Customs, Excise and Gold Tribunal - Tamil Nadu
Lady Ampthil Nurses Institute And The ... vs Commissioner Of Customs on 9 August, 2004
Equivalent citations: 2005(98)ECC549, 2004(177)ELT1124(TRI-CHENNAI)
ORDER P.G. Chacko, Member (J)
1. The facts of the case are briefly as under:
14 consignments of medical equipments were imported by the appellants during the period August 1990 to November 1992. Two consignments out of these were assessed to NIL duty. The remaining 12 consignments were subjected to provisional assessment. Out of these 12 consignments, the provisional assessments made in respect of 10 consignments were finalized during 1991-92. In respect of the remaining 2 consignments, covered by Bills of Entry Nos. 23359 & 23360 both dated 6.7.1991, the provisional assessments were finalized on 5.12.1994, whereby the duty-free clearance of the goods in terms of Notification No. 64/88-Cus. dated 1.3.88 was approved. Later on, however, an investigation was launched by the department of ascertain whether the post-importation conditions of the Notification were being complied with by the importer. If appeared from the results of investigation that the post-importation requirements under the Notification had not been fulfilled by the assessee and, accordingly, the department issued show-cause notice on 4.9.98 to the assessee proposing to recover duty of Rs. 56,24,524 on the goods under Section 28(1) of the Customs Act by denial of the benefit of exemption; to confiscate the goods under Section 111(o) of the Act and to impose penalty on the noticee under Section 112(a) of the Act. These proposals were contested. The Commissioner of Customs who adjudicated the dispute passed under dated 16.11.98, which is under challenge in the present appeal.
2. The impugned order confirmed demand of duty to the extent of Rs. 9,74,996 on the goods covered by the aforesaid two Bills of Entry, after holding a major part of the demand raised in the show-cause notice as time-barred. The order also held the goods to be liable for confiscation under Section 111(o) of the Act. It, however, allowed the importer to redeem them on payment of a fine of Rs. 47.00 lakhs. A penalty of Rs. 50,000 was also imposed on the importer under Section 112(a) of the Act.
3. The major issues in this case have already been settled by the Tribunal's Larger Bench against the appellants in its order dated 22.8.2002 reported in 2002 (83) ECC 630 (LB): 2002 (150) ELT 776 (Tri.-LB). In the result, the question as to the demand of duty confirmed by the adjudicating authority does not survive. Similarly, whether the subject goods are liable to confiscation is no more a live issue. The limited question before us relates to the quanta of redemption fine (under Section 125) and penalty (under Section 112). On these questions, we have heard both sides.
4. Ld. Counsel submits that the adjudicating authority has not stated any valid reason for determining the 'excessive' fine of Rs. 47.00 lakhs. The Commissioner ought to have considered the fact that the value of the goods had substantially diminished order the years since importation. That the appellants are a non-profit-making hospital within the meaning of Section 125 of the Companies Act was also not considered by the Commissioner. No attempt was even made to ascertain the market value of the goods for the purpose of determining redemption fine in terms of the proviso to Section 125(1). The subject goods were not liable to be valued in excess of Rs. 27,04,000. Ld. Counsel has further argued that the adjudicating authority erred in determining the redemption fine with reference to the date of importation. According to her, the fine should have been quantified with reference to the value of the goods as on the date of confiscation. Yet another submission made by the Counsel is that the extenuating circumstances such as the bonafides of the subject imports were not considered by the Commissioner while exercising his discretion in the matter of determination of redemption fine. In this connection, Ld. Counsel has relied on the Supreme Court's decision in Jain Export Pvt. Ltd. v. UOI, 1990 (47) ELT 213 (SC). Ld. Counsel has also challenged the penalty on similar grounds.
