TaxTMI 
TaxTMI 
2017 (1) TMI 1223
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..... The facts leading to the present Appeal in nutshell are as under:- 2.1 That, the respondent herein M/s. Kay Bee Tex-Spin Limited, Surat is engaged as a 100% EOU in the manufacture of final products viz., Textured Yarn, Twisted Yarn, Knitted Fabrics, Sized Yarn, etc. The Unit was granted LOP vide letter dated 15th June 2009 and as 100% EOU by the Development Commissioner, KFTZ, Gandhidham [Kutch], and accordingly, the Unit was granted a license for private Bonded Warehouse under 100% Export Oriented Scheme under Section 58 of the Customs Act, 1962 by the Deputy Commissioner, Central Excise & Customs, Division V, Surat. That, it was found that the respondent-Unit diverted the goods illicitly into the open market and the raw-materials which were procured by forgoing the customs duty were not used for the purpose for which they were imported. Therefore, the Commissioner, Central Excise & Customs, Surat-II served a show cause notice upon the respondent, making the demand of Central Excise duty, Customs duty, etc., on the raw material, interest thereon and the penalties under various sections of the Customs Act, 1962 and the Central Excise Act, 1944. 2.2 At this stage, it is requ....
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.... the Customs Act, 1962 does not arise ?" 3. Shri Sudhir Mehta, learned advocate appearing on behalf of the appellant-Revenue has vehemently submitted that in the facts and circumstances of the case, the learned Tribunal has materially erred in holding that as the goods were not available for confiscation at the time of issuance of the show cause notice for adjudication, the redemption fine in lieu of confiscation under Section 125 of the Customs Act cannot be imposed. 3.1 It is further submitted by Shri Mehta, learned advocate appearing on behalf of the Department that the learned Tribunal has materially erred in not properly appreciating the fact that the goods were released and as the possession of the goods were handed over/given to the importer on furnishing the necessary bond/undertaking. It is submitted that in that case, as the goods were released and/or possession of which was given to the respondent herein-importer on issuing the bond and necessary undertaking, as held by the Hon'ble Supreme Court in the case of Weston Components Limited v. Commissioner of Customs, New Delhi, 2000 [115] ELT 278 (SC), the redemption fine is imposable. 3.2 Shri Mehta, learned ad....
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....hat as per Section 110 of the Customs Act, if the proper officer has reason to believe that any goods are liable to confiscation under the Act, he may seize such goods. It is submitted that Section 110 of the Customs Act provides for provisional release of goods, documents or things seized pending adjudication. It is submitted that therefore, before the goods are confiscated, the seizure is sine quo non and Section 125 of the Customs Act shall be applicable in a case where goods are confiscated, but not available at the time of adjudication, and in that case, only redemption fine can be imposed. It is submitted that therefore in the present case, as the goods were neither seized and consequently not confiscated, there is no question of imposing redemption fine under Section 125 of the Customs Act, 1962. 4.2 Shri Modh, learned advocate appearing on behalf of the respondent-Unit has heavily relied upon a decision of Bombay High Court in the case of Commissioner of Customs [Import], Mumbai v. Finesse Creation Inc., 2009 [248] ELT 122 (Bom.) as well as in case of Commissioner of Customs, Export v. National Leather Cloth Mfg. Co., 2015 (321) ELT 135 [Bom.]. 4.3 It is further submi....
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.... the obligors, shall discharge all dues whether Central Excise duty or the lawful charge which shall be demandable on the goods obtained by us without payment of duty from the domestic tariff area and transported from the place or procurement to our premises for use in special Industrial purpose and shall also pay after final assessment by the proper officer/Assistant Commissioner of Central Excise or such other delegated authority,as the case may be which were assessed on provisional basis under Rule 9B of the Central Excise Rules, 1944 all dues within 10 days of the date of demand thereof being made in writing by such officers. 12. We, the obligor, shall if the articles so manufactured are and are allowed to be sold in India in such quality and subject to such other limitation and conditions as may be specified in this behalf by the Director General of Foreign Trade, pay duty of Excise leviable on such articles under Section 3 of the Central Excise Act, 1944 and duty of Customs & Central Excise leviable on the raw materials/ components parts used in the manufacture of such articles as are not allowed to be sold in India in accordance with the provision of Exim policy. ....
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.... the goods which were permitted to be imported and thereafter deposited in a warehouse without payment of customs duty, were not required to be sold in the open market in India. Thus, once the confiscation of such goods was authorized, Section 125 of the Customs Act shall be applicable. However, as the goods were not available for confiscation at the time of adjudication, as the same were already released on bond and/or permitted to be warehoused without payment of duty on furnishing the bond and undertaking, redemption of fine in lieu of confiscation was imposable. 5.5 Under the circumstances, considering the decision of Apex Court rendered in case of Weston Components Limited [Supra] and the decision of Karnataka High Court in the case of Shilpa Trading Company [Supra], the Tribunal ought to have held that the Adjudicating Authority ought to have imposed redemption fine in lieu of confiscation of the goods which were illicitly diverted in the open market, which were permitted to be warehoused on certain terms and conditions; including without making payment of Customs duty. 5.6 Now, so far as reliance placed upon a decision of Bombay High Court rendered in case of Finesse C....