Custom, Excise & Service Tax Tribunal
Ms Nathi Mal Rugan Mal vs Nhava Sheva - I on 24 September, 2018
IN THE CUSTOMS, EXCISE & SERVICE TAX
APPELLATE TRIBUNAL
WEST ZONAL BENCH AT MUMBAI
COURT No. I
APPEAL Nos. C/87266,87268/2018
(Arising out of Orders-in-Appeal No. 498(Gr.I)/2018
(JNCH)/Appeal-II dated 24.5.2018 and 512 (Gr.I)/2018
(JNCH)/Appeal-II dated 25.5.2018 passed by Commissioner of
Customs (Appeals), Nhava Sheva, Raigad)
Nathi Mal Rugan Mal Appellant
Vs.
Commissioner of Customs, Nhava Sheva, Raigad Respondent
Appearance:
Shri B.R. Tripathi, Advocate, for appellant Shri Manoj Kumar, Assistant Commissioner (AR), for respondent CORAM:
Hon'ble Dr. D.M. Misra, Member (Judicial) Hon'ble Mr. Sanjiv Srivastava, Member (Technical) Date of Hearing: 24.9.2018 Date of Decision: 24.9.2018 ORDER No. A/87587-87588/2018 Per: Sanjiv Srivastava These appeals are directed against the order of Commissioner (Appeals) up holding the order of Joint Commissioner of Customs Appr. Group-I, JNCH. By the said two orders similarly worded Joint Commissioner has held as follows:
2 C/87266,87268/2018 "15 I confiscate the goods having declared assessable value of Rs 8,38,950/- imported vide above mentioned Bill of Entry No 5633431 dated 19.03.2018 under provisions of section 111(d) of the Customs Act, 1962.
Howver I give the importer an option to redeem the goods for re-export only on payment of Redemption Fine of Rs 1,00,000/- (Rs One Lakhs only) under section 125 of the Customs Act, 1962. I order the fine imposed should be paid within in a period of one hundered and twenty five days from the date of option given, such option shall become void, unless an appeal against this order is pending"
16. I impose a penalty of Rs 50,000/- (rupees Fifty Thousand only) on importer M/s Nathi Mal Rugan Mal under section 112(a) of the Customs Act, 1962
17. This order is passed without prejudice to any other action that may be taken against the abovementioned firms and persons under the provision of the Customs Act, 1962 and/ or any other law, for time being in force in the Republic of India."
In the second order goods imported vide Bill of entry No 5372538 dated 27.02.2018 having declared assessable value of Rs 51,55,575/- have been confiscated and allowed to be redeemed for re-export in on payment of 3 C/87266,87268/2018 redemption fine of Rs 1,00,000/- (Rs One Lakh Only). A penalty of Rs 50,000/- has been imposed in this case. 2.0 In both the appeal, appellant have made the following prayer-
"1 In view of the foregoing, it is very sincerely and humbly prayed that the Hon. Bench of CESTAT may kindly allow the appeal by setting aside O-in-O as well as the O-in-A by ordering the release of goods for home consumption on payment of such redemption fine which may deem just, fair and equitable. The entire amount of penalty of Rs 50,000/- may please be set aside,
2. Any other relief which may deem fit and proper in the facts and circumstances of the case."
3.1 We have heard Shri B R Tripathi, Advocate for the appellant and Shri Manoj Kumar, Assistant Commissioner, Authorized Representative in the matter. 3.2 Arguing for the Appellants learned Advocate submitted that his main grievance is against the imposition of condition of re-export for redeeming the goods. He submitted that imposition of the said condition is neither contemplated in law or justified. He submitted that Section 125, under which the confiscation of goods is adjudged, requires adjudicating authority to determine whether the goods are to be confiscated or not. In case adjudicating authority finds 4 C/87266,87268/2018 that the goods are prohibited goods, he should confiscate them absolutely and in other cases allow the goods to be redeemed on payment of redemption fine adjudged by him. The said section do not allow any liberty to impose any further condition for redemption of the goods confiscated. In support of the said preposition he relied upon various authorities listed below:
i. Rational Art & Press Pvt Ltd vs Commissioner of Customs (Imports) Mumbai [2007 (215) ELT 522 (T)] ii. Oetiker India Pvt Ltd. Versus Commissioner of Customs (Import) Nhava Sheva [2016 (340) ELT 226 (T-
Mum)];
3.3 Arguing for revenue learned AR Supported the order of lower authorities and submitted that option to re-export the goods on payment of redemption fine has been allowed by the adjudicating authority. In case the goods are not re-exported they will automatically stand absolutely confiscated. Since the goods are found to be prohibited goods adjudicating authority has rightly confiscated the goods and subject to the re-export and redemption fine under section 125. He relied upon the decisions of Apex Court as follows in his support i. Collector of Customs Bombay Vs Elephanta Oil and Industries Ltd. [2003 (152) ELT 257 (SC)] 5 C/87266,87268/2018 ii. Alchemist Foods Ltd Vs Additional Commissioner of Customs [2017 (356) ELT 257 (Del)] 4.1 The issue is under a very narrow compass, and the question of law which needs to be considered is "Whether adjudicating authority was correct in imposing the condition of re-export while allowing the goods to be redeemed on payment of redemption fine." 4.2 For better appreciation of law, it is necessary to reproduce the provisions of Section 125 of the Customs Act, 1962 which empower the officer of Customs to adjudge the issue in relation to confiscation of goods under various circumstances:
"SECTION 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:
Provided that where the proceedings are deemed to be concluded under the proviso to sub-section (2) of section 28 or under clause (i) of sub-section (6) of that section in respect of the goods which are not prohibited or restricted, the provisions of this section shall not apply:
