Customs, Excise and Gold Tribunal - Delhi
Hemant Bhai R. Patel vs Commissioner Of Customs on 13 February, 2003
Equivalent citations: 2003(87)ECC823, 2003(153)ELT226(TRI-DEL)
ORDER
K.K. Usha, J. (President)
1. The West Regional Bench at Bombay before whom the above appeals by importers came up for hearing sought to refer two issues for decision of the Larger Bench. The issues are as follows:-
(1) Whether in terms of Section 125 of the Customs Act, the power vests in the adjudicating authority to prescribe any fine for reexport when liability to confiscation under Section 111 is established?
(2) Whether in the circumstances where the misdeclaration, etc., is established leading to the orders of the confiscation of the goods, penalty is not leviable when the goods are sought to be re-exported?
On going through the detailed referal order we understand the issue No. (1) to mean whether in terms of Section 125 of the Customs Act power is vested with the adjudicating authority to impose redemption fine when liability to confiscation under Section 111 is established even when permission for re-export is granted. Both sides appearing before us also agree that scope of issue No.(1) is as above.
2. The reference was occasioned in view of the difference of opinion between Benches regarding the power of the adjudicating authority to impose redemption fine and penalty when re-export is permitted. The Bench before which the matter came up for hearing was not inclined to agree with view that when re-export is permitted no redemption fine and penalty can be imposed by the adjudicating authority. We make it clear that we are considering a situation where the goods imported are liable to be confiscated under Section 111 of the Customs Act and where the adjudicating authority is empowered to pass an order under Section 125 of the Customs Act to impose payment of a fine in lieu of confiscation and also penalty. It is relevant to note that the contention raised by the appellant that when re-export is permitted no redemption fine can be imposed is not based on the interpretation of any provision of statutory law or any specific legal principle. The source of the argument is from the view taken in certain decided cases.
3. The first reported decision relied upon by the learned Counsel for the appellant in support of his contention that no redemption fine can be imposed when the goods were permitted to be re-exported is that of a learned Single Member in Padia Sales Corporation v. Collector of Customs, 1992 (61) E.L.T. 90 (T). On a reading of the above decision we find that after observing that the adjudicating authority has no power to impose redemption fine while permitting re-export of the goods, the Tribunal modified the order of the Additional Collector holding that "the goods are confiscated, but the appellants are entitled to redeem the same on payment of Rs. 35,000/-". In the original order the adjudicating authority permitted the importer to re-export the goods on payment of redemption fine of Rs. 35,000/-. So ultimately, the effect of the order of the Tribunal was to delete permission given to the importer to re-export the goods. In Skantrons (P) Ltd. v. Collector of Customs, New Delhi, 1994 (70) E.L.T. 635 (T) it was held that imposition of redemption fine on confiscation of goods under Section 111(d) while giving option to reexport of the goods is not correct in law. It was observed that importer is entitled to import the goods and consume the same within the country on payment of redemption fine. Therefore, the simultaneous imposition of two conditions namely (i) imposition of fine in lieu of confiscation and (ii) directing re-export, cannot co-exist. The appellant was found entitled to refund of redemption fine paid if the goods had already been re-exported.
4. In HCL Hewlett Packard Ltd. v. Collector of Customs, Delhi, 1997 (92) E.L.T. 367 a Bench of two Members referred to Padia Sales Corporation and held that the adjudicating authority is not empowered to impose any redemption fine in the case of re-export of goods. The learned Counsel for the appellant also placed strong reliance on the decision of the Supreme Court in Siemens Ltd. v. Collector of Customs, 1999 (113) E.L.T. 776. On going through the above decision we find that the issue coming up for consideration before us as such was not before the Supreme Court. From a reading of the portion of the adjudication order as quoted in the judgment it is seen that two options were given to the importer. One to redeem the goods on payment of redemption fine and another an option to re-export within three months. As the appellant was not able to export the goods within three months due to certain actions on the part of the Customs authorities, they paid the redemption fine and moved the Supreme Court for extension of time to re-export the same. Time was extended by the Apex Court and the re-export took place within the extended time. Therefore, in terms of the order passed by the adjudicating authority the Supreme Court held that the appellant is entitled to refund of the redemption fine. The question whether redemption fine could be imposed when goods are liable to be confiscated even when re-export is permitted as such was not an issue before the Supreme Court. Therefore, we find that the above decision is not an authority in support of the contention raised by the appellant.
5. In Siemens Public Communication Networks Ltd. v. CC (Airport), Calcutta, 2001 (137) E.L.T. 623 (Tri.-Kolkata), Eastern Bench, Kolkata took the view that the issue is covered in favour of the appellant by the decision of the Supreme Court in Siemens Ltd., and the other decisions referred above and it was held that when the Commissioner had given an option for reshipment of the goods back to the supplier, redemption fine and penalty imposed by him were not justified.
6. The learned DR would on the other hand submit that a permission granted for re-export is irrelevant for exercise of the power to impose redemption fine when goods are confiscated. Once the goods are confiscated unless the importer redeems the goods by paying redemption fine he is not reacquiring the ownership of the goods which would entitle him either to clear for domestic consumption or for re-export. The decisions relied on by learned DR-
(1) K & K Gems v. CC, Mumbai-I, 1998 (100) E.L.T. 70 (T) = 1998 (25) RLT 440 (2) Escorts Herion Ltd. v. CC, Mumbai, 1999 (107) E.L.T. 599 (T) (3) Smt. Kusumbhai Dahyabhai Patel v. CC (P), Ahmedabad, 1995 (79) E.L.T. 292 (T) = 1995 (10) RLT 167. (4) Kothari Filaments v. CC (Port) Calcutta, 2002 (144) E.L.T. 80 (Tri.-Kolkata)
The correct legal position has been explained in Paragraph 8 of the decision in K & K Gems v. CC in the following manner:-
"The main contention is that redemption levied for re-export in this case is without jurisdiction as Section 125 of Customs Act, 1962 does not empower such a levy. The relevant portion of Section 125 reads:-
'Whenever confiscation of any goods is authorised by this Act, the officer adjudicating it may, in the case of any goods the importation or exportation whereof, is prohibited under this Act and shall, in the case of any other goods give the owner of the goods, or where such owner is not known the person from whose possession or custody such goods have been seized, an option to pay in lieu of confiscation such fine as the said officer thinks fit.' It is also laid down in Section 125 that the fine shall not exceed market price of the goods less duty chargeable in respect of such goods. The fine is to be paid apart from the duty and charges payable on such goods. Section 126 of the Customs, 1962 lays down that when any goods are confiscated under the Customs Act, 1962 such goods shall thereupon vest in Central Government. Thus when goods are found to be offending goods and an order of confiscation is passed, then the goods shall vest in Central Government. If they are to be restored to the owner, the adjudicating authority can do so only under provisions of Section 125 which prescribes the option of a fine in lieu of confiscation. Thus Section 125 does not have a nexus with how the goods are dealt with after payment of fine in lieu of confiscation. The find envisaged thereunder is only to get over the order of confiscation irrespective of whether the goods are cleared for home consumption for re-export. When the importer makes a request for re-export it has been a general practice in Custom Houses to consider such a request having regard to the bona fides of such request. By re-exporting the goods the importer can avoid the payment of duty but not the fine in lieu of confiscation."
In Escorts Herion Ltd., a similar view was taken after distinguishing Padia Sales Corporation. In Smt. Kusumbhai Dhyabhai Patel also Padia Sales Corporation was not followed. It was held that when goods are ordered to be confiscated they became the property of the Government and it can be cleared for home consumption or re-exported only after redeeming it after paying redemption fine. In Kothari Filaments the majority took the view that when redemption fine is paid and goods are redeemed the importer becomes the full owner of the goods and it is open to him either to use it in domestic consumption or to re-export the same after complying with the relevant rules.
7. The learned DR brought to our notice a decision of the Apex Court in M.J. Exports Ltd. v. CEGAT, 1992 (60) E.L.T. 161 where the Supreme Court has affirmed re-export of imported goods. After rejecting the contention of the Revenue that if an importer intends to export the goods imported he should clear them for warehousing and then proceed in terms of Section 69 the Apex Court held as follows :-
"On the other hand, there are provisions which indicate that export of imported goods is very much envisaged under the statute. The provisions contained in Section 74 fully reinforce this interpretation. Indeed Section 74 would be redundant if the Department's stand that imported goods cannot be exported were to be accepted as correct. As pointed out by Counsel for the appellant, para 174(1) of the Policy which reads:
'No REP. benefits are admissible in the case of imported goods which are re-exported in the same State without undergoing any processing or manufacturing operations in India'.
also impliedly recognizes that imported goods can be re-exported as such; only the exporter thereof cannot claim REP benefits."
8. In the light of the above discussion we have no hesitation to agree with the view expressed in the K & K Gems, Escorts Herion Ltd., Smt. Kusumbhai Dhyabhai Patel and Kothari Filaments. Section 111 of the Customs Act, empowers the Customs authorities to confiscate goods imported if any of the provisions contained under the sub-clauses is satisfied. Section 112 authorizes imposition of penalty. Section 125 contains the provisions enabling the Customs Officer to grant an option to the owner or the person from whose possession the goods have been seized to pay a fine in lieu of confiscation. In an adjudication proceeding as in the present case these are the provisions which would come into play. If the owner gets the goods released after payment of redemption fine, he may either clear it for home consumption or reexport the same subject to the relevant rules. A permission granted for reexport on the basis of a request made by the owner of the goods is outside the purview of the adjudication proceedings, as mentioned above. We, therefore, answer the questions referred in the affirmative and hold that it is open to the adjudicating authority to impose redemption fine as well as penalty even when permission is granted for re-exporting the goods. The reference is answered as above.