Custom, Excise & Service Tax Tribunal
V Karthik vs Commissioner Of Customs - Chennai Ii ... on 26 September, 2025
CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
CHENNAI
REGIONAL BENCH - COURT No. I
Customs Appeal No. 40549 of 2024
(Arising out of Order-in-Original No. 106063/2024 dated 05.04.2024 passed by Commissioner
of Customs, Chennai II, No. 60, Custom House, Rajaji Salai, Chennai - 600 001)
M/s. Ocean Sky Impex Pvt. Ltd. ...Appellant
No. 33/4, North Street, Venkatesh PU,
Ayanavaram,
Chennai - 600 023.
Versus
Commissioner of Customs ...Respondent
Chennai II Commissionerate,
No. 60, Custom House,
Rajaji Salai,
Chennai - 600 001.
With
Customs Appeal No. 40553 of 2024
(Arising out of Order-in-Original No. 106063/2024 dated 05.04.2024 passed by Commissioner
of Customs, Chennai II, No. 60, Custom House, Rajaji Salai, Chennai - 600 001)
Mr. V. Karthik ...Appellant
Managing Director,
M/s. Ocean Sky Impex Pvt. Ltd.,
No. 33/4, North Street, Venkatesh PU,
Ayanavaram,
Chennai - 600 023.
Versus
Commissioner of Customs ...Respondent
Chennai II Commissionerate,
No. 60, Custom House,
Rajaji Salai,
Chennai - 600 001.
And
Customs Appeal No. 40610 of 2024
(Arising out of Order-in-Original No. 106063/2024 dated 05.04.2024 passed by Commissioner
of Customs, Chennai II, No. 60, Custom House, Rajaji Salai, Chennai - 600 001)
Mr. Mahabir Prasad Sharma ...Appellant
S/o. Shri Shiv Kumar Sharma,
R/o Flat No. 57, Bharat Apartment,
Sector-13, Rohini, North West,
Delhi - 110 085.
Versus
Commissioner of Customs ...Respondent
Chennai II Commissionerate,
No. 60, Custom House,
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Rajaji Salai,
Chennai - 600 001.
APPEARANCE:
For the Appellants : Mr. Prem Ranjan Kumar, Advocate
For the Respondent : Mr. Anoop Singh, Authorised Representative
Mr. Sanjay Kakkar, Authorised Representative
CORAM:
HON'BLE MR. VASA SESHAGIRI RAO, MEMBER (TECHNICAL)
HON'BLE MR. AJAYAN T.V., MEMBER (JUDICIAL)
FINAL ORDER Nos. 41044-41046 / 2025
DATE OF HEARING : 01.04.2025
DATE OF DECISION : 26.09.2025
Per Mr. VASA SESHAGIRI RAO
These Customs Appeal Nos. C/40549, 40553,
40610/2024 have been filed by the importer, M/s. Ocean Sky
Impex Private Limited, Chennai (hereinafter called OSIPL for
short), and two other co-noticees, Mr. V. Karthik, Managing
Director of M/s. OSIPL and one Shri Mahabir Prasad against
Order-in-Original No. 106063/2024 dated 05.04.2024 passed
by the Commissioner of Customs, Chennai-II.
2. Briefly stated, the facts of the case are that the
appellant filed bills of entry Nos. 2214121 dt. 29.08.2022,
2299510 dt. 04.09.2022 & 2299525 dt. 04.09.2025 for
clearance of goods declared as "Polyester Coated Fabric
(Polymric Compound)". Upon detailed examination of the
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consignments by officers of DRI and testing of samples
drawn from the consignments, it was found that the
imported goods were mis-declared in respect of description
and classification. After further investigation, a show cause
notice was dated 15.04.2011 was issued to the appellant
with the proposals to (i) reject the declared description,
classification and assessable value in respect of the above
said bills of entry No. 2214121 dt. 29.08.2022, 2299510 dt.
04.09.2022 and 2299525 dt. 04.09.2025 and re-determine
the same as proposed in the show cause notice; (ii) demand
differential duty of Rs. 90,03,347/- in terms of Section 28(4)
of Customs Act, 1962 on the goods imported under bill of
entry No. 2214121 dt. 29.08.2022, for which Out of Charge
order was already given by the proper officer of Customs;
(iii) confiscate the impugned imported goods for
contravention of sections 111(l) and 111(m) of Customs
Act, 1962; and (iv) impose penalties on the appellant under
Section 112, 114A and 114AA ibid.
2.1 The description, classification and assessable
value proposed in the snow cause notice for the impugned
imported goods are as mentioned in the table below: -
BE No. & Proposed Proposed Proposed Differential Duty
Date Description CTH Value (Rs.) in Rs. (including
BCD/SWS/ADD/IGST
2299525/ Polyester woven
59032090 8,14,04,704 4,62,56,607
04.09.2022 fabric laminated with
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Polyurethane based
material
Polyester woven
fabric laminated with 59032090 1,54,26,648
2299510/
Polyurethane based 4,26,53,792
04.09.2022
material
100% Polyester 54076190 1,16,73,504
woven fabric
2214121/ 100% Polyester
54076190 1,30,93,280 90,03,747
29.08.2022 woven fabric
2.2 On adjudication, the proposals made in the show
cause notice were confirmed. However, the appellant was
granted permission to re-export the goods subject to
payment of (i) Fine of Rs.1,25,00,000/- imposed under
Section 125 of Customs Act, 1962 for redemption of the
goods imported under bills of entry No. 2299510 dt.
04.09.2022 & 2299525 dt. 04.09.2025 and Rs. 15,00,000/-
imposed under Section 125 ibid for redemption of the goods
imported under bill of entry No. 2214121 dt. 29.08.2022; (ii)
Penalty of Rs. 70,00,000/- imposed on the appellant under
Section 112(a) of the Customs Act, 1962 for rendering the
goods imported under bills of entry No. 2299510 dt.
