TaxTMI 
TaxTMI 
2023 (7) TMI 1192
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....cable, as per Notification No. 21/2015-20 dated 25.07.2018, but no such relaxation was available for Arecanut, even when imported by EOU. 3. Admittedly, appellants are EOU and since no said exemptions were available in the case of Arecanut and the imports were below the MIP, same were considered as "prohibited goods" and liable for confiscation in terms of Section 111(d) of Customs Act.. Subsequently, the Original Adjudicating Authority, after due consideration of the submissions made by the appellant, ordered for absolute confiscation of 216MT of Arecanut covered under the Bill of Entry 9760994 and 9761044, both dated 28.07.2022. In addition, he also imposed a penalty of Rs. 10 lakhs. It is against the said impugned order the appellants are before this Tribunal. 4. The appellants have primarily relied on Ministry of Commerce and Industry office Memorandum No. ADMN/71/2022-EOU dated 31.08.2022 with reference to the representation of the firm and also on Notification No. 57/2015-2020 dated 14.02.2023, which according to them has got retrospective application. On the other hand, the Department has mainly contested that there was no exemption to EOU from the applicability of MIP in ....
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.... overseas buyer. 8. On the other hand, the Learned DR invites the attention to Notification No. 20/2015-2020 dated 25.07.2018, whereby the import policy of Arecanut was amended in supersession of the earlier Notification No. 35/2015-2020 dated 17.01.2017. Due to this amendment, the Arecanut became "prohibited" item under the Trade Policy. There was however a revised policy condition also which mandated that if the CIF value was Rs. 251 and above per kg, Arecanut will continue to be "free". He has also invited attention to another amending Notification No. 21/2015-2020 dated 25.07.2018 whereby, the policy condition in respect of pepper was revised in as much as the MIP condition was not to be applicable for imports under Advance Authorisation Scheme, imports by 100% export unit and units in SEZ. Learned DR submitted that there being no similar policy relaxation in respect of Arecanut, as was done in the case of pepper, the MIP condition was applicable to the imports by appellant despite them being an EOU. Since the imports were made below the MIP, the goods were in the nature of prohibited goods and liable for confiscation. 9. He has also invited attention to Foreign Trade Policy,....
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....would be having any retrospective effect. 12. Thus, the Adjudicating Authority has rightly held that on the date on which the imports were made, the goods were clearly in the "prohibited" category for having not met the MIP criteria and hence liable for confiscation. It is well settled law that the goods can be confiscated under Section 111(d) of the Customs Act if it is prohibited under Customs Act or any other law for the time being in force. Despite arguments by the appellant to the effect that this notification was clarificatory notification and therefore having retrospective effect, in view Ministry of Commerce having written a letter to DGFT for considering the exclusion from MIP criteria in this case, as was applicable to other goods like pepper, cashew nuts etc, the fact remains that the said notification did not have any provision for giving it retrospective application. Further, in view of clear position stated in the EXIM policy, as pointed out by the Learned DR, any policy change has to be given prospective effect only and therefore the exemption from MIP criteria for 100% EOU in respect of Arecanut cannot be extended till the time the revised notification was issued o....
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....d it is left to the discretion of the Adjudicating Authority that it may give an option for payment of fine in lieu of confiscation. It is innate in this provision that if the Adjudicating Authority does not choose to give such an option, the result would be of absolute confiscation. The Adjudicating Authority in the present matters had given such an option of payment of fine in lieu of confiscation with imposition of penalty whereas the Appellate Authority has found faults in such exercise of discretion and has ordered absolute confiscation with enhancement of the amount of penalty. This takes us to the principles to be applied for exercise of the discretion so available in the first part of Section 125(1) of the Customs Act. ............ ............ ............ ............ ............ 71. Thus, when it comes to discretion, the exercise thereof has to be guided by law; has to be according to the rules of reason and justice; and has to be based on the relevant considerations. The exercise of discretion is essentially the discernment of what is right and proper; and such discernment is the critical and cautious judgment of what is correct and proper by differentiatin....
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....." Therefore, it is apparent Hon'ble Supreme Court while upholding the decision of the Appellate Authority for not giving the option for redemption in the given set of facts, also observed that this discretion is not an absolute discretion and the Adjudicating Authority has to taken into consideration various pros and cons and other relevant factors to arrive at his decision. 16. Therefore, the next question to be decided is whether in the given facts of the case, the goods were liable for absolute confiscation or the Adjudicating Authority should have given an option to the importer to redeem the goods on payment of fine in lieu of confiscation, as provided in the Section 125 of the Customs Act. The Adjudicating Authority has analysed the provisions and analysed the word "may" as provided under Section 125 of the Customs Act to come to the conclusion that the said discretion cannot be exercised for giving option to redeem the goods in the given facts of the case. He has relied on certain case laws in support of his not giving an option and going in for absolute confiscation namely: i) Abdul Razak Vs Union of India [2012 (275) ELT 300 (ker)] ii) T.S. Sivagnanam, J.Kamal Sarbu....
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....cerned, the goods have been correctly confiscated as they were prohibited in nature on the date of importation. However, whether in the given facts of the case the Commissioner has erred in not giving the option to pay fine in lieu of confiscation or otherwise needs to be analysed in a little more detail. Firstly, the case laws relied upon by the Adjudicating Authority are clearly meant for goods which were entering into the domestic tariff area and there were either detrimental to the economy or some policy or for protecting farmers interest etc. This is not the case where the imports are only for the purpose of re-export by an EOU without payment of duty, following the exemption notification meant for duty free import by EOU. Therefore, facts are not on all fours in so far as this case is concerned. Further, while it is correct that he has relied on Raj Grow Impex for justifying absolute confiscation, he has not appreciated that in the said order the Hon'ble Supreme Court, interalia, held that discretion has to be exercised to further the purpose of such law and therefore all pros and cons have to be weighed before the final decision for giving option or absolute confiscation of ....
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....port in the event of their submission for clearing of their goods not being considered and in reply the importer stated reexport was not an available option. This indicates that the option of reexport was also offered which was not taken at that point of time for certain reasons but it essentially means that at that point the Adjudicating Authority was not considering absolute confiscation otherwise he would not have give option for re-export. The facts that goods were imported on nominal value and not based on commercial value, is also relevant. Similarly, irrespective of any value declared, even higher than MIP, duty was not payable in view of exemption available to EOU. 22. Therefore, having regard to the several mitigating factors and the facts of the case, it is obvious that the Commissioner has erred in not giving the option by not excersising his discretion in favour of the appellant under Section 125 of the Customs Act 1962. In so far as the issue of penalty is concerned in the light of Commissioner's observation that there was no malafide intention nor any mis-declaration/mis-classification, the penalty appears to be excessive and perhaps based on the value indicated in t....