Punjab-Haryana High Court
M/S National Copier Equipments vs Commissioner Of Central Excise on 3 December, 2014
Bench: Rajive Bhalla, B.S. Walia
CUSAP No. 24 of 2013 -1-
IN THE HIGH COURT OF PUNJAB AND HARYANA AT
CHANDIGARH
CUSAP No. 24 of 2013
Date of Decision: 03.12.2014
M/s National Copier Equipments ... Appellant
Versus
Commissioner of Central Excise ... Respondent
CORAM:- HON'BLE MR. JUSTICE RAJIVE BHALLA
HON'BLE MR. JUSTICE B.S. WALIA
Present: Mr. Jagmohan Bansal, Advocate,
for the appellant.
Mr. Sunish Bindlish, Advocate,
for the respondent.
1. To be referred to the Reporters or not?
2. Whether the judgment should be reported in the Digest?
B.S. WALIA, J.
Vide this appeal u/s 130 of the Customs Act, 1962 (for short 'the Act') the Appellant seeks quashing of Final Order dated 28.6.2013 (Annexure A-8), passed by the Customs Excise and Service Tax Appellate Tribunal, New Delhi (for short 'the Tribunal') dismissing Appeal No.C / 689 / 2008 filed by it while partially allowing Appeal No. C. / 664 / 2008 filed by the respondent.
Brief facts of the case necessary for adjudication of the appeal are that against value declared by the appellant of imported consignment of old and BANITA CHUGH 2014.12.23 12:10 I attest to the accuracy and authenticity of this document chandigarh CUSAP No. 24 of 2013 -2- used frame of copier incorporating optical system , 2000 & 3000 series at Rs.14,09,535/-, vide bill of entry No.0016, dated 24.01.2008, the respondent on the basis of inquiry formed an opinion that the consignment consisted of different canon made model, that the value of the goods as per contemporaneous import data should be Rs.17,33,555/- and since the appellant had imported machines without getting licence from the authorities as required for import of second hand photocopier machines the same being restricted items in terms of para 2.17 of the Foreign Trade Policy (2004-2009), therefore, the goods were liable for confiscation u/s 111(d) of the Act besides appellant being liable to penal action u/s 112(a) of the Act.
After considering the reply of the appellant to the show cause notice, the respondent by taking note of the fact that the appellant had been regularly importing goods without licence, imposed penalty of Rs. 17 lacs u/s 112(a) of the Act besides redemption fine of Rs.8.5 lacs vide order in original dated 15.5.2008 (Annexure A-4).
Aggrieved against the order passed by the respondent, the appellant filed an appeal before the Commissioner of Central Excise (Appeals), Delhi- III, who vide order dated 14.7.2008 (Annexure A-5) reduced the amount of redemption fine from Rs.8.5 lacs to Rs.4.25 lacs and penalty from Rs. 17.00 lacs to Rs.4.00 lacs.
Aggrieved against the order dated 14.7.2008 passed by the Commissioner (Appeals) (Annexure A-5), the appellant filed an appeal before the Tribunal for setting aside fine and penalty whereas the respondent filed an appeal seeking quashing of the order in appeal and for restoration of penalty imposed by the adjudicating authority. The Tribunal vide order dated 28.06.2013 (Annexure A-8) relying upon its earlier decision in the case of BANITA CHUGH 2014.12.23 12:10 I attest to the accuracy and authenticity of this document chandigarh CUSAP No. 24 of 2013 -3- Unitech Enterprises Vs. Commissioner of Customs, Chennai, 2012(279) ELT 236 (Tri.-Chennai) held that the licensing regulations had come into force from 19.10.2005, therefore, the goods in question were liable for confiscation and the appellant liable to fine and penalty. While holding that dose of redemption fine and penalty would deter illegality as also the same being perpetuated, the Tribunal restored the adjudication order and upheld redemption fine, but reduced the amount of penalty from Rs.17.00 lacs to Rs. 8.5 lacs.