04.09.2022 & 2299525 dt. 04.09.2025 liable for confiscation;
(iii) Penalty equal to the differential duty of Rs. 90,03,747/-,
along with applicable interest, imposed on the appellant in
terms of provisions of Section114A of the Customs Act, 1962
on account of the appellant being liable to pay the said
differential duty determined under Sub Section (8) of Section
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28 of Customs Act, 1962; and (iv) Penalty of Rs. 10,00,000/-
imposed on the appellant under Section 114AA of Customs
Act, 1962 for gross mis-declaration and wilful mis-statement
of description and quantity in the bills of entry filed by the
appellant. Separately, differential duty of Rs. 90,03,347/-
was demanded from the appellant in terms of Section 28(4)
of Customs Act, 1962 on the goods imported under bill of
entry No. 2214121 dt. 29.08.2022, while at the same time it
was also held that the said differential duty may not be
payable in case the goods were re-exported upon payment of
applicable fine and penalties.
3. The appellant has preferred the present appeal
assailing the impugned Order-in-Original No. 106063/2024
dated 05.04.2014 passed by the Commissioner of Customs,
Custom House, Chennai II in so far as it relates to imposition
of fine and penalty on the appellant and making payment of
the same by the appellant as a pre-condition for re-export of
the impugned imported goods.
4. The Ld. Advocate Shri Prem Ranjan Kumar
appeared and argued for the appellant and submitted that
the consignments in question were wrongly shipped by the
supplier and the Adjudicating Authority has not given any
evidence to discard the same and therefore holding that the
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appellant has wilfully mis-declared the imported goods and
has suppressed the facts is erroneous.
4.1 The Ld. Advocate further submitted that the
Adjudicating Authority has accepted the contentions of the
appellant that the consignments were sent by mistake from
the side of supplier and that they are ready to accept it back
and accordingly the cargo can be allowed to be re-exported
with applicable fine and penalty and in such case differential
duty may not be payable. He submitted that once the
Adjudicating Authority accepted the submission of the
appellant with regard to wrong shipment by their supplier,
there is no question of redemption fine and penalty for
permitting re-export.
4.2 It is the Ld. Advocate's contention that the
appellant had filed the bills of entry under FIRST CHECK as
the appellant was not sure about the correct classification,
the exact meterage of the goods and it was incumbent upon
the proper officer to check all parameters including
classification prior to assessment of the goods in question.
Hence there was no question of intention to evade duty.
4.3 The Ld. Advocate averred that the allegation of
intended mis-declaration was erroneous as the department
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themselves was not sure about the exact nature of the goods
in question. The goods were sent for testing and only then
the correct classification were ascertained which was not
possible by a mere visual examination.
4.4 The Ld. Advocate for the appellant relied on the
following judgments to submit that in the interest of justice
the Appeal be allowed with consequential relief setting aside
the impugned order in so far as it imposed redemption fine
and penalty while permitting re-export.
i. Sankar Pandi versus Union of India reported in 2002 (141)
ELT 635 (Madras High Court)
ii. Selvam Industries Ltd. versus Commissioner of Customs,
Tuticorin reported in 2021 (377) ELT 458 (Tri. Chennai)
(SMB)
iii. Rose Mary International versus Comm. of Customs passed
in Customs Appeal No. 41693 of 2019(SMB)
iv. Simplex Engineers & Traders versus Commissioner of
Customs (Import) passed in Customs Appeal No. 41339 of
2019(SMB)
v. OMS Sivajothi Mills versus The Commissioner of Customs
passed in Customs Appeal No. 40784 of 2019(SMB)
vi. Lalkalam Enterprises versus Comm. of Customs Chennai
reported in 2018 (364) ELT 856 (Tri. Chennai) (Divisional
Bench)
vii. Regal Impex versus Comm. of Customs ICD TKD New
Delhi reported in 2016 (332) ELT 835 (Tri. Del) (Divisional
Bench)
viii. Comm. of Customs Visakhapatnam versus HBL Power
Systems Ltd. reported in 2019 (367) ELT 154 (AP High
Court)
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ix. Extreme Electronics Pvt. Ltd. versus Commissioner of
Customs, Mundra Final Order No. 12711/2024 dated
14.11.2024
5. Per contra, Shri Sanjay Kakkar, the Learned AR
for the Revenue has submitted that the impugned case is
one which was booked by DRI, on the basis of specific
intelligence that the Appellant was importing fabrics by mis-
classifying them with an intent to evade duty, specifically
Anti-Dumping Duty. He submitted that the case involves
huge mis-declaration on all counts - description,
classification as well as quantity, all of which would have not
come to notice, but for the specific intelligence and
investigation.
5.1 The Ld. AR further submitted that based on the
statement of Sh. V. Karthik, Managing Director of the
Appellant company, it appears that the entire business was
conducted as per the financial control and operational
management of Sh. Mahabir Prasad, the co-Noticee. It was
submitted that Sh. V. Karthik has clearly and categorically
stated in both his voluntary statements under Section 108 of
the Customs Act, that at each step of the conduct of
business, he was instructed by Sh.Mahabir Prasad to act in a
particular manner, that similar mis-declared goods had been
imported in numerous past consignments. This fact has also
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been stated by Sh.V.Parthiban, Director of M/s Sri Sai Exim
(Customs Broker) in his voluntary statement under Section
108 of the Customs Act.
5.2 The Ld. AR averred that Sh. Mahabir Prasad has
been non-cooperative with the investigation and has avoided
all answers. He also appears guilty of making false
statements before the investigation officers, where he even
denounced sending a mail to DRI on 10.01.2023. He appears
to be the mastermind behind the entire plan to defraud
revenue.
