Case Law Details

Case Name : Commissioner Of Customs (Import), Raigad Vs M/s. Finacord Chemicals (P) Ltd. & Ors. (Supreme Court of India)
Appeal Number : Civil Appeal Nos. 1633-1638 Of 2004
Date of Judgement/Order : 08/04/2015
Related Assessment Year :
Courts : Supreme Court of India (986)

Brief facts

It has been held in case of Commissioner Of Customs (Import) V/s. M/S. Finacord Chemicals (P) Ltd. & Ors. it was held by supreme court that, In August, 1991, respondent herein imported  certain containers of  alcohol  under  the description  “Undenatured Ethyl Alcohol’ (Malt Spirit plus or minus 59.3% Vol.) from an  intermediary, M/s. Ravco International Ltd., England (hereinafter  referred  to  as  ‘RIL'(for short).  As per the Department, these imports were under invoiced at pound 1.40 per litre whereas the actual price of the said goods was pound 3.78 per litre.   This  led  to  issuance  of  a  show  cause  notice  dated 28.09.1992 upon the importers/respondents herein.  It was alleged  that  the correct transaction value of the imported goods  was  pound  3.78  per  bulk litre  and  that  the  goods  were  imported   against   invalid   licenses. Accordingly, demand of customs duty was raised against respondent. It also proposed confiscation of the goods and penal action against the respondents. The Collector of   Customs   vide   Order-in-Original   dated 28.02.1995 upheld the mis declaration and undervaluation.

Aggrieved, the respondents filed  appeals  before  the  Customs, Excise and Service  Tax  Appellate  Tribunal  (hereinafter  referred  to  as ‘CESTAT’) and the CESTAT vide  its  final  order  dated  10.09.2003,  partly allowed the appeals  thereby  setting  aside  the  order  of  the  Collector regarding enhancement of the unit price, while upholding that import of  the said goods was unauthorised and was liable for confiscation.   However, the CESTAT reduced the amount of fine imposed and set aside the penalties imposed on the respondents.  Hence the present Appeals.

Held by Hon’ble Supreme Court of India

The Hon’ble Supreme Court stated that as far as the first issue of import  price  of  the  liquor  in question  is  concerned,  the  order  of  the  Collector  reveals  that  the respondents-assessee have relied upon a letter indicating  that  the  goods were imported  at  the  rate  of  UK  pound  1.40  per  bulk  litre.   After discussing elaborately, the Collector rejected   the   authenticity   or evidentiary value of the said letter.  However, apart from this letter, the respondents had also produced invoices and in these invoices price of UK

Pound 1.40 per bulk litre is specifically mentioned.  The Collector has not taken into account or considered the import of these invoices.   On  the other hand, the CESTAT has remarked and rightly so, that when  the  invoices are produced showing the  purchase  price  of  the  goods  in  question  and authenticity of these invoices is not doubted by the Department, these  will form  as  the  primary  evidence  in  support  of  the  contention  of   the respondents that the imported goods were purchased  at  UK  pound  1.40  per bulk litre.  The Hon’ble Court thus, do not find any flaw in the reasoning of the CESTAT while deciding this issue.

The Hon’ble Court further stated that insofar as the reduction of redemption fine as well as the penalty is concerned, the CESTAT has given the following reasons in doing

So: –

“Redemption Fine

In view  of  our  finding  on  issue  (i)  that  the  goods  are  liable  to confiscation as they have been imported without cover of  a  valid  licence. We hold that levy of fine is warranted.  However we note that for the first time in the case of Bussa Overseas Properties Ltd.  Vs.  CC(I)  Mumbai 2002(148) ELT 328, the Tribunal held  that  over-proof  whisky  having  more than 55% alcohol content by vol. is a  concentrate  of  alcoholic  beverages and until this decision, a practice to allow  clearances  of  similar  goods under REP licence was prevalent.  We  also  note  that  a  long  period  has lapsed  since  the  import  and  that  the  goods  are  raw  materials   for manufacture of alcoholic beverages that this is not a case of  duty  evasion as the finding on undervaluation has on set aside  by  us  thereby  reducing the gravamen of the charge.  The assessable value of the goods imported  by FCPL is Rs.15,08,040/- while the assessable value of the goods imported  by SRN is Rs.22,78,578/-.  The fine levied  by  the  Commissioner  on  FCPL  is Rs.51,62,413/- and that of SRN  is  Rs.22,65,006/-.   We  are  not  able  to fathom the logic behind  fixing  the  above  quantum  of  fines.   There is nothing in the impugned order to indicate the basis on which the quantum was arrived at.  Having regard to the above factors including the fact  that the import Policy was liberalised subsequently and that only the  charge  of ITC violation has been sustained by us, we reduce the fine  levied  on  FCPL to Rs. 10 lakhs and on SRN to Rs. 15 lakhs.”

The Hon’ble Court stated that the CESTAT has  given  valid  reasons for reducing the penalty and  fine  and  the  discretion  exercised  by  the CESTAT on valid considerations does not call for  any  interference.

In view of the above the appeal is dismissed.

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