We have heard learned counsel for the parties and perused the impugned order. Learned counsel for the appellant argued that although as per commercial invoice and packing list the goods were copier machines incorporating Optical System yet the machines were not simple photocopier machines, but different Cannon made model as per survey carried out by Chartered Engineer. The Tribunal in the case of Shivam International Vs. Commissioner of Customs 2012 (286) ELT 545 had held that used digital multifunctional print and copier machines were not photocopier machines. It was further submitted that it was only w.e.f. 5.6.2012 vide para 2.17 of the Foreign Trade Policy, (notification No.I(RE-2012)/2009-14) that the DGFT put digital copier under the category of restricted goods. The instant case period involved was much prior to 05.06.2012, therefore, the restriction imposed vide notification dated 05.06.2012 was not applicable. The Tribunal while relying on its earlier decision in the case of Unitech Enterprises(Supra) had totally ignored the decision of Madras High Court in the case of Sai Graphic Systems Vs. Commissioner of Customs (Seaport-import), 2013(289) ELT 423 (Mad.), wherein it had been held that digital multi functional print and copying machines fell under the category of restricted goods w.e.f. BANITA CHUGH 2014.12.23 12:10 I attest to the accuracy and authenticity of this document chandigarh CUSAP No. 24 of 2013 -4- 5.6.2012 and that the restriction was operative prospectively only. Lastly, it was argued that without prejudice to the aforementioned submissions, fine and penalty equal to 100% of the value of the goods had been imposed, but the decision of the learned Tribunal as upheld by this Court as well as the decision of the Madras High Court, wherein the learned Tribunal had imposed penalty and fine not more than 20% of the assessed value had been ignored, that although fine and penalty were the discretion of the authorities, but it was settled law that discretion should be exercised judicially and in a consistent manner, therefore, the respondent could not impose penalty from 15% to 20% in one case and 100% in another case. In the light of above, it was contended that the amount of fine and penalty needed to be reduced substantially.
Learned counsel further contended that there were several judgments, where such machines in similar factual situations were allowed to be redeemed on a fine of 10% of the value of goods and by imposing penalty equally to 5% of the said value. Learned counsel for the appellant while referring to the decision of the Commissioner of Central Excise(Appeals), Delhi-III, pointed out that the learned Commissioner had taken into account cases in which the department in a batch of appeals had contended that the quantum of redemption fine and penalty imposed were not high enough to be a deterrent for the importer for the future and that in these cases, fine imposed approximating to 15% and penalty approximately 5% of the enhanced value was held to be sufficient.
Learned counsel for the appellant has further contended that the Tribunal had committed grave error in imposing high redemption fine and penalty by restoring the order in original qua redemption fine and in reducing BANITA CHUGH 2014.12.23 12:10 I attest to the accuracy and authenticity of this document chandigarh CUSAP No. 24 of 2013 -5- the penalty amount from Rs. 17 lacs to Rs. 8.5 lacs only thereby imposing fine and penalty of Rs.8.5 lacs each, that no justifiable reasons had been given in the order for imposing such a huge fine and penalty except that such a dose of redemption of fine and penalty would deter illegality being perpetuated. Learned counsel contended that even assuming for the sake of argument that old and used photocopiers were liable to confiscation still the quantum of redemption fine could have been equal to the margin of profit, which was very low in the present case as old and used photocopiers were freely available in the market and further that old and used photocopiers were normally purchased by small scale entrepreneurs or unemployed youths to earn their livelihood and that old and used photocopiers were cheaply available in the market. However, imposition of redemption fine and penalty of Rs.8.5 lacs was wholly unjustified and unwarranted and the order by the Tribunal required to be modified on the ground of the same being unduly, harsh and unjustified. After addressing the above arguments, counsel for the appellant submits that he confines his plea to reduction of redemption fine and penalty.
On the other hand, on behalf of the respondent-Department, it was urged that imposing of redemption fine and penalty had compulsorily to be prohibitive so as to dissuade import of restricted goods and to make the same prohibitive and non-profitable.
Thus, the main grievance of the appellant is of there being no uniformity in imposition of fine and penalty by the Tribunal and even in the cases of similar situated importers different yardsticks having been applied, of the imposition of fine being so heavy as to make the cost of the goods prohibitive causing great loss to the appellant.
BANITA CHUGH 2014.12.23 12:10 I attest to the accuracy and authenticity of this document chandigarh CUSAP No. 24 of 2013 -6-
The Madras High Court in the case of Commissioner of Customs Tuticorn Vs. M/s Sai Copiers and others, [2008-TIOL-98-HC-MAD-CUS], wherein while rejecting the appeal, held as under:-
"9. From the reading of the above provisions, it is clear that the statutory requirement is that the imposition of redemption fine shall not exceed the market price of the goods confiscated, less in the case of imported goods, the duty chargeable thereon. The language employed "shall not exceed" indicates that the authorities under Act are empowered to impose redemption fine less than the market price of the goods confiscated. Thus, a discretion is vested on the authorities with a rider that the imposition of redemption fine should not exceed the market price.
10. Likewise, under Section 112(a) also, the statutory prescription is in the case of goods in respect of which any prohibition is in force under the Customs Act, or any other law the penalty imposable shall not exceed the value of the goods or Rs.5,000/- which ever is greater. In respect of dutiable goods other than prohibited goods, the penalty could be imposed not exceeding the duty sought to be evaded on such goods or Rs.5,000/- which ever is greater.
