2025 (3) TMI 1357 - AT - Customs

Confiscation with redemption fine unsustainable when provisional assessment remains unchallenged by Revenue and achieves finality

CESTAT Kolkata held that confiscation of imported goods with redemption fine and penalty could not be sustained when the finalization of provisional ... Confiscation of imported goods - levy of redemption fine and penalty - finalization of the provisional assessment not challenged - HELD THAT:- The finalization of the assessment of Bills of Entry was never challenged by the Revenue. Therefore, on that score itself the valuation matter has reached finality. The impugned OIA, which was passed when the matter was sub judice before the Tribunal, does not survive - Appeal allowed. ISSUES PRESENTED and CONSIDEREDThe core legal questions considered in this judgment revolve around the following issues:Whether the goods imported by the appellant were liable to confiscation and whether penalties could be imposed under sections 111(d) and 112 of the Customs Act, 1962.Whether the finalization of the provisional assessment of the goods imported under 21 Bills of Entry was valid and whether the valuation accepted by the customs authorities could be challenged.Whether the Order-in-Appeal setting aside the refund order was valid, given the subsequent developments in the appellate process.ISSUE-WISE DETAILED ANALYSIS1. Confiscation and PenaltyRelevant legal framework and precedents: The legal provisions under sections 111(d) and 112 of the Customs Act, 1962 were invoked for the confiscation of goods and imposition of penalties. These sections deal with improper importation of goods and penalties for improper importation.Court's interpretation and reasoning: The Tribunal had previously set aside the redemption fine and penalties imposed by the adjudication order, which was affirmed by the Supreme Court. The Tribunal's decision was based on the fact that the confiscation and penalties were not justified under the circumstances.Key evidence and findings: The Tribunal found that the goods were initially assessed provisionally and that the final assessment accepted the declared value of the imports. The adjudication order imposing fines and penalties was challenged, and the Tribunal quashed these penalties.Application of law to facts: The Tribunal applied the legal provisions to the facts and determined that the confiscation and penalties were not warranted, as the final assessment of the goods was accepted and not challenged by the Revenue.Treatment of competing arguments: The Tribunal considered the arguments of both the appellant and the Revenue, ultimately siding with the appellant by quashing the penalties and fines.Conclusions: The Tribunal concluded that the penalties and fines imposed were not sustainable and were rightly quashed by the Tribunal and affirmed by the Supreme Court.2. Finalization of Provisional AssessmentRelevant legal framework and precedents: The finalization of provisional assessments is governed by the Customs Act, which allows for the acceptance of declared values unless challenged.Court's interpretation and reasoning: The Tribunal noted that the final assessment order was not challenged by the Revenue, indicating acceptance of the declared value of the goods.Key evidence and findings: The final assessment order accepted the declared value, and no appeal was filed against this order by the Revenue.Application of law to facts: The Tribunal applied the principles of finality and non-challenge to conclude that the valuation issue had reached finality.Treatment of competing arguments: The Tribunal found that the lack of challenge to the final assessment by the Revenue was a critical factor in affirming the appellant's position.Conclusions: The Tribunal concluded that the finalization of the provisional assessment was valid and binding, as it was not contested by the Revenue.3. Validity of Order-in-AppealRelevant legal framework and precedents: The Order-in-Appeal was assessed in light of the subsequent developments in the appellate process.Court's interpretation and reasoning: The Tribunal found that the Order-in-Appeal was passed when the matter was still pending before the Tribunal, and subsequent developments rendered it unsustainable.Key evidence and findings: The Tribunal's final order and the Supreme Court's dismissal of the Revenue's appeal were critical in determining the unsustainability of the Order-in-Appeal.Application of law to facts: The Tribunal applied the principle that decisions rendered during pending litigation must consider subsequent appellate outcomes.Treatment of competing arguments: The Tribunal considered the procedural history and the finality of the Tribunal's and Supreme Court's decisions in setting aside the Order-in-Appeal.Conclusions: The Tribunal concluded that the Order-in-Appeal was invalid and set it aside, allowing the appellant's appeal.SIGNIFICANT HOLDINGSPreserve verbatim quotes of crucial legal reasoning: 'The Redemption Fine and Penalty imposed by the Revenue stands fully quashed after the Supreme Court's order dated 12.12.2024.'Core principles established: The finality of unchallenged assessments and the binding nature of appellate decisions were reinforced.Final determinations on each issue: The Tribunal set aside the Order-in-Appeal and allowed the appellant's appeal, providing for consequential relief, including the refund of the initial recovery of redemption fine and penalty.