5.3 The Ld. AR submitted that the Appellants have
not contested the nature, quantity, quality, etc. of the
imported goods before the Adjudicating Authority. This
amounts to acceptance of the contraventions and attempt to
smuggle the goods by mis-declaration.
5.4 The Ld. AR argued that from the foregoing, there
is no other option but to infer that the plan to clear mis-
declared goods was a carefully planned activity and the plea
of wrong-shipment appears to be a cooked-up argument, in
as much as a first-check assessment also appears to be a
part of the plan. He submitted that a first-check assessment
is no substitute to a proper declaration, especially in a case
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where acceptedly similar goods have been mis-declared and
imported in scores of earlier shipments. Acceptedly, the
smuggling continued for scores of imports and there is no
retraction of the statements given by the Noticees. The re-
determined classification, quantity and valuation remain
uncontested, as these are based on factual determination of
testing of goods and detailed examination of the cargo.
5.5 It is the contention of Learned AR that the plea
of wrong-shipment does not meet the eye by any stretch of
prudent thought, since no foreign supplier who deals in
international trade at such a high volume could be unaware
of the good dispatched by them, for as long as 4 months. It
was further submitted that the plea put forth by the
Appellant must appear acceptable to atleast some basic
level, it cannot be so weird or bizarre that sounds
unacceptable at the face of it and could be dismissed at the
threshold. The plea of wrong-shipment is not backed with
any documentary evidence.
5.6 It was further submitted by Learned AR that as
much as the onus is on the department to prove any charge
contained in the Show cause Notice, it is equally applicable
that the onus is on the importer-Appellant to provide
evidence for the defence they adopt in the proceedings, in
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the absence of which the preponderance of probabilities
ought to weigh against them. This is a case of gross mis-
declaration with the intention to defraud revenue by a
carefully planned operation. The option to re-export, citing a
wrong-shipment is part of this plan as a residuary option to
wriggle out of the situation.
5.7 The Ld. AR averred that the uncontested
contraventions of Section 46, viz. mis-declaration of
classification, description and valuation, rendered the goods
liable for confiscation under Sections 111(l) and (m) ibid,
attracting penal provisions. It was further submitted that
once the goods are confiscated, the property vests with
Government as per Section 126 of the Customs Act and it is
only when an option for redemption is sought by the
importer, the provisions of Section 125(1) come into play.
However, Section 125(2) of the Customs Act imposes a
condition that once the option under Section 125(1) for
redemption is availed, the payment of duty and other
charges (which indicates and includes interest and penalty)
is an inseparable condition. The Adjudicating authority has
rightly permitted re-export, as sought by the Appellant, after
redemption of the goods, only "consequent" to payment of
differential duty.
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5.8 The Ld. AR relied on the decision of Larger Bench
of this Tribunal in Hemant Bhai R. Patel Vs Commissioner of
Customs [2003 (153) ELT 226 (Tri-LB)] to submit that the
Adjudicating Authority had powers to impose redemption fine
and penalty even when re-export was permitted.
5.9 Finally, the Learned AR prayed that the penalties
imposed on Sh. V. Karthik, Managing Director of the
Appellant company and Sh. Mahavir Prasad, co-noticee, as
imposed by the Adjudicating Authority under Section 112(a)
and 114A be confirmed for the overt role played by both
repeat-offenders in the smuggling by mis-declaration and
abetment thereof; and the appeal be dismissed and the
Order of Original authority be upheld in the light of his
submissions and also considering that the case is clearly writ
with element of gross mis-declaration, with a conscious
intent to defraud revenue by repeat offenders.
6. Heard both sides and perused the appeal
records.
7. The issues for consideration in this appeal are: -
i. Whether redemption fine is imposable on the goods
which are permitted to be re-exported.
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ii. Whether penalties are imposable for contravening the
provisions of the Customs Act, 1962 when goods are
permitted to be re-exported.
8. We shall examine each of the issues in the light
of the facts and circumstances of the case and the relevant
legal provisions and judicial pronouncements. The appellant's
argument is that once the Adjudicating Authority accepted
the submission of the appellant with regard to wrong
shipment by their supplier, there is no question of
redemption fine and penalty for permitting re-export.
Another contention of the appellant is that there was no
question of intention to evade duty as they had filed the bills
of entry under FIRST CHECK, whereby it was incumbent
upon the proper officer to check all parameters including
classification prior to assessment of the goods in question.
9. We find that in paras 77.2, 81 and 83 of the
impugned order, the Adjudicating Authority has held as
under: -
"77.2 From the above it is evident that M/s OSIPL had
grossly mis-declared the description of the imported goods
to evade payment of Customs duty / Anti Dumping duty as
below:
M/s OSIPL had not declared PU Coated Fabric (CTH
59032090) to evade payment of Anti Dumping duty as per
the Notification No. 14/2022 dated 20.05.2022
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M/s OSIPL had not declared Polyester Woven Fabric (CTH
54076190) which had a rate of duty @20% per SQM or
Rs. 150 per Kg whichever is higher."
"81. I find that the declared description of the above
discussed 3 import consingments of fabric of M/s OSIPL do
not correspond to the actual description of the import
consignments since they are grossly mis-declared in
quantity as well as description, as brought out in the paras
above. It is also found that the said 3 import consignments
were mis-declared to evade specific rate of Customs Duty.
Therefore, the said 3 import consignments are liable for
confiscation under the provisions of Section 111(l) and
Section 111(m) of the Customs Act, 1962."