5. Ld. SDR has defended the order of the Commissioner by submitting that the redemption fine of Rs. 47.00 lakhs amounts only to about 33°/. of the invoice value [Rs. 1,40,61,310] of the imported equipments and cannot be considered to be excessive or unreasonable, when tested with the yardstick embodied in the proviso to Section 125(1) of the Act. The imported equipments were not available in the market. Hence, the concept of 'market price and margin of profit' was not applicable to them. When, in such circumstances, the proviso to Section 125(1) is applied for determination of redemption fine in lieu of confiscation of the goods, it is the invoice value that should be taken into consideration. According to Ld. SDR, these aspects were duly taken into account by the adjudicating authority. Reliance has been placed on the judgment of the Calcutta High Court in Pradeep Ch. Saha v. Additional Collector of Customs, 1995 (51) ECC 110 (Cal): 1993 (68) ELT 525 (Cal). This decision has also been pressed into service by Ld. SDR in support of the point that it was the date of importation, and not the date of adjudication, that was relevant for determination of quantum of redemption fine. With regard to penalty also, Ld. SDR submits, the Commissioner has taken all the relevant factors into consideration in para 11 of his order. The penalty of Rs. 50,000 is reasonable by all means.
6. We have carefully considered the submissions. At the outset, we reject the Counsel's contention that the redemption fine should have been determined with reference to the value of the goods as on the date of confiscation. In respect of imports, the liabilities of the importer are normally determined, under the Customs Act, with reference to the date of importation. Insofar as the liability of any imported goods for confiscation is concerned, the position is no different. This is clear from the language of Section 125 of the Customs Act. As regards the quantum of redemption fine and penalty imposable on an importer, the Calcutta High Court, in Pradeep Ch. Saha (supra), considered the relevant provisions of law and held as under:
"............The proviso to Section 125 states that redemption fine shall not exceed the market price of the goods confiscated less, in the case of imported goods, the duty chargeable thereon. This is the maximum penalty [sic] which can be levied. There is no warrant for the proposition that in every case the maximum redemption fine has to be imposed......The basic idea behind Section 125 in imposing redemption fine is to minimize the profit that an importer can make by the unauthorised import. The redemption fine is imposed to mop up the profit to the maximum extent possible. In finding out the price and the percentage of profit, all relevant matters have to be taken into account...........".
The High Court, in the above case, found that the Additional Collector had not given any method or mode of calculation of redemption fine and that he had imposed redemption fine without giving any details as to how the quantum of fine had been arrived at. In the instant case also, we find, it is not discernible from the impugned order as to how the fine of Rs. 47.00 lakhs was arrived at. Though, in their reply to the show-cause notice, the importer had claimed a much lower value for the goods in question, that claim apparently was not considered by the adjudicating authority. As imposition of redemption fine is penal in nature, it is incumbent on the authority imposing such fine to take into account such relevant factors as the bonafides of the importer's conduct also as held by the Apex Court in Jain Exports (supra). The impugned order does not reflect such considerations. It is apparent from the record that the appellant-hospital is a non-profit-making institution, so recognized under Section 125 of the Companies Act. They have been using the equipments for more than a decade. The impugned order is calling upon them to redeem the equipments by paying a fine which is 33% of the value of the goods as on the date of importation, This quantum, to our mind does not seem to be reasonable in the facts and circumstances which we have considered. We reduce it to Rs. 35.00 lakhs (Rupees thirty five lakhs).
7. Insofar as the penalty is concerned, however, we find no reason to interfere with the decision of the Commissioner. He has recorded justifiable reasons for this penalty in para 11 of the impugned order. His view is lenient. The penalty is sustained.
8. In the result, it is ordered as under:
(a) The demand of duty confirmed in the impugned order is sustained.
(b) The order of confiscation is also sustained. But the redemption fine is reduced to Rs. 35,00 lakhs (Rupees thirty five lakhs).
(c) The penalty imposed by the Commissioner is also sustained.
9. We make it clear that the appellants are entitled to redeem the goods on payment of the above fine as well as the duty adjudged by the Commissioner.
10. It has been pointed out by Ld. Counsel that the goods were redeemed on payment of an amount of Rs. 25.00 lakhs pursuant to an order dated 24.12.1998 of the Madras High Court. In this situation, the appellants shall pay the balance amount of Rs. Ten lakhs towards redemption fine, apart from duty and penalty.
The appeal stands disposed of in the above terms.