Appeals allowed for pre-painted steel coils import under MIP restrictions due to insufficient reasoning for penalties

CESTAT Chandigarh allowed appeals concerning import of pre-painted steel coils under MIP restrictions. The Tribunal found Commissioner (Appeals) failed to provide sufficient reasons for imposing redemption fine and penalty. Since no mis-declaration of description or transaction value occurred and confiscation under Section 111(d) was set aside, penalty under Section 112(a) could not be sustained. Without malafide intention to evade duty, and given the matter involved interpretation issues, no confiscation, redemption fine, or penalty was imposable. Both impugned orders were set aside with consequential relief.

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Issues Involved:
1. Confiscation of goods under Section 111(d) of the Customs Act, 1962.
2. Imposition of redemption fine under Section 125 of the Customs Act, 1962.
3. Imposition of penalty under Section 112(a) of the Customs Act, 1962.

Detailed Analysis:

1. Confiscation of Goods under Section 111(d) of the Customs Act, 1962:
The appellant imported 'Prime Pre-painted Steel Coils (Non Alloy)' with a declared CIF price of USD 485 per MT, which was below the Minimum Import Price (MIP) of USD 752 per MT set by DGFT Notification No. 38/2015-2020 dated 05.02.2016. The department argued that the goods were imported in contravention of the Foreign Trade Policy 2015-20 and were liable for confiscation under Section 111(d) of the Customs Act, 1962. The appellant contended that the goods were imported against a contract dated 31.12.2015, with advance payments made before the notification date, and that the notification was not applicable to their case. However, the adjudicating authority confiscated the goods, which was later upheld by the Commissioner (Appeals) in the order dated 08.10.2018 but set aside in the order dated 27.07.2023.

2. Imposition of Redemption Fine under Section 125 of the Customs Act, 1962:
The adjudicating authority imposed a redemption fine of Rs. 6,00,000/- for each Bill of Entry in the orders dated 07.04.2016 and 13.05.2016. The Commissioner (Appeals) upheld this in the order dated 08.10.2018 but set aside the redemption fine in the subsequent order dated 27.07.2023. The Tribunal noted that the Commissioner (Appeals) had not provided sufficient reasons for imposing the redemption fine in the 2018 order and had acknowledged in the 2023 order that there was no attempt by the appellant to mis-declare the description or transaction value. Consequently, the Tribunal found that once confiscation is set aside, the imposition of redemption fine does not arise.

3. Imposition of Penalty under Section 112(a) of the Customs Act, 1962:
The adjudicating authority also imposed a penalty of Rs. 1,50,000/- for each Bill of Entry under Section 112(a) of the Customs Act, 1962. The Commissioner (Appeals) upheld the penalty in both orders dated 08.10.2018 and 27.07.2023. The Tribunal found that penalty under Section 112(a) can only be imposed for acts rendering goods liable to confiscation under Section 111. Since the confiscation was set aside, the penalty was also deemed unsustainable. The Tribunal cited various precedents, including the decision in John Deere India Pvt Ltd and Pathange And Company, which supported the view that no penalty is imposable when there is no malafide intention or mis-declaration.

Conclusion:
The Tribunal concluded that both impugned orders were not sustainable in law. It set aside the orders, thereby allowing the appeals with consequential relief. The Tribunal emphasized that the appellant had no malafide intention to evade duty and that the imposition of penalty was not justified in the absence of confiscation. The appeal was allowed in favor of the appellant, setting aside both the confiscation and the penalties imposed.

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