6 C/87266,87268/2018 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.
(3) Where the fine imposed under sub-section (1) is not paid within a period of one hundred and twenty days from the date of option given thereunder, such option shall become void, unless an appeal against such order is pending.
Explanation.--For removal of doubts, it is hereby declared that in cases where an order under sub-section (1) has been passed before the date** on which the Finance Bill, 2018 receives the assent of the President and no appeal is pending against such order as on that date, the option under said sub-section may be exercised within a period of one hundred and twenty days from the date on which such assent is received." 4.3 Section 125 of the Customs Act 1962 has been considered by the larger bench of Tribunal in case of A K Jewellers [2003 (155) ELT 585 (T-LB)] and it has been held as follows:
"10. After going through the provisions of Section 125 of the Customs Act, we find that provisions of this section do not specifically provide that an option may be given to redeem the goods for re-export. It empowers an adjudicating authority in case of goods the import or 7 C/87266,87268/2018 export of which is prohibited under Customs Act or under any law in force, to grant an option to pay in lieu of confiscation such fine as the said authority thinks fit. The provisions of this section equally apply to the goods to be exported as well as imported goods. Where the goods which have been tendered for export are ordered to be confiscated and an option to redeem the goods on payment of fine, it would follow that option is for the export of the goods. This is no doubt different from re- export. Re-export is a facility permitting export of goods which have already been permitted to be imported. Except in cases where import is prohibited by any law, those goods which have been imported may be permitted to be exported. The formal procedure of filing a shipping bill and observing other formalities relating to export of goods would have to be followed. There is no prohibition on the adjudicating authority from permitting re-export of the goods. When an adjudicating authority after ordering confiscation of imported goods permits their re-export, he is in effect first ordering the redemption of the goods on payment of fine and thereafter permitting them to be re- exported. Each of these two actions is independent and is permitted by law. An order whereby both are combined, therefore, is not contrary to law.
11.If we take up the issue from another angle that where the adjudicating authority allows re-export of the prohibited goods and in such a case, by holding that the order of confiscation and redemption fine is not justifiable, this will make the provisions of Section 125 of the Customs Act redundant which specifically empowers the adjudicating authority to exercise his powers in respect of prohibited goods. As confiscation and redemption fine in lieu of confiscation and re-export are two independent actions, hence the view taken that in 8 C/87266,87268/2018 case the assessee is allowed to re-export, the confiscation and redemption fine is not justified, is not a correct view. Further, we find that this view is also taken by the Hon'ble Supreme Court in the case of C.C. v. Elephanta Oil & Industries Ltd. reported in 2003 (152) E.L.T. 257 (S.C.) rejected the contention of the importer that once the imported article is re-exported as directed by the department, there is no question of levying any penalty or redemption fine. The Hon'ble Supreme Court held that power to levy the penalty under Section 112 of the Customs Act for improper importation of goods is different from the power of confiscation of goods under Section 125 of the Customs Act. The question of law referred to the Larger Bench is answered accordingly."
4.4 Further in case of Hemant Bhai R Patel [2003 (153) E.L.T. 226 (Tri. - LB)] Larger Bench of Tribunal held as follows:
"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 9 C/87266,87268/2018 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."
4.5 Similarly in case of Kothari Filaments [2002 (144) E.L.T. 80 (Tri. - Kolkata)], on difference of opinion, majority view was expressed as follows:
21.It is relevant to note that while the Learned Member (judicial) holds that no redemption fine is imposable when re-export of goods is allowed, learned Member (Technical) does not hold otherwise. On the other hand, by interpreting the order of the Commissioner the Member (Technical) comes to the conclusion that no permission has been granted by the Commissioner to re-export and therefore the question that Commissioner cannot pass an order granting permission to re-export while imposing redemption fine does not arise in this case. In paragraph 48 of the order impugned the Commissioner refers to the argument as to whether simultaneous imposition of two conditions, namely, (i) imposition of fine in lieu of confiscation and (ii) direction to re-export can co-exist.