"83. I further find that bills of entry no. 2299525 &
2299510 both dated 04.09.202 are live consignments
which has to be confiscated under the provisions of Section
111(l) and 111(m) of the Customs Act, 1962 for gross mis-
declaration in both quantity as well as description. The
third bill of entry no. 2214121 dt 29.08.22 for which out of
charge was given was also seized and is liable for
confiscation under the provisions of Section 111(l) and
111(m) of the Customs Act, 1962 for gross mis-declaration
of imported goods in both quantity as well as description.
This act of the importer shows mis-declaration and wilful
mis-statement that led to the evasion of duty. Therefore, I
find that the importer has suppressed the facts and
willfully mis-stated the classification to evade applicable
Customs Duties and hence, in respect of bill of entry no.
2214121 dt 29.08.2022, I find that it is a fit case for
invoking the extended period of limitation of five years, in
terms of Section 28(4) of the Customs Act, 1962.
Therefore, in respect of bill of entry no. 2214121 dt
29.08.22, the total short levied Customs duty amounting
to Rs.90,03,747/- (Rupees Ninety Lakhs Three Thousand
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Seven Hundred and Forty Seven Only) demanded under
Section 28(4) of the Customs Act, 1962 is liable to be
confirmed and recovered under Section 28(8) of the
Customs Act, 1962 along with applicable interest under
Section 28AA of the Customs Act, 1962. Accordingly,
penalty under Section 114A and Section 114AA of the
Customs Act, 1962 is rightly invokable. I find that the
importer have stated that the consignment was sent by
mistake from the side of supplier and they are ready to
accept it back and accordingly, they have requested for re-
export of the cargo. Accordingly, the cargo can be allowed
to re-export with applicable fine and penalties and in such
case, differential duty may not be payable."
10. Further, in para 84 of the impugned order, the
Adjudicating Authority referred to the letter dated
15.12.2022 of Shri V.Karthik, Managing Director, M/s.
Oceam Sky Impex P. Ltd. addressed to the Principal
Commissioner of Customs, Chennai and held that the
averment made therein that the goods were wrongly
supplied by the overseas suppliers is false.
11. Therefore, we find that the appellant's claim that
the Adjudicating Authority accepted the submission of the
appellant with regard to wrong shipment by their supplier is
contrary to the facts obtaining in paras 77.2, 81, 83 and 84
of the impugned order.
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12. The appellant's other contention that they have
filed bills of entry under FIRST CHECK and therefore, the
question of intention to evade duty does not arise is not
supported by any legal provision of Customs Act, 1962 or by
any documentary evidence produced by the appellant.
Further, the findings of the Adjudicating Authority in paras
77.2, 81, 83 and 84 of the impugned order which we had
occasion to discuss supra and which have not been rebutted
by the Appellant lead us to the inevitable conclusion that the
appellant intended to evade payment of Customs duty / Anti
Dumping duty. While we are on this subject, we deem it
appropriate to refer to the recent judgement passed by the
Principal Bench of CESTAT in the case of M/s. Surendra
Electricals Vs Commissioner of Customs, (Export), New Delhi
[2024 (1) TMI 536 - CESTAT New Delhi] wherein it is held as
follows: -
"The defence put forth by the appellant do not inspire any
confidence in this regard. It cannot be accepted that the
appellants were importing the goods without knowing the
true nature of the goods. Appellants submission that they
have opted for first check, also cannot be said to be valid
defence for the reason that first check is a facility to
determine the exact nature of the goods, and not a facility
to mis-declare. The invoice of the Chinese Supplier is not
having any details to infuse any confidence. Hence in our
view the appellant have deliberately misdeclared the
goods."
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Similar view has been taken by a Coordinate Bench of
CESTAT, Mumbai in the case of M/s. Swastik Creation and
Shri Manish Shah, Proprietor Versus Commissioner of
Customs, Air Special Cargo, Mumbai [2022 (11) TMI 1238 -
CESTAT Mumbai] by holding as follows: -
"Appellants submission that they have opted for first
check, also cannot be said to be valid defence for the
reason that first check is a facility to determine the
exact nature of the goods, and not a facility to mis-
declare."
13. Further, after carefully considering all the facts
of this appeal, it is to be noted that the imported quantity of
fabric in metreage terms is more than 2.6 times of the
declared quantity in respect of B.E No. 2214121 /
29.08.2022, is almost 3 times of the declared quantity in
respect of B.E No. 2299510/04.09.2022 and is almost 1.4
times of the declared quantity in respect of B.E No.
2299510/04.09.2022. This is besides the mis-declaration in
respect of description of imported goods. All of this would
have gone unnoticed had the shipments not been intercepted
by DRI and examined 100%. Citing the judgements in the
case of Eastern Silk Industries Ltd Vs. Commissioner of
Customs (Airport/Admn), Kolkata and CC, Kandla Vs Essar
Oil Ltd reported in 2004 (172) ELT 433 (SC), the
Adjudicating Authority has held that: -
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"88. From the case of EASTERN SILK INDUS. LTD. Versus
COMMR. OF CUS. (AIRPORT/ADMN.), KOLKATA it is held
that:-
"A Fraud in common parlance means dishonest
dealing, deceit or cheating, etc.
- It makes no difference whether fraud is committed
by outrightly forging of documents or by wilful mis-
declaration/misrepresentation - Fraud is fraud and
there is no categories in mild frauds and severe
frauds in taxation matters. Demand not time barred"
In the present context, I find that M/s. OSIPL filed bills of
entry with wrong description, quantity, value and
classification, as ascertained from examination & testing
deliberately to evade payment of duty and thus extended
period of limitation is rightly invokable in respect of bill of
entry no. 2214121 dt 29.08.22 for which Out of Charge
was given.
89. I find that the Hon'ble Supreme Court in the case of CC
Kandla vs Essar Oil Ltd reported in 2004 (172)E.L.T. 433
(S.C) held that: -
"Fraud as is well known vitiates every solemn act.
