enhanced value and penalty 5% of enhanced value; respondent allowed to redeem on these terms. Issue 5 - Relief for delay (waiver of detention/demurrage) Legal framework: Equitable relief for delay may be granted where prolonged adjudication causes hardship; however, grant of waiver requires specific finding and legal basis. Precedent Treatment: Prior orders noted long delays in similar matters and have considered equitable measures, but waiver of detention/demurrage is not automatic and depends on circumstances and findings. Interpretation and reasoning: The Tribunal observed that approximately six years had elapsed causing loss to the importer and relying on the settled approach to disposal in similar cases directed release on the quantified monetary terms. The record shows request for waiver of detention/demurrage but the Tribunal confined relief to direction for release on quantified payment; no explicit waiver of detention/demurrage was ordered in the operative disposition. Ratio vs. Obiter: A general admonition about undue delay and its consequences is obiter in the context of the specific monetary relief granted; no general rule for automatic waiver was laid down. Conclusion: Although delay was noted and influenced the interest of justice, the Tribunal's operative relief was direction to release on duty and quantified fine/penalty; no specific waiver of detention/demurrage was ordered in the decision rendered. Cross-references See Issue 1 and Issue 4: The determination that absolute confiscation is inappropriate (Issue 1) directly informs the quantum of redemption fine and penalty applied (Issue 4). See Issue 2 and Issue 3: Acceptance of the Chartered Engineer's enhanced value (Issue 2) enabled the Tribunal to quantify fine/penalty and thereby remedy the appellate remand defect identified in Issue 3.