Redemption fine & penalty imposed without final assessment is not permissible

Redemption fine & penalty imposed by Revenue Department without final assessment is not permissible

The Hon’ble CESTAT Chandigarh in matter of M/s J.S. Steel Traders v. the Commissioner of Customs, Ludhiana [Custom Appeal No. 60037 of 2021, Final Order No. 60840/2021 dated May 24, 2021] set aside the order passed by the Revenue Department, imposing redemption fine and penalties on the assessee. Held that, without finalization of the assessment, re-assessment of the bill of entry and duty paid by the assessee under Section 18(2) of the Customs Act cannot be adjusted and the duty, interest, 15% penalty in terms of Section 28(5) of the Customs Act, 1962 (“the Customs Act”) paid by the assessee is sufficient.

Facts:

M/s J.S. Steel Traders (“the Appellant”) imported consignment of heavy metal scrap. On physical verification consignment found to be of secondary and defected MS Sheets. The Appellant sought provisional release of the goods under Section 110 A of the Customs Act and the goods were allowed to be released provisionally. At the time of taking possession of the goods, the Appellant paid entire amount of the differential duty along with interest thereon and 15% duty as penalty in terms of Section 28(5) of the Customs Act.

Subsequently a Show Cause Notice (“SCN”) was issued by the Commissioner of Customs, Ludhiana (“the Respondent”) to the Appellant alleging that the duty has been paid by the Appellant under Section 18(2) of the Customs Act, therefore the interest is to be demanded under Section 28 AA of the Customs Act and the redemption fine of INR  1,00,000/- and penalties of INR 1,75,000/- is to be imposed under Section 112 and Section 114 AA of the Customs Act respectively.

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