Case Law Details
Commissioner of Customs (Port) Vs Karan Impex (CESTAT Kolkata)
Introduction: In a recent order by the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) Kolkata, the case of Commissioner of Customs (Port) vs. Karan Impex took center stage. The appeal revolved around the redemption fine and penalty imposed on Karan Impex for the import of old and used worn clothing. The adjudicating authority had enhanced the declared value, leading to confiscation and the imposition of redemption fine and penalty.
Detailed Analysis: Karan Impex had imported old and used worn clothing, fumigated and assessed after value enhancement. The declared value per kg was increased from US$ 0.45 to US$ 0.60. Additionally, redemption fine and penalty were levied based on the classification of the items under Tariff Item No.63090000 and the restrictions imposed by the Foreign Trade Policy 2009-2014.
The Adjudicating Authority imposed a redemption fine and penalty at rates of 19.5% and 7.8%, respectively, of the assessed value. The Revenue appealed, seeking an enhancement of the redemption fine and penalty.
The Tribunal referred to a similar case involving Venus Traders, wherein it observed that Section 111(m) of the Customs Act, which deals with goods not corresponding to the entry made, might not be applicable when proceedings are initiated before the filing of bills of entry. The Tribunal upheld the confiscation under Section 111(d) for the import of ‘old and serviceable garments’ without the required import license. However, it reduced the redemption fine and penalty, considering the failure to comply with licensing requirements.
Following the precedent, the CESTAT Kolkata upheld the redemption fine and penalty imposed on Karan Impex by the adjudicating authority. The Tribunal noted the failure of the original authority to disclose the margin of profit that prompted the fine and penalty. While acknowledging the confirmed duties and penalties, the Tribunal considered the reduction of redemption fine to 10% of the ascertained value and penalty to 5% as sufficient to meet the ends of justice.
Conclusion: The CESTAT Kolkata’s decision in the Commissioner of Customs vs. Karan Impex case underscores the significance of complying with licensing requirements for restricted imports. The Tribunal’s adherence to the principles of justice resulted in the confirmation of redemption fine and penalty at reduced rates. Importers should take note of this case, as it emphasizes the importance of accurate declarations and adherence to trade policies to avoid penalties and confiscation.
FULL TEXT OF THE CESTAT KOLKATA ORDER
The Revenue is in appeal against the impugned order.
2. The facts of the case are that the respondent imported old and used worn clothing, completely fumigated which were assessed after value enhancement, confiscation and imposition of redemption fine and penalty.
2.1 The declared value was enhanced from US$ 0.45 per kg to US$ 0.60 per kg and redemption fine and penalty were also imposed on the ground that the old and used worn clothing articles are classifiable under Tariff Item No.63090000 of the First Schedule of the Act and is restricted item for import as per Para 2.17 of Foreign Trade Policy 2009-2014, read with ITC HS Classification of import and export items 2009-2014. Import of goods under Tariff Item No.63090000 is restricted and their import is allowed only against the valid specific license.
2.2 The Adjudicating Authority has imposed redemption fine and penalty at the rate of 19.5% & 7.8% of the assessed value respectively. In some of the cases where goods are not available, no redemption fine is imposed.
2.3 Against the said orders, the Revenue is before us for enhancement of redemption fine and penalty.
3. Heard the parties and perused the records.
4. We find that this issue came up before this Tribunal in the case of Venus Traders Vs. Commissioner of Customs (Import), Mumbai reported in 2019 (365) ELT 958 (Tri.-Mumbai), wherein this Tribunal has observed as under :
“4. We find that proceedings initiated against most of the imports commenced even before the filing of bills of entry. In these circumstances, invoking of Section 111(m) which applies to ‘111(m) any goods which do not correspond in respect of value or in any other particular with the entry made under this Act or in the case of baggage with the declaration made under Section 77 in respect thereof or in the case of goods under transhipment, with the declaration for transhipment referred to in the proviso to sub-section (1) of Section 54;’ does not appear to be in conformity with law. Confiscation of goods is empowered when material particulars are withheld or incorrectly recorded in the declaration which, for the purpose of Section 111 of Customs Act, 1962, is the bill of entry. Therefore, whatever would be the finding on the description or value, Section 111(m) is not liable to be invoked in the absence of a declaration.
5. Confiscation under Section 111(d) has been invoked for import of ‘old and serviceable garments’ without an import licence as prescribed under Chapter 2 of the Foreign Trade Policy. Want of such licence is not disputed by the appellants. Consequently, confiscation under Section 111(d) of Customs Act, 1962 in the impugned order cannot be faulted. Release of confiscated goods to the importer is contingent upon fine in lieu imposed under Section 125 of Customs Act, 1962. The redemption fine is not, in terms of the statute, permitted to exceed the market price of the goods and the undertaking of a survey is not improper. However, such a survey, more than a decade after the import and, that too, after remand was ordered by the Tribunal, does not appear to the intent of the decision of the Tribunal. The remand order is specific in directing that the margin of profit, ascertained for computation of the fine, should be made known to the appellant. It is, therefore, the manner in which the original authority had, in the first instance, ascertained the margin of profit that was required to be supplied to the appellants. The original authority has patently failed to do so and has tried to rectify the deficiency of such ascertainment by a process that is not only bereft of validity but also inconsistent with the remand order. The Tribunal, in its remand order, had allowed determination of value of misdeclared goods. That part of the remand order appears impossible to comply with ex post facto in the light of the finding that
‘4. From the examination report (only one consignment was subjected to 100% examination on first check basis), which was already on record it appeared that imports in these cases were of a mixed lot consisting of used garments and also 40% to 50% mutilated single cut garments.
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20. Before proceeding further it is pertinent here to state that the exact description and quantity of goods, container wise, cannot be determined at this stage since no 100% examination of all containers was done at the time of clearance of goods. At any event all the importers had agreed during the personal hearing conducted by the then Commissioner of Customs (I), that the impugned goods were either old and used garments other than rags or they were not mutilated as per the norms laid down in this regard. It is on this agreement for the nature/description of goods, that we have to proceed further in this case. As regards the margin of profit, a market survey was done whose salient features are as follows :’
in the impugned order.
6. Though the appellants question the margin of profit and the validity of market survey, there is no serious resistance to the ascertained value.
7. Considering the various issues and submissions made and the failure of the original authority to comply with the direction in remand to disclose the margin of profit that prompted the fine and penalty, the matter would normally have to be remitted back by another remand order. However, the paucity of evidence and the negligible scope for ascertainment at this stage deters us from doing so. In the light of the admitted failure to comply with the licensing requirements, we uphold the confiscation of the goods under Section 111(d) of Customs Act, 1962. However, it is our opinion that the ends of justice would be served by reducing the redemption fine to 10% of the ascertained value and penalty to 5%.”
5. Against the confirmed duties and the penalties the Redemption Fine imposed by the Adjudicating Authority, the Respondent has not filed any appeals.
6. Following the above cited decision of this Tribunal, we hold that the redemption fine and penalty imposed on the respondents by the adjudicating authority is sufficient to meet the end of justice. Therefore, the redemption fine and penalty confirmed by the adjudicating authority are upheld.
7. Consequently, we do not find any infirmity in the impugned order and the same are upheld.
8. The appeals filed by the Revenue are dismissed.
(Dictated and pronounced in the open Court.)
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