Customs, Excise and Gold Tribunal - Tamil Nadu
Commissioner Of Customs vs Vijex Office Equipment Pvt. Ltd. on 19 June, 2006
ORDER P.G. Chacko, Member (J)
1. The respondents in this appeal of the Revenue imported second-hand photocopying machines and accessories without specific import licence and filed Bill of Entry dated 20-4-2005 for clearance of the goods. The declared value of the goods was Singapore Dollar 52,416, The department rejected this value and proposed to enhance it to Singapore Dollar 59,616. Subsequently, the goods were got examined by a Chartered Engineer, who estimated the value of the machines at Singapore Dollar 65, 577. Taking the view that the machines were not capital goods and that their description and value had been misde-clarcd by the importer, the department proposed to confiscate the same under Section 111(d) of the Customs Act as also to impose penalty on the importer under Section 112 of the Act. The assessable value of the goods was also proposed to be enhanced as above. These proposals were upheld by the original authority, which fixed the assessable value of the goods at Rs. 17,57,463/- under Rule 8 of the Customs Valuation Rules, 1988; confiscated the goods under Section 111(d) with option for redemption on payment of a fine of Rs. 5.25 lakhs under Section 125 and imposed a penalty of Rs. 2.6 lakhs on the importer under Section 112(a) of the Act. In the appeal preferred by the assessee against the decision of the original authority, learned Commissioner (Appeals) held the machines to be capital goods not requiring licence for import under the relevant EXIM Policy, following the Tribunal's Larger Bench decision in Atul Commodities (P) Ltd. and Ors. v. CC 2005-TIOL-470-CESTAT-DEL-LB. Accordingly, the appellate authority set aside confiscation (with RF) and penalty. However, the assessable value determined by the lower authority was sustained. The assessee was not aggrieved by this decision of the learned Commissioner (Appeals). The department has filed the present appeal against the setting aside of confiscation and penalty.
2. Ld. SDR submits that the view taken by the Tribunal's Larger Bench in Atul Commodities (supra) has been reversed by the Hon'ble High Court of Kerala in Cus. Appeal No. 11 of 2005 filed by the department. The Hon'ble High Court has held similar second-hand photocopying machines to be "consumer goods" and not "capital goods" and, therefore, such goods were not freely importable. Ld. SDR points out that all the EXIM Policy circulars considered by the Tribunal's Larger Bench were also examined by the High Court and further that the order passed by the AP High Court in the appeal filed by the department against the Tribunal's decision in Atul Commodities (supra) was also considered by the Kerala High Court. In view of the Kerala High Court's decision in Atul Commodities, Id SDR prays for restoring the order passed by the original authority.
3. Ld. counsel for the respondents has placed on record the Tribunal's Larger Bench decision and decisions rendered by the regular Bench at Chennai by following the above decision. It is also submitted that, in any case, the quanta of fine and penalty imposed by the original authority are unreasonably high. It is pointed out that, in the determination of fine and penalty, it should be borne in mind that the goods were imported at a time when it was widely accepted that second-hand photocopiers were capital goods requiring no import licence.
4. After giving careful consideration to the submissions, I do not find any conflict of decisions between the Hon'ble High Courts and that the only case law to be followed is the one laid down by the Kerala High Court. The Hon'ble AP High Court's judgment in the department's appeal reads as under:
No question of law, much less any substantial question of law, as such arises for our consideration in this appeal. The appeal shall accordingly stand dismissed.
Thus, it is clear that, on the set of facts presented before the Hon'ble AP High Court by the department, no question of law had arisen and, therefore, their lordships had no occasion to decide on any issue. On the other hand, in the way the department presented the case before the Kerala High Court, they succeeded in formulating a substantial question of law and got a favourable decision on merits. This decision is binding on this Tribunal. Accordingly, it is held that second-hand photocopying machines imported by the respondents were imported in breach of the licensing provisions under the EXIM Policy and hence were rightly confiscated by the original authority. Fairly, that authority gave option to the importer for redemption of the goods in lieu of confiscation. Ld. SDR has argued that, in the absence of an appeal by the respondents, it would not be open to the Tribunal, in the department's appeal, to modify the quantum of redemption fine fixed by the original authority. The same contention has been raised in respect of penalty as well. While conceding that there is no appeal of the respondents, Id. counsel submits that it is still open to the Tribunal to sit in judgment over the correctness or otherwise of the quanta of fine and penalty. 1 must agree with this argument. Now that the appellate Commissioner's order setting aside confiscation (with RF) and penalty has been held liable to be set aside, a question would legitimately arise as to what should be the appropriate quanta of fine and penalty. There is an element of discretion in the determination of these factors. The original authority does not seem to have exercised this discretion on sound principles of law and justice. In this context, I advantageously take judicial notice of the fact that it is a departmental practice to impose redemption fine in the range of 10 to 25% of GIF value of imported goods confiscated. In the present case, the value fixed by the lower authorities is Rs. 17.5 lakhs and the fine imposed is Rs. 5.25 lakhs, which is more than 35%. This fine cannot be said to be reasonable, in the facts and circumstances of this case. It is not in dispute that second-hand photocopying machines have been held to be 'capital goods' consistently by this Tribunal over a period of time. The position has changed for good in favour of the department with the decision of the Hon'ble High Court of Kerala which was rendered as late as in April 2006. If any party ventured into import of such machines as capital goods without import licence prior to the decision of the High Court, there is no reason to attribute mens rea to them inasmuch as case law was in their favour. Moreover, admittedly, in respect of second-hand goods, no market enquiry is possible in terms of Section 125 of the Customs Act. Second-hand consumer goods are not marketed either, as they are for own consumption of the importer. In my view, these are mitigating circumstances, which would justify reduction of quanta of fine and penally in the present case. I am of the view that a fine of Rs. 2.5 lakhs (Rupees Two lakhs fifty thousand only) would meet the ends of justice and a penalty of Rs. 25,000/- (Rupees Twenty-five thousand only) would be reasonable, in the facts and circumstances of this case. The impugned order is set aside except in respect of the assessable value of the goods and the Revenue's appeal is allowed to the aforesaid extent.
(Dictated and pronounced in open Court)