1989 (9) TMI 209 - AT - Central Excise

Supreme Court emphasizes fair discretion in Customs Act redemption & valuation issues.

The Supreme Court directed the Collector to re-adjudicate on the redemption issue under Section 125 of the Customs Act, emphasizing the need for fair and ... Remand - Order of remand appeal on other grounds Issues Involved:1. Option to redeem goods under Section 125 of the Customs Act, 1962.2. Valuation of the goods imported.Issue-wise Detailed Analysis:1. Option to Redeem Goods Under Section 125 of the Customs Act, 1962:The appellants argued that the Collector erred in not allowing the option to redeem the goods under absolute confiscation. They contended that the discretion under Section 125 must be exercised fairly and reasonably, citing instances where even prohibited goods were allowed clearance. The appellants pointed out that although ball bearings were banned in the 1983-84 Import Policy, they were only restricted in the 1984-85 Policy, suggesting a case for release on fine. The Collector, however, viewed the gravity of the offense as too serious to justify exercising discretion to allow redemption. The Tribunal noted that any form of restriction amounts to prohibition, making the option to redeem discretionary. The Tribunal had previously remanded the matter for re-examination of absolute confiscation and potential redemption, indicating that the implications of Section 125 were considered. The Supreme Court also directed re-adjudication on the redemption issue, reinforcing the need for the Collector to reconsider exercising discretion under Section 125. Additionally, the potential deterioration of the goods due to long storage was highlighted as a factor for considering redemption.2. Valuation of the Goods Imported:The Tribunal had earlier set aside the Collector's adjudication order and remanded the matter for re-examination of the valuation issue. The appellants argued that the valuation should be based on international prices at arm's length, and the revenue had not provided evidence of higher prices for similar goods. The Tribunal observed that each case must be evaluated on its own merits and directed the adjudicating authority to re-examine the valuation. The department's reference application against this order was dismissed, and the Supreme Court disposed of the appellants' Special Leave Petition, making the Tribunal's remand order on valuation final. The Collector, however, did not address the valuation issue, believing the Supreme Court's order was limited to the redemption question. The Tribunal clarified that the Collector must implement the remand order and re-examine the valuation issue in accordance with the Tribunal's observations and after hearing the appellants.Conclusion:The Tribunal remanded the case to the Collector to reconsider the valuation issue as directed in its previous order and to consider allowing the goods to be cleared on payment of a suitable fine in lieu of confiscation under Section 125 of the Customs Act, 1962. The Collector was instructed to hear the appellants in the matter and to bear in mind the criteria for fixing the quantum of fine, ensuring it does not result in a profit for an illegal import transaction.