Proportionality in redemption fine and penalty led to reduction after enhanced valuation of imported second-hand goods.

Imported second-hand goods were revalued on the basis of contemporaneous imports, but the redemption fine and penalty were considered disproportionate to the likely duty benefit from undervaluation. Applying the proportionality principle, the monetary sanctions were reduced even after acceptance of the enhanced valuation. The matter reflects the approach that confiscation-related penalties should bear a reasonable relationship to the expected revenue advantage, and not be imposed at an excessive level where the valuation dispute has been addressed.

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Issues: Whether the redemption fine and penalty imposed on confiscation of imported second-hand goods required reduction in proportion to the benefit expected from undervaluation.

Analysis: The imported goods were assessed on the basis of contemporaneous imports and the declared value was enhanced under the valuation rules. Even on acceptance of the enhanced valuation, the redemption fine and penalty were found to be excessive when compared with the likely duty advantage to the importer. The appropriate course was therefore to reduce the monetary sanctions in line with the proportionality principle applied in similar matters.

Conclusion: The redemption fine and penalty were reduced to 30% and 5% of the CIF value respectively, in favour of the assessee.

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