Fraud and justice never dwell together. Fraud is a
conduct either by letter or words, which includes the
other person or authority to take a definite
determinative stand as a response to the conduct of
the former either by words or letter. It is also well
settled that misrepresentation itself amounts to
fraud. Indeed, innocent misrepresentation may also
give reason to claim relief against fraud. A fraudulent
misrepresentation is called deceit and consists in
leading a man into damage by wilfully or recklessly
causing him to believe and act on falsehood. It is a
fraud in law if a party makes representations, which
he knows to be false, and injury enures therefrom
although the motive from which the representations
proceeded may not have been bad. An act of fraud
on court is always viewed seriously. A collusion or
conspiracy with a view to be deprive the rights of the
others in relation to a property would render the
transaction void ab initio. Fraud and deception are
synonymous. Although in a given case a deception
may not amount to fraud, fraud is anathema to all
equitable principles and any affair tainted with fraud
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cannot be perpetuated or saved by the application of
any equitable doctrine including res judicata. (See
Ram Chandra Singh v. Savitri Devi and Ors. (2003
(8) SCC 319)."
90. In the present context, I find that M/s OSIPL filed bills
of entry with wrong description, quantity, value and
classification, as ascertained from examination & testing
deliberately to evade payment of applicable customs
duties. From legal precedents cited above, I find that the
importers have a significant responsibility for accurate self-
assessment, and any attempt to evade payment of duty
through misdeclarations or fraudulent means can lead to
penalties and demands. In the instant case, I find that
they have wilfully mis-stated the classification and
description to evade payment of applicable duties and thus
penalties as proposed in the SCN are rightly invokable
against the Noticees."
14. We find that the importer's attempt to claim
innocence on the premise that a first-check assessment was
sought does no good to their case as admittedly, they were
regular importers of identical goods over the past and so
must be well aware of the goods that they were regularly
ordering and importing. It appears that almost 50 shipments
in about 145 containers had been cleared by the importers,
as per their own statement and it defies logic that the
importer wouldn't be aware of what fabric they were dealing
in - importing as well as selling in the domestic market. A
first-check assessment, that too for an item that has been
regularly imported, is no substitute for a proper declaration
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as mandated under Section 46 of the Customs Act. It cannot
be used as a ploy or a tool to wash off personal
responsibilities and liabilities in the era of self-assessment
and surreptiously fasten the liability of detecting the
parameters of a product on the proper officer, for if that be
the case, every delinquent importer would seek a first-check
and claim innocence of not knowing their own goods, for
which they had placed an order with their foreign supplier
through a negotiated and/or protracted process as an arms-
length transaction. A first-check procedure could definitely
be resorted for any import but is justified only in special
circumstances that justify the cause, such as where some
uncertainty has arisen in understanding the nature of goods
imported, which are either a new technological manufacture
or something that remained amiss between the foreign
supplier and the Indian importer or where the goods are
required to be tested.
15. In such cases, the onus to prove that the
importer was incapacitated in understanding the nature of
the product being imported by them to determine the correct
classification or value of the goods imported, that
necessitated a first-check assessment would be on the
importer. This is besides the cases where the proper officer
may still feel a lack of sufficient information or data, beyond
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what is provided by the importer, in enabling a proper
assessment of the imported goods.
16. In the instant case, admittedly, the importer was
a regular importer of the same goods and prudent
understanding of the situation would lead only to the
conclusion that he was aware of what was being purchased
from the foreign suppler as every business transaction of
purchase and sale happens only with a determination of the
item being dealt with, including the precise technical
characteristics thereof; any negotiation of pricing or terms of
supply happens only after the transacted goods are clearly
identified and defined.
17. In the instant case, the importer has not placed
any documentary evidence in the nature of supplier's test
reports to justify the description of goods declared by them.
Their claim of wrong shipment also sounds hollow under the
circumstances as no supplier of such huge volume of goods
would remain silent for as long as 4 months after the date of
shipment if it was a case of wrong shipment, for which such
suppliers already is expected to possess sufficient internal
controls. The claim of a case of wrong shipment is not
backed with any documentary evidence and the timing of
such a claim makes it a suspect claim, intended only to
22
C/40549,40553&40610/2024
restrict the damage caused to their attempt to smuggle
goods being curtailed by DRI. In fact, the case is built on a
specific intelligence input received by DRI that the importer
was evading huge tax liability for mis-declaring the
description of goods and hence classification, which had a
huge bearing on tax, especially the levy of Anti-Dumping
Duty. Confronted with test reports, the importer has also
conceded the factual position emanating therefrom.
Therefore, we have no hesitation in holding that the first-
check argument of the importer is merely a ploy to escape
their liability for a proper declaration mandated under
Section 46 of the Customs Act.
18. In view of the above, in the light of the fact that
this is a case of mis-declaration of description, which has a
direct bearing on classification, valuation and assessment of
Customs duty, we hold that the importer-appellant's claim
that they stand absolved of the offence due to assessment
sought under 'first-check' basis lacks merit and hence the
goods become liable for confiscation under Sections 111(l)
and 111(m) of the Customs Act, as held in the impugned
Order. The consequence of any confiscation under Customs
Act is that, as per Section 126 of the Customs Act, the
property vests in the Central Government and the officer
adjudging confiscation shall take and hold possession of the
confiscated goods.
23
C/40549,40553&40610/2024
19. Further, Section 125 of the Customs Act provides
an option to pay fine, commonly called redemption fine, in
lieu of confiscation. Section 125 is extracted below and reads
as: -
"125. Option to pay fine in lieu of confiscation. - (1)
Whenever confiscation of any goods is authorised by this
Act, the officer adjudging it may, in the case of any goods,
the importation or exportation whereof is prohibited under
this Act or under any other law for the time being in force,
and shall, in the case of any other goods, give to 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 :
xxxx xxxx xxxx
Provided further that], without prejudice to the provisions
of the proviso to sub-section (2) of section 115, such fine
shall not exceed the market price of the goods confiscated,
less in the case of imported goods the duty chargeable
thereon.
