Redemption fine and penalty under Customs law must reflect market value and profit element, with excessive amounts reduced.

Redemption fine and penalty in a customs misdeclaration matter were held to be excessive because they were fixed without a proper market survey and without considering the margin of profit. The Tribunal applied the principle that quantum under section 125(1) and section 112 of the Customs Act, 1962 must be proportionate and grounded in the relevant market value and profit element. Customs duty liability was left undisturbed, but the redemption fine and penalty were reduced.

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Issues: Whether the redemption fine and penalty imposed in connection with import misdeclaration were excessive and liable to be reduced.

Analysis: The dispute was confined to the quantum of redemption fine under section 125(1) of the Customs Act, 1962 and penalty under section 112 of the Customs Act, 1962. The liability to pay customs duty was not disturbed. In fixing the quantum of redemption fine and penalty, the absence of a proper market survey and the failure to consider the margin of profit were treated as material deficiencies. The Tribunal followed the approach taken in prior decisions that redemption fine and penalty must be proportionate and supported by an assessment of the relevant market value and profit element.

Conclusion: The redemption fine and penalty were held to be on the higher side and were reduced.

Ratio Decidendi: Redemption fine and penalty under the Customs Act should be determined with reference to the market price and margin of profit, and excessive quantum cannot be sustained in the absence of a proper market survey.

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