Import policy for used diesel engines examined fully when challenged; redemption fine and penalty reduced on proportionality grounds.

Where the importer itself challenged the applicability of the import policy, the appellate authority was entitled to examine the full scope of that policy, including whether its benefit extended to used diesel engines; the objection that it had travelled beyond the order-in-original was rejected, and the import was treated as unauthorised. On confiscation consequences, precedent on old and used diesel engines indicated that redemption fine and penalty should be proportionate to the value of the goods. Applying that approach, the redemption fine was reduced to the value of the goods and the penalty was scaled down accordingly, giving only partial relief to the importer.

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Issues: (i) Whether the appellate authority exceeded the scope of the order-in-original by considering the applicability of the import policy to the imported used diesel engine. (ii) Whether the redemption fine and penalty imposed on import of the used diesel engine required reduction.

Issue (i): Whether the appellate authority exceeded the scope of the order-in-original by considering the applicability of the import policy to the imported used diesel engine.

Analysis: The appeal itself raised the applicability of the ITC (HS) classification as a ground of challenge. Once that question was opened by the importer, the appellate authority was entitled to examine the full effect of the import policy, including whether its benefit extended to used and old diesel engines. Consideration of the nature of the goods and the relevant policy provisions did not amount to travelling beyond the record.

Conclusion: The objection that the appellate authority introduced a new ground was rejected, and the finding that the import was unauthorised was upheld.

Issue (ii): Whether the redemption fine and penalty imposed on import of the used diesel engine required reduction.

Analysis: The precedents relied upon concerned imports of old and used diesel engines under the same policy regime and indicated that redemption fine is ordinarily fixed around 100% of the value of the goods, with penalty at about 10% of the value. Applying that approach to the facts, the fine and penalty were found excessive and were scaled down.

Conclusion: The redemption fine was reduced to the value of the goods and the penalty was reduced accordingly.

Final Conclusion: The import was held unauthorised, but the monetary confiscation consequences were substantially reduced, resulting in only partial relief to the importer.

Ratio Decidendi: Where the importer itself challenges the applicability of an import policy, the appellate authority may examine the policy in full to determine its applicability to the goods imported, and in cases of used diesel engines under the relevant policy regime, redemption fine and penalty should be aligned with the established precedent on proportionality.

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