(2) Where any fine in lieu of confiscation of goods is
imposed under sub-section (1), the owner of such goods or
the person referred to in sub-section (1), shall, in addition,
be liable to any duty and charges payable in respect of
such goods.]
xxxx xxxx xxxx"
24
C/40549,40553&40610/2024
20. The question raised by the appellant that when
the goods have been re-exported, the question of
confiscation of goods under Section 111(l) and (m) of the
Customs Act 1962 does not arise and that no redemption
fine could be imposed for goods re-exported is like putting
the cart before the horse. Confiscation of offending goods
under Sections 111(l) and (m) is an action precedent to
allowing the same to be redeemed under Section 125 of the
Customs Act 1962. The permission for re-export of goods
that have been confiscated and sought to be redeemed, is an
administrative order emanating from the importer's request
for re-export of the goods and is not flowing from Section
125 of the Customs Act 1962. After confiscation, once the
title of the property vests with Central Government as under
Section 126, the re-export wouldn't be possible till the same
are redeemed, of course on payment of fine imposed under
Section 125. Redemption and re-export come into operation
only after the importer gets back title to the confiscated
goods on paying the redemption fine. That the permission for
re-export has been bundled and passed in a quasi-judicial
order pertaining to the confiscation and redemption of goods
is only for administrative convenience.
21. Thus, an order permitting re-export of goods is
sequentially a separate process which would come into play
25
C/40549,40553&40610/2024
only after the importer redeems the confiscated goods.
Simply because the decision is bundled along with a quasi-
judicial order will not change the sequence of events. This
being so confiscation of goods under Section 111(l) and (m)
of the Customs Act, 1962 is a must before the permission for
the export of the said goods is given at the discretion of the
Adjudicating Authority. Further, such a permission gives a
certainty to the action the importer is permitted to take post
redemption of the goods. It also makes it easier for the
importer, who does not have to file a fresh application for
export post redemption of the goods and await an uncertain
outcome. The Appellants averment in this regard is hence
rejected.
22. Having considered and given our findings on the
submissions of the Appellant, we now turn our attention to
the two issues which are before us, viz. whether redemption
fine and penalties are imposable on the goods which are
permitted to be re-exported.
23. We find that identical issues came up for
consideration before the Larger Bench of this Tribunal in
Hemant Bhai R. Patel Vs Commissioner of Customs [2003
(153) ELT 226 (Tri-LB)] and the Larger Bench held that it is
open to the adjudicating authority to impose redemption fine
26
C/40549,40553&40610/2024
as well as penalty even when permission is granted for re-
exporting the goods. Relevant portions of the decision of the
Larger Bench read as follows: -
"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 re-export 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
27
C/40549,40553&40610/2024
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.
..
..
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 28 C/40549,40553&40610/2024 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 29 C/40549,40553&40610/2024 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.
...
...
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 re-export the same subject to the relevant rules. A permission granted for re-export 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."
24. Further, we find that identical issues also came up for consideration before this Tribunal in the case of M/s.
Scania Commercial Vehicles India Pvt. Ltd. vs Commissioner of Customs, Chennai, which was decided recently in favour of 30 C/40549,40553&40610/2024 Revenue in Final Order No. 40621/2024 dated 07.06.2024 by placing reliance on the decision of Larger Bench of this Tribunal in Hemant Bhai R. Patel Vs Commissioner of Customs [2003 (153) ELT 226 (Tri-LB)]. Relevant portions of the decision in Final Order No. 40621/2024 dated 07.06.2024 read as under:-
"6. Heard both sides. The question that needs to be answered is whether;
A) when the goods have been re-exported, the question of confiscation of goods under Section 111(d) of the CA 1962 arises.
B) no redemption fine is imposable on the goods that are re- exported.
C) no penalty under Section 112(a) can be imposed when goods are re-exported."
....
....
13. When goods are imported in breach of statutory provisions, Section 111(d) of the CA 1962 squarely applies as the goods become offending goods liable for confiscation. Confiscation of goods in the situation of a statutory breach by imported 'prohibited goods', is not discretionary. Section 111(d) of the CA 1962 reads as under;
111. Confiscation of improperly imported goods, etc.
- The following goods brought from a place outside India shall be liable to confiscation:-
(d) any goods which are imported or attempted to be imported or are brought within the Indian customs waters for the purpose of being imported, contrary to any prohibition imposed by or under this Act or any other law for the time being in force;
In its judgment in Zunjarrao Bhikaji Nagarkar v. Union of India [1999 (112) E.L.T. 772 (S.C.)], the Hon'ble Supreme Court examined the meaning of the word "liable" in the context of section 11AC of the Central Excise Act, 1944 31 C/40549,40553&40610/2024 ("the person who is liable to pay duty as determined under sub-section (2) of section 11A shall also be liable to pay a penalty equal to the duty so determined :") and Rule 173Q of the Central Excise Rules, 1944, ("then, all such goods shall be liable to confiscation and the manufacturer, producer, registered person of a warehouse or a registered dealer, as the case may be, shall be liable to a penalty."), which are similar to the context in this case. The Hon'ble Court held as under;
30. . . . What is the significance of the word "liable" used both in Rule 173Q and Section 11AC? Under Rule 173Q apart from confiscation of the goods the person concerned is liable to penalty. Under Section 11AC the word "also" has been used but that does not appear to be quite material in interpreting the word "liable" and if liability to pay penalty has to be fixed by the adjudicating authority. The word "liable" in the Concise Oxford Dictionary means, "legally bound, subject to a tax or penalty, under an obligation". In Black's Law Dictionary (sixth edition), the word "liable' means, "bound or obliged in law or equity; responsible; chargeable; answerable; compellable to make satisfaction, compensation, or restitution.... Obligated; accountable for or chargeable with. Condition of being bound to respond because a wrong has occurred. Condition out of which a legal liability might arise.... Justly or legally responsible or answerable."
