Customs, Excise and Gold Tribunal - Mumbai
Commissioner Of Customs vs R.A. Spinning Mills (P) Ltd. And Ors. on 2 April, 2004
Equivalent citations: 2004(95)ECC643, 2004(171)ELT54(TRI-MUMBAI)
ORDER Jyoti Balasundaram, Member (J)
1. The brief facts of the case are that the respondents herein tiled various Bills of Entries for clearance of the goods described as synthetic rags. The B/E filed by M/s. R.A. Spinning Mills were assessed under the second check appraisement basis considering the description of the goods as synthetic rags. During the examination of the cargo in the Docks it was revealed that 70% of the goods were used trousers cut in two pieces. In this case the entire consignment was found to be two pieces of which 65% were new trousers and 35% were used trousers. In another case of M/s. Krishna Export Corporation, it was found during the examination that out of 60 bales, 30 bales were one piece garments and 30 bales were two piece trousers (synthetic). In the 30 bales in which one piece trousers were found it was reported that 60% of the trousers are brand new and unused and the balance 10% of the trousers were found old and used. In the balance 30 bales it was found that 60% of the goods were found new garments in two pieces and the balance 40% were found old and used garments in two piece. However, 2 out of 98 consignments were subjected to examination first and in the case of balance consignments, the goods were passed on second Appraisement. The Commissioner of Customs observed that the entire 98 consignments are mixed lots consisting of unused garments (which can be considered new), used garments and mutilated garments which are not completely mutilated as per. notfn. No. 60/88 and 80/93. The Commissioner therefore held that the brand new garments are classifiable under Chapter 61 and 62 and chargeable to duty 50% + 2% + 0.05% cess and the used garment under CTH 6309 chargeable to duty at the rate, of 50% + 2% + 0.05% cess and requiring Specific Import Licence and the synthetic rags u/CTH 6310 chargeable to duty @ 30% + 2% + nil + 0.05X% cess and requiring no import licence. The Commissioner has also held that the sorting out each bale to ascertain the correct description will require effort, patience and disputes on classification. Therefore, there will be delay in recovering the duty and redemption fine and will further increase burden of demurrage and container detention charges on the importers. The Commissioner accordingly held that the entire 98 consignments be charged to the highest rate of duty and cleared against Special Import Licence. The Commissioner also observed that redemption fine for non-production of specific import licence and for mis-declaration of the goods is required to be imposed as goods falling under heading 6309 require specific import licence in view of ITC (HS) classification of export and import items under EXIM Policy, 1992-97. The Commissioner accordingly ordered to accept the valuation of the goods as US$ 0.35 per kg and wherever it is higher than US$ 0.36 per kg., the duty is to be collected on higher price. The Commissioner also ordered the classification of goods under CTB 6103 and allowed the clearance against the S.I.L. produced for every consignment. In view of the fact that the importers in all these cases have to suffer heavy demurrage and container detention charges, the Commissioner took a lenient view and fixed the redemption fine of Rs. 2/- per kilo (Rs. Two per kilo) on the gross declared weight of the entire consignments. The Adjudicating Authority refrained from imposing any personal penalty on the importers. The valuation of the goods was fixed @US$ 0.36 per kg by the Commissioner which is the value declared for synthetic rags and not for the brand new garments as found in the consignment. The brand new garments are salable in the market on the unit price basis and not on per kg basis as held by the Commissioner.
2. The above order was reviewed by the CBEC and appeals filed before the Tribunal for enhancement of fine and for imposition of penalty.
3. We have heard the ld.D.R. Shri K.K. Srivastava for the Revenue and Shri Anil Balani and Shri Jerry Lewis, advocates for the respondents.
4. According to the Revenue, the entire lot of 98 consignments should have been subjected to the first check examination in order to ascertain the correct description and quantity of the goods. The Revenue is also aggrieved by the fixation of the value at the rate of US$ 0.35 per kg which is the value declared in the invoice for synthetic rags and not for brand new garments found in the consignment, which are saleable in the market on the unit price basis and not on per kg. Basis as held by the Commissioner. The ld.D.R. contends that the margin of profit involved in the case is very high and one kg of goods were found consists of 4 pieces of trousers which will be available at not less than Rs. 25 per piece and hence the market price for 4 trousers will work out to be Rs. 100/- per kg. The Department therefore, seeks imposition of higher redemption fine. The ld.D.R. also contends that the clear intention of the importers who cleared the consignment as synthetic rags is brought out from their request for clearance under SIL and therefore, stringent penalty under Section 112 of the Customs Act, 1962 should have been imposed.
5. The prayer is opposed by the ld.Counsels who draw our attention to the Tribunal's order So. C.II/62-108/WZB/2003 dated 6.1.03 on appeals filed by the importers against levy of fine of Rs. 2 per kilo wherein the Tribunal has, while sustaining confiscation under Section 111(m) and setting aside confiscation under Section 111(d) of the Customs Act, reduced the fine to Rs. One per kilo. The ld.Counsels also submit that sufficient reasons have been adduced by the Commissioner for refraining from imposing any penalty and that certain relevant factors weighed with the Commissioner in holding that there was no need to impose penalty upon the importers. The ld.Counsels submit that imposition of penalty is not mandatory even in cases where goods are confiscated under Section 111(m) of the Customs Act, 1962.
6. In view of the Tribunal's order cited supra reducing the fine on the goods to Rs. One per kilo, it is not now open to the Revenue to argue for enhancement of fine. Accordingly, we reject the prayer for increase in quantum of fine.
7. As regards the issue as to whether penalty should have been imposed, we find that it has been held in series of decisions including that in the case of Wooltex Associates v. CC, Mumbai [1998(99)E.L.T.245] that Section 112 of the Customs Act does not provide for a mandatory penalty and the discretion to impose penalty or not to impose penalty depends upon each case. In the case of Akbar Badruddin Jiwani v. CC 1990(47)E.L.T.161(S.C.), penalty imposed under Section 112 was set aside by the Apex Court on the ground that the importers were under a bonafide belief that the goods imported were covered under OGL. This decision has been relied upon by the Tribunal in the case of Siris Aqua Ltd. v. CCE, Hyderabad [2000(115)E.L.T.186] to set aside penalty as mens rea on the part of the importers was not fully established. Same view was reiterated in the case of SIJ Electronics Comp. Tech. Pvt. Ltd. v. CC, Kochi [2001(129)E.L.T.528]. In the light of these decisions, we hold that Section 112 of the Customs Act does not provide for a mandatory penalty.
8. Now we deal with the question as to whether penalty is warranted in the facts of the present case. We note that although the imported consignments consisted of garments as well as synthetic rags, they have been charged to duty at the higher rate as garments. The value of the goods was increased to US $ 0.35 per kg wherever the value declared was lower. We also note that the importers produced a special Import Licence for speedy clearance of the goods. Heavy detention and huge demurrage charges have also incurred by the importers. All these reasons have weighed with the Commissioner for levy of low redemption fine which has been further reduced by the Tribunal as seen above. These relevant factors were kept in view by the Adjudicating authority in coming to the conclusion that no penalty is called for. We agree with the conclusion of the Commissioner that in these circumstances, no penalty is called for.
9. In the result, we uphold the impugned order and reject the appeals.
10. Cross objections are disposed of accordingly.