11. Here again, the maximum that could be levied is only prescribed. There is no statutory prescription that the penalty should not be reduced by the appellate authority. Before the Tribunal, the importers relied on the earlier order of the Tribunal in the case of Sri Venkatesh Enterprises Vs. BANITA CHUGH 2014.12.23 12:10 I attest to the accuracy and authenticity of this document chandigarh CUSAP No. 24 of 2013 -7- Commissioner of Customs, Chennai [2005(192) ELT 818 = [2005-TIOL-363-CESTAT-DEL)] wherein the quantum of redemption fine imposed in lieu of confiscation of second hand photocopiers valued at Rs.17.7 lakhs was restricted to Rs.2.5 lacs and the quantum of penalty was restricted to Rs.85,000/-. The same was followed in the case of the respondents also by the Tribunal. The fixation of the quantum of redemption is an exercise of discretionary jurisdiction of the authorities under the Customs Act. The Court can interfere only in the circumstances in which it was demonstrated before it that the order of the Tribunal is thoroughly arbitrary, whimsical and resulting in miscarriage of justice. As already stated, the Tribunal has followed its own earlier decision wherein the Tribunal has consistently imposed the redemption fine at 15 per cent and penalty under Section 112(a) at 5 per cent of the value of the goods, which factum has not been disputed by the counsel appearing for the department. In the above said view of the matter, we find no question of law, much less a substantial question for entertaining these appeals. Hence the appeals are dismissed. However, there is no order as to costs. Consequently, connected M.P. Nos.1,1,1 and 1 of 2007 in C.N. A. No.127 to 130 of 2008 are also dismissed."
This Court in Customs Appeal No.14 of 2011 (M/s BE Office Automation Products Limited, Baddi Vs. Commissioner of Central Excise, Gurgaon), decided on 18.11.2013, held as under:-
BANITA CHUGH 2014.12.23 12:10 I attest to the accuracy and authenticity of this document chandigarh CUSAP No. 24 of 2013 -8-
"16. Counsel for the appellant has made reference to Selection Enterprises Vs. Commissioner of Customs, Hyderabad 2008 (232) E.L.T. Customs Appeal No.14 of 2011 -5- 755 (Tri. Bang), Rex Printing Press Vs. Commissioner of Customs, Kolkata 2005 (184) E.L.T. 73 (Tri. Bang) and Bhavani Enterprises Vs. Commissioner of Customs 2010 (262) E.L.T.
536. In the last case, it was ordered that redemption fine shall not be in excess of 15% of the value of imported goods, whereas penalty of 5% of value on imported goods as certified by chartered engineers was upheld. It may be noticed that in these three cases cited by the appellant, there was import of second hand photocopier machines etc.; so is the case in the present appeals.
17. In these appeals, the Tribunal had noticed that the appellant had not cited any comparable cases where redemption fine had been reduced to 10% and penalty to 5%. The appellant citing these judgments of the Tribunal has convincingly shown that there have been instances, where the Tribunal had considerably reduced the penalty.
It is no doubt true that a repeat violator has to be imposed appropriate fine and penalty in order that the same acts as a deterrent to the repeated violation of law, however, at the same time, the Tribunal could not lose site of the fact that in similar cases it had reduced redemption fine to 10% and penalty to 5%. Without going into the issue whether the restriction imposed vide notification dated 05.06.2012 was applicable or not in view of the period involved being prior to 05.06.2012, we hold that the ends of justice would be BANITA CHUGH 2014.12.23 12:10 I attest to the accuracy and authenticity of this document chandigarh CUSAP No. 24 of 2013 -9- met if the quantum of redemption fine and penalty is reduced from the excessive rate at which it has been imposed to 20% each of redemption fine as well as penalty imposed vide the order in original. Our view finds support from the decision of this Court in Customs Appeal No. 14 of 1011 (M/s BE Office Automation Products Limited, Baddi Vs. Commissioner of Central Excise, Gurgaon), decided on 18.11.2013, Customs Appeal No. 1 of 2014 ( M/s Bhagwan Elector Pho Copiers I, Vs Commissioner of Central Excise ) as well of the Madras High Court in the case of Commissioner of Customs Tuticorn Vs. M/s Sai Copiers and others [2008-TIOL-98-HC-MAD- CUS]. Accordingly, order dated 28.06.2013 passed by the Tribunal is modified to the extent as indicated above.
With the aforesaid modification, order Annexure A-8 impugned before this Court stands affirmed and the appeal disposed of accordingly.
( RAJIVE BHALLA ) (B.S. WALIA)
JUDGE JUDGE
03.12.2014
chugh
BANITA CHUGH
2014.12.23 12:10
I attest to the accuracy and
authenticity of this document
chandigarh