1991 (8) TMI 173 - AT - Customs

Tribunal Upholds Fines and Penalties in Department's Appeals Decision

The Tribunal dismissed the Department's appeals, upholding the adequacy of fines and penalties imposed by the Collector. It found that the fines were ... Redemption fine Issues Involved:1. Adequacy of Redemption Fine2. Adequacy of Personal PenaltiesDetailed Analysis:1. Adequacy of Redemption Fine:The Department's appeals sought to enhance the quantum of fines and penalties imposed by the Collector of Customs, Rajkot, arguing that the fines were too insignificant given the grave nature of the offense. The Department contended that the imports were engineered by Mr. M.C. Desai, who had admitted to using forged endorsements on licenses to import canalised items. The Department claimed that the Collector did not properly appreciate the gravity of the offense and that the fines and penalties imposed were inadequate.The Department argued that the margin of profit was significant, citing a difference of Rs. 6,476 per M.Ton between the sale price and the landed cost. They suggested that the fines should have been Rs. 64,74,000/- instead of the imposed Rs. 10 lakhs. They also contended that detention charges and other expenses should not offset the sale price for calculating the margin of profit.The respondents countered that the landed cost was Rs. 24 per kg and the sale price was Rs. 26 per kg, leaving a margin of only Rs. 2 per kg after accounting for various expenses. They argued that the fines imposed were already on the higher side and did not warrant any modification.The Tribunal observed that the main grievance was the quantum of fines and penalties, not the legality of the Collector's orders. It noted that the Department had not provided sufficient evidence to substantiate the claim of a higher margin of profit. The Tribunal found that the margin of profit was only Rs. 2 per kg and that the fines imposed were adequate. Therefore, the Department's appeal for enhancing redemption fines was dismissed.2. Adequacy of Personal Penalties:The Department also sought to enhance the personal penalties imposed on the respondents, arguing that the penalties were too meagre considering the gravity of the breach. They highlighted Mr. M.C. Desai's central role in the unauthorized imports and his connection with the respondent firms. The Department noted that Mr. Desai had already been penalized Rs. 20 lakhs by the Bombay Customs for similar offenses.The respondents argued that the penalties imposed by the Collector were adequate and commensurate with the offense. They pointed out that the Collector had already imposed penalties ranging from 3% to 5% of the CIF value and that the main person behind the imports, Mr. Desai, had already been heavily penalized.The Tribunal noted that the adjudicating authority had not erred in imposing the penalties and had exercised discretion judiciously. It emphasized that the appellate authority should be reluctant to interfere with the discretion exercised by the adjudicating authority unless there was a clear mistake of fact or misapprehension of principles. The Tribunal found no justifiable reason to interfere with the penalties imposed and agreed with the Collector's decision.Conclusion:The Tribunal dismissed the Department's appeals on both counts, finding that the fines and penalties imposed by the Collector were adequate and commensurate with the gravity of the offense. The Tribunal emphasized the importance of judicial discretion and found that the Department had not provided sufficient evidence to warrant an increase in the fines and penalties.