31. When we examine Rule 173Q it does appear to us that apart from the offending goods which are liable to confiscation the person concerned with that shall be liable to penalty up to the amount specified in the Rule. It is difficult to accept the argument of the appellant that levy of penalty is discretionary. It is only the amount of penalty which is discretionary. Both things are necessary : (1) goods are liable to confiscation and (2)) person concerned is liable to penalty."
(emphasis added) Hence there is no discretion with the Proper Officer, not to confiscate goods that are found liable to such action as per section 111(d) of the CA 1962. As per the discussion above the Customs Act only provides a distinction between 'prohibited goods' and 'other goods' under Section 125(1) of the CA 1962 for the purpose of allowing redemption of the goods.
32C/40549,40553&40610/2024
14. From the discussions it is clear that an order permitting re-export of goods is sequentially a separate process which would come into play only after the importer redeems the confiscated goods. Simply because the decision is bundled along with a quasi-judicial order will not change the sequence of events. This being so confiscation of goods under Section 111(d) of the CA 1962 is a must before the administrative permission for the export of the said goods is given at the administrative discretion of the Proper officer. Appellants averment in this regard are hence rejected. No redemption fine is imposable on the goods that are re- exported.
15. The appellant has stated that it is a settled position of law that no redemption fine is imposable on the goods that are re-exported. We find that once goods are imported in contravention of any provisions of the CA 1962 they are liable for confiscation. Any breach of a statutory obligation under the Customs Act is a blameworthy conduct by the assessee. In case the goods involved are 'prohibited goods' it is within the discretion of the Proper Officer to absolutely confiscate the goods or to allow it to be redeemed on payment of a fine. To release prohibited goods without imposing a fine is not a valid option. After the appellant informed the Proper Officer that they were not in a position to fulfill the conditions of EPR 1986, it was incumbent on the Officer to confiscate the prohibited goods imported in violation of the said Rules. Once the offending goods are confiscated the title of the goods comes to be held by government and the mechanism for the importer to get back possession of the goods is by paying a redemption fine as decided by the Proper Officer. Hence the goods can only be taken repossession of with title by the importer, if he pays a fine.
16. The appellant has stated that it is a settled position of law that no redemption fine is imposable on the goods that are to be re-exported. We have earlier seen that for the 33 C/40549,40553&40610/2024 Proper Officer to allow the redemption of prohibited goods is part of his discretionary jurisdiction. No court has laid down the law that prohibited goods, imported without authorization, are to be released for re-export without payment of redemption fine. Such a stance would only encourage importers smuggling / making improper import of goods, to take a chance with the law and if caught request for re-export of the offending goods without a fine. It would also be discriminatory that for the same offence the intended nature of clearance of the confiscated goods would determine the imposition of fine i.e. if the offending goods are cleared for home consumption fine is to be imposed and if the importer requests for its export, no fine can be imposed. The position is legally untenable. The offence does not get cured by the intended destination of the goods. Confiscated goods can be redeemed either for home consumption / warehousing or for export only on payment of a fine. I find that the impugned order is legal and proper and no interference in the discretion exercised by the Proper Officer is called for. The Hon'ble Supreme Court in its judgment in Duncan Industries Ltd. and Anr Vs Union of India [AIR 2006 SC 3699 / 2006 (3) SCC 129] held as under;
"We are broadly in concurrence with the reasoning of the High Court that in matters of administrative discretion it is not open to the courts to interfere in minute details, except on grounds of mala fides or extreme arbitrariness. Interference should be only within very narrow limits, such as, where there is a clear violation of a statute or a constitutional provision, or extreme arbitrariness in the Wednesbury sense."
The appellants averments in this regard are hence rejected. No penalty under Section 112(a) cannot be imposed when goods are re-exported.
18. A penalty is the result of a breach of statutory duty. The main object behind the imposition of penalty is deterrence. Re-export of the goods does not cure the breach of 34 C/40549,40553&40610/2024 statutory duty already committed. While a fine is imposed on the redemption of offending goods imported in breach of law, a penalty is levied on a person responsible for the breach of statutory duty. No interfere should ordinarily be made by an appellate body, in the discretionary order passed by a lower authority, just because another view might be possible, except on grounds of mala fides or extreme arbitrariness. No such ground has been made out in this case. Hence this plea also does not have any merit and is rejected.
19. We shall next examine the judgments cited by the appellant. Reliance is placed by them in this regard on the following judgments;
(a) Siemens Limited v. Collector of Customs [1999 (113) E.L.T. 776 (S.C.)].
(b) Sankar Pandi v. Union of India [2002 (141) E.L.T. 635 (Mad.)], upheld by the Hon'ble Supreme Court in Union of India v. Sankar Pandi [2018 (360) E.L.T. A214 (S.C.)].
(c) M.K.A. Chinnasamy Nadar & Sons v. CC, Tuticorin [2021 (378) E.L.T. 511 (Tri. - Chennai)]
(d) M/s. Akshara & Co. v. CC, Chennai [2022 (3) TMI 825
- CESTAT CHENNAI]
(e) Royal Import and Exports v. CC, Tuticorin [2021 (377) E.L.T. 865 (Tri. - Chennai)
(f) Selvam Industries Ltd., v. Commissioner of Customs, Tuticorin reported in 2021 (377) ELT 458 (Tri Chennai)
(g) Lalkamal Enterprises v. Commissioner of Customs, Chennai I reported in 2018 (364) ELT 856 (Tri Chennai)
(h) Skylark Office Machines v. Commissioner of Customs, Chennai [2020 (374) E.L.T. 99 (Tri. - Chennai)
(i) M/s. SDS Ramcides Crop Science Pvt. Ltd. v. CC, Chennai II [2023 (7) TMI 891 - CESTAT CHENNAI]
20. As regards the judgments, the appellant has stated that as per the decision of the Hon'ble Supreme Court in Siemens Limited (supra) and Sankar Pandi (supra), in a case of re-export, redemption fine or duty cannot be imposed. We find that the Hon'ble Supreme Court has not laid down any such law in the said case. Its decision to order refund of the redemption fine were based on the peculiar facts of the case. So also in the case of the Hon'ble High Court in Sankar Pandi. The other judgments cited by the appellant are based on decisions of the Tribunal. In this 35 C/40549,40553&40610/2024 regards I propose to examine the Larger Bench decision in the case of Hemant Bhai R. Patel (supra), cited by Revenue, which is binding on a Bench of lesser strength. The question examined was that when re-export is permitted no redemption fine can be imposed, which is the same issue involved here. The Larger Bench of this Tribunal answered the question as under;
"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 re-export the same subject to the relevant rules. A permission granted for re-export 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."
Judicial discipline requires that we follow the judgment of the Larger Bench. The appellant's plea is hence rejected.
21. For the reasons discussed, the impugned order is upheld and the appeal filed by the appellant is rejected and disposed of accordingly."
25. Thus, the ratio decidendi of both the above decisions is squarely applicable to the facts obtaining in this appeal and both the questions raised on imposition of redemption fine in case of allowing re-export of the imported impugned goods and levy of penalties are answered against the appellants.
36C/40549,40553&40610/2024
26. The Appellant has placed reliance on the following judgments: -
i. Sankar Pandi versus Union of India reported in 2002 (141) ELT 635 (Madras High Court) ii. Selvam Industries Ltd. versus Commissioner of Customs, Tuticorin reported in 2021 (377) ELT 458 (Tri. Chennai) (SMB) iii. Rose Mary International versus Comm. of Customs passed in Customs Appeal No. 41693 of 2019(SMB) iv. Simplex Engineers & Traders versus Commissioner of Customs (Import) passed in Customs Appeal No. 41339 of 2019(SMB) v. OMS Sivajothi Mills versus The Commissioner of Customs passed in Customs Appeal No. 40784 of 2019(SMB) vi. Lalkalam Enterprises versus Comm. of Customs Chennai reported in 2018 (364) ELT 856 (Tri. Chennai) (Divisional Bench) vii. Regal Impex versus Comm. of Customs ICD TKD New Delhi reported in 2016 (332) ELT 835 (Tri. Del) (Divisional Bench) viii. Comm. of Customs Visakhapatnam versus HBL Power Systems Ltd. reported in 2019 (367) ELT 154 (AP High Court) These decisions are of no avail to the appellant in light of the discussions made in the case of Scania Commercial Vehicles India Pvt. Ltd. Vs. Commissioner of Customs, Chennai [Final Order No. 40621/2024 dated 07.06.2024] and the Tribunal's Larger Bench decision in the case of Hemant Bhai R. Patel Vs 37 C/40549,40553&40610/2024 Commissioner of Customs [2003 (153) ELT 226 (Tri-LB)] which we have discussed above.
27. We find that the judgment of Hon'ble Telangana and Andhra Pradesh High Court in the case of HBL Power Systems Ltd. is on a different issue of whether the Adjudicating Authority has the power to impose the condition that the goods should be re-exported after redemption.
28. We observe that the appellant has stated that as per the decision of the Hon'ble Supreme Court in Siemens Limited (supra) and Sankar Pandi (supra), in a case of re-
export, redemption fine or duty cannot be imposed. We find that the Hon'ble Supreme Court has not laid down any such law in the said case. Siemens Limited was only a case where timelines for re-export were discussed and no law was laid.
Its decision to order refund of the redemption fine was based on the peculiar facts of the case. So also, in the case of the Hon'ble High Court in Sankar Pandi. The other judgments cited by the appellant are based on decisions of the Tribunal where the facts were different and the legality of Sections 125 and 126 were not placed before the Courts.
29. The case of Extreme Electronics cited supra limited the observation of Tribunal to the decision of 38 C/40549,40553&40610/2024 provisional release of goods, that too only for re-export with a rider that the same shall not influence the adjudication of the case. As such, the Larger Bench decision in the case of Hemant Bhai R. Patel (supra), cited by Revenue, is binding on a Bench of lesser strength.
30. To conclude, the questions examined therein were whether when re-export is permitted, can redemption fine be imposed and penalties can be levied are the same issues involved here. The Larger Bench of this Tribunal answered both the questions as under: -
"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 re-export the same subject to the relevant rules. A permission granted for re-export 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."
In compliance to judicial discipline, we follow the judgment of the Larger Bench, and, the appellants' pleas are hence 39 C/40549,40553&40610/2024 rejected. Thus, we hold that imposition of redemption fine even in case of allowing reimport and imposition of penalties is justified and so, are upheld.
31. In view of our above findings, we reject the appeal and uphold the impugned Order-in-Original No. 106063/2024 dated 05.04.2024 passed by the Commissioner of Customs, Chennai-II.
(Order pronounced in open court on 26.09.2025) Sd/- Sd/-
(AJAYAN T.V.) (VASA SESHAGIRI RAO) MEMBER (JUDICIAL) MEMBER (TECHNICAL) MK