Case Law Details
Gencor Pacific Auto Engineering Pvt. Ltd. Vs Commissioner of Customs (CESTAT Chennai)
In a significant ruling, the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) in Chennai addressed the appeal filed by Gencor Pacific Auto Engineering Pvt. Ltd. against the Commissioner of Customs. The case revolved around the import of ‘Aluminium Alloy Ingots’ which, upon examination, were found to be Stone Chips. This led to a series of legal and procedural disputes culminating in the Tribunal’s decision. The Tribunal quashed the redemption fine imposed by the Commissioner (Appeals), reinforcing the principle that a taxpayer cannot be worse off by filing an appeal.
Background and Initial Findings
Gencor Pacific Auto Engineering Pvt. Ltd. had placed an order for ‘Aluminium Alloy Ingots’ but received a shipment of Stone Chips. The company promptly informed the Department and requested to abandon the consignment under Section 23 of the Customs Act, 1962, seeking remission of duty and re-credit of duty debited in their DEEC Advanced Authorisation Scrips. The Adjudicating Authority found no offence committed by the appellant and did not impose a redemption fine but denied the re-credit of the debited duty. Additionally, a penalty of Rs. 30,000 was imposed, which the appellant paid.
Appeal and Decision by Commissioner (Appeals)
Dissatisfied with the denial of re-credit, the appellant approached the Commissioner (Appeals). The Commissioner (Appeals) ruled that the goods should be confiscated and imposed a redemption fine of Rs. 19 lakhs, despite the Adjudicating Authority’s decision against such a fine. The Commissioner (Appeals) agreed on the re-credit but limited it to the duty applicable to Stone Chips rather than Aluminium Alloy Ingots.
Tribunal’s Findings and Judgment
The appellant further contested this decision at the CESTAT Chennai. The Tribunal, led by the learned counsel Mr. S. Krishnanandh, argued that imposing a redemption fine when no offence was found and the goods were abandoned was unjustified. Citing the Supreme Court’s decision in Jaswal Neco Ltd. Vs. Commissioner of Customs, the Tribunal emphasized that an appellant cannot be placed in a worse position due to filing an appeal.
The Tribunal observed that:
- The Adjudicating Authority had confiscated the goods only to facilitate their custody by the Central Government following the abandonment.
- Imposing a redemption fine when the goods were not being redeemed but abandoned contradicted the Customs Act’s provisions.
- There was no justification for the Commissioner (Appeals) to impose a redemption fine in an appeal filed by the importer when the Department had not contested the initial order.
Conclusion
The CESTAT Chennai’s decision underscored the importance of fair appellate procedures, ensuring that an appellant’s situation does not worsen by exercising their right to appeal. The Tribunal set aside the Rs. 19 lakhs redemption fine and ruled that Gencor Pacific Auto Engineering Pvt. Ltd. was entitled to a re-credit of the duty applicable to Aluminium Alloy Ingots, not Stone Chips.
FULL TEXT OF THE CESTAT CHENNAI ORDER
Brief facts are that the appellant placed order for import of ‘Aluminium Alloy Ingots’ and filed Bills of Entry declaring the goods as ‘Aluminium Alloy Ingots’. On examination by the Dock Officers, it was found that the consignment contained Stone Chips and not Aluminium Alloy Ingots. The appellant stated that as per Letter dated 10.09.2013, the supplier abroad had sent the credit note for the value of the shipment and that they do not intent to make any payment to the supplier as the supplier has sent a wrong shipment to the appellant. The appellant requested the Department to permit them to abandon the consignment and remission of duty as per Section 23 of the Customs Act, 1962. They also requested to re-credit the duty that has been debited in the DEEC Advanced Authorisation Scrips. The appellant requested to waive the issuance of Show Cause Notice. After personal hearing, the Adjudicating Authority held that there is no offence committed by the appellant and that redemption fine is not imposable. However, the appellant’s claim for re-credit of the Advance Authorisation was not permitted. The duty amount of Rs.19,90,620/- was debited from the Advanced Authorisation Scrips. Besides this, a penalty of Rs.30,000/- was also imposed. The appellant paid the penalty and filed an appeal before the Commissioner (Appeals) as they were aggrieved by the order of the Original Authority not permitting to re-credit the duty amount in the Advance Authorisation Scrips. The Commissioner (Appeals) vide Order impugned herein held that since the goods have been confiscated, the Adjudicating Authority ought to have imposed redemption fine and imposed redemption fine of Rs.19 Lakhs. It was observed by the Commissioner (Appeals) that the appellant is eligible for re-credit of duty in the Advance Authorisation, but however, limited the amount of duty as applicable to the Stone Chips and not of the duty of Aluminium Alloy Ingots. Aggrieved by such order, the appellant is now before the Tribunal.
2.1 The Ld. counsel Mr. S. Krishnanandh appeared and argued for the appellant. The findings of the Adjudicating Authority in Paragraphs 13 and 14 was adverted to by the Ld. counsel to submit that there is a clear finding by the Adjudicating Authority that there is no offence committed by the importer and that redemption fine is not imposable. The Commissioner (Appeals) ought not to have imposed redemption fine in an appeal filed by the appellant. An appellant cannot be put into a worse situation than that of the earlier order on which the appeal has been filed. The decision of the Hon’ble Supreme Court in the case of Jaswal Neco Ltd. Vs. Commissioner of Customs, Visakhapatnam [2015 (322) ELT 561 (SC)] was relied to support this argument.
2.2 The Ld. Counsel submitted that the appellant had placed order for Aluminium Alloy Ingots and the shipment contained Stone Chips. The appellant had not made any payment to the supplier and had totally abandoned the goods. The appellant paid penalty and did not contest the penalty only to buy peace with Department. The appellant requested to the Adjudicating Authority for re-credit of the duty that was debited from their Advance Authorisation Scrips. The Adjudicating Authority did not permit the same. However, the Commissioner (Appeals) held in the impugned order that the appellant is not liable to pay duty and is eligible for re-credit in the Advance Authorisation Scrips. The Commissioner (Appeals) allowed re‑ credit and limited it to the duty applicable to the Stone Chips. It is submitted that the duty applicable to the Aluminium Alloy Ingots having been debited from the Scrips, the same may be permitted to be re-credited. The Ld. counsel prayed that the appeal may be allowed.
3.The Ld. Authorised Representative Mr. M. Selvakumar appeared and argued for the Department. The findings in the impugned order was It is submitted that the