Case Law Details
Sri Sai Graphics Vs Commissioner of Customs (CESTAT Bangalore)
The core issue in these appeals revolves around the fine and penalty to be imposed on the appellant for importing MFDs without adhering to DGFT’s licensing conditions. It was observed by the Tribunal that in many similar cases, when the value is enhanced based on the Chartered Engineer’s certificate without market enquiry, a fine and penalty of 10% and 5% respectively, based on the enhanced value, is deemed just. This stance has been consistently held by the Tribunal in a series of judgments.
The decision of the Tribunal to impose a fine and penalty at 10% and 5% was affirmed by the Karnataka High Court. A recent case, Omex International, also upheld this percentage as the acceptable standard for fine and penalty in similar circumstances.
FULL TEXT OF THE CESTAT BANGALORE ORDER
These four appeals are filed against the Order-in-Appeal No.1033-1036/2017 dt. 26/12/2017 passed by Commissioner of Customs (Appeals), Bangalore.
2. Briefly stated the facts of the case are that the appellant had filed four Bills of Entry between 14/06/2016 and 02/08/2016 declaring the value for the goods imported viz. used Multifunctional Devices (MFDs) without obtaining necessary authorization / licence from the DGFT. Since the impugned goods were declared as used, the Bills of Entry were marked for 1st check examination and after 1st check, it was found being used machines, therefore, the case was referred to a Chartered Engineer for valuation. The Chartered Engineer, Shri Garuda Prasad G.K., by report dt. 20/06/2016 indicated that the equipments will have residual life of more than 5 years. The declared value of imported goods were ascertained by the Chartered Engineer. A copy of which was handed over to the appellant. Since the photocopier machines / Digital multifunction Print and copying machines are restricted for import and permitted only on authorization / licence issued by the DGFT. The importer was directed to place valid authorization from DGFT. As the appellant could not produce valid authorization, the transaction value was rejected and it was enhanced on the basis of Chartered Engineer’s certificate. Aggrieved by the said order, they filed appeal before the learned Commissioner(Appeals) who in turn, rejected their appeals. Hence the present appeals.
3.1. Learned advocate for the appellant has submitted that in the present appeals, the appellants are not contesting the enhancement of value but they are challenging the imposition of quantum of fine and penalty. He submitted that in the impugned order, the learned Commissioner(Appeals) has confirmed the redemption fine approximately 25% of the enhanced value and penalty @ 10% of the said value of the goods. He has submitted that the said order is contrary to the series of judgments passed by this Tribunal and hence deserves to be set aside. He has further submitted that the fine and penalty in similar types of cases even in repeated imports was, pegged at 10%/5% respectively of the enhanced value. He referred to the following judgments:
i. Selection Enterprises Vs. CC, Hyderabad [2008(232) ELT 755 (Tri. Bang.)]
ii. Rex Printing press Vs. CC, Kolkata [2005(184) ELT 73 (Tri. Bang.)]
iii. CC&CE, Hyderabad-II Vs. Komma Reddy Computer Services [2008(227) ELT 393 (Tri. Bang.)]
iv. Navpad Enterprises Vs. CC, Cochin [2009(235) ELT 376 (Tri. Bang.)]
v. CC, Cochin Vs. Dilip Ghelani [2009(248) ELT 888 (Tri. Bang.)]
vi. Champion Phototstat Industrial Corporation Vs. CC, ICD, TKD, New Delhi [2021 (376) ELT 394 (Tri. Del.)]
vii. Omex International Vs. CCE, New Delhi [2015 (328) ELT 579 (Tri. Del.)]
3.2. He has also submitted that the principle laid down by the Tribunal in Navpad Enterprises’ case has been upheld by the Hon’ble Karnataka High Court. Further, he has submitted that the judgment cited by the Revenue viz. Unitech Enterprises Vs. CC, Chennai [2012(279) ELT 236 (Tri. Chennai)] which was upheld by the Hon’ble Madras High Court as reported 2021(377) ELT 283 (Mad.)] is clearly distinguishable. In the order of the Hon’ble Madras High Court, even though the Tribunal’s finding was upheld on merit, no question of law was framed relating to fine and penalty; accordingly no observation has been recorded on this issue. Therefore, the said judgment cannot be applicable to the present case in deciding the quantum of fine and penalty.
4. Per contra, the learned AR for the Revenue reiterated the findings of the learned Commissioner(Appeals). He has submitted that since the appellant had repeatedly imported the goods in violation of the conditions, the imposition of fine to the extent of 25% and penalty of 10% is justifiable. In support, he has referred to the judgment of the Tribunal in the case of Unitech Enterprises (supra).
5. Heard both sides and perused the records.
6. The short issue involved in the present appeals relate to quantum of fine and penalty imposable on the appellant who imported MFDs in violation of the licensing conditions of DGFT. I find that the Tribunal in a series of judgments referred to by the learned counsel consistently held that when the value has been enhanced on the basis of certificate by the Chartered Engineer without market enquiry, the imposition of fine and penalty @ 10% and 5% taking note of the enhanced value would meet the ends of justice. In Navpad Enterprises case, the Tribunal at para 6 has observed as follows:-
6. On a very careful consideration of the issue, we find that the value declared by the appellant has already been enhanced by the Revenue on the basis of the Chartered Engineers certificate. It is seen that there is no evidence brought out by the revenue to show that the appellants had paid more than what he had declared to the customs. Therefore, in such circumstances, the Tribunal took a view to impose fine and penalty at 10% and 5% in many of the cases cited by the appellant. As this Bench cannot deviate from the ratio of its own decision, we find that in all these cases the fine and penalty should be fixed only at 10% and 5% of the value of the imported goods determined by the Chartered Engineer, respectively. Therefore, by following the ratio of the several decisions of this Bench we dispose of these appeals on the above terms.
The said judgment was later upheld by the Karnataka High court. Also recently in Omex International’s case (supra), it was held that the redemption fine and penalty in such cases be 10% and 5% of the value. Following the aforesaid precedent, the impugned order is modified and fine and penalty in each of the cases are reduced to 10% and 5% of the enhanced value. Appeals are disposed of as above.
(Pronounced in open court on 08/06/2023)