Ultimately in paragraph 49 he rejects the request for release of 11.5 MTs of Lithopone and re-export of 10 MTs of Tetracycline. Thereafter in paragraph 50 he orders confiscation of the whole consignment containing 10 MTs of Tetracycline and 11.5 MTs of Lithopone under Section 111(d) and (m) of the Customs Act, 1962 read with Section 119 and Section 3 of the Foreign Trade Development & Regulation Act. An option to redeem the 10 C/87266,87268/2018 confiscated goods was then granted on payment of a fine of Rs. 30 lakhs in lieu of confiscation. Thereafter he observed that the importer may re-export the goods after redemption or take out the goods for home consumption. The above observation cannot be treated as an option given to the importer to re-export. No provision of law has been brought to my notice which gives jurisdiction to the Commissioner in an adjudication proceedings as in the present case to grant permission for re-export. In M/s. Goodyear India Ltd. v. Collector of Customs (Final Order No. A/32/90-NRB, dated 27-12-90) which was followed in Padia Sales Corporation v. Collector of Customs - 1992 (61) E.L.T. 90, it has been held as follows :
"7. The Collector by his order. confiscated the goods. However, as per Section 125 of the Customs Act, 1962 he is empowered to allow the importer to redeem the goods on payment of fine. The imposition of fine only validates the import, in other words, on payment of fine the importer becomes absolute owner of the goods, and he is free to export them subject to the provisions of Customs Act, 1962 and Rules made thereunder. The provision enables the owner to avoid confiscation by paying the fine imposed. However, there is no provision under the Act empowering the Collector to re-export the goods on payment of redemption fine. The order passed by the Collector is, therefore, without jurisdiction. The reliance placed by Ms. Mann on para 128 of the Handbook of Import and Export Procedures 1985-88 is irrelevant to the facts of the case.
8. We, therefore, modify the order of the Collector in the following manner :
"The goods are confiscated, but the appellants are entitled to redeem the same on payment of Rs. 5000/-. Accordingly, we dispose of the appeal."
11 C/87266,87268/2018 In the above mentioned two cases challenge was against the imposition of redemption fine while permitting re- export and in both the cases the Tribunal modified the orders retaining that portion of the order directing confiscation and imposing redemption fine. Direction for re-export was vacated. The position of law as explained in the above decision is that once the redemption fine is paid and the confiscated goods are redeemed the importer becomes the full owner of the goods and it is open to him to deal with the goods as he desires either to use it in domestic consumption or to export the same subject to relevant rules. In the light of the above, there is justification in the view taken by the Learned Member (Technical) that the last sentence in paragraph 50(i) of the order may be treated as an observation with regard to the legal position. This is more so in view of the rejection of the prayer of the importer to release the goods for re- export in paragraph 49 of the order."
4.6 Similar view has been expressed by the tribunal in the decisions cited by the learned counsel. On going through the provisions of section 125 and the above referred decision the position of law emerges as follows:
i. In terms of Section 125, officer adjudging the cases in relation to confiscation of goods shall confiscate the goods absolutely when the goods under adjudication are prohibited goods and in case where the goods are not prohibited he shall still confiscate the goods but allow the goods to redeemed on payment of redemption fine adjudged by him.
12 C/87266,87268/2018 ii. On redemption of the said goods the person redeeming the goods becomes the owner of the goods and he is entitled to deal with the goods in manner he likes. No condition can be imposed by the adjudicating authority for dealing the goods in particular manner after redemption.
iii. In case when the goods are redeemed, and taken for home consumption, the person redeeming the goods is required to pay the duty due on the goods in addition to redemption fine imposed.
iv. The person redeeming the goods can ask for re-
export of the goods if he deems fit.
v. Permission to re-export the goods cannot be
factor for determining the quantum of
redemption fine.
vi. Proceedings for confiscation and imposition of
penalty are separate proceedings and just because goods are allowed to redeemed or allowed to be re-exported the penalty cannot be waived or imposed on lower side.
4.7 In view of the legal position as stated above we are not in position to uphold the order of the lower authorities whereby a condition of re-export has been 13 C/87266,87268/2018 imposed in the proceedings of confiscation under Section 125 of the Customs Act, 1962.
5.0 Thus we modify the orders of the adjudicating authority to delete the condition of re-export imposed by him, and allow the appeal of party to the extent of such modification. The redemption fine and penalties imposed by the adjudicating authority are upheld in toto. Appeals are disposed off accordingly.
(Pronounced in court)
(Dr. D.M. Misra) (Sanjiv Srivastava)
Member (Judicial) Member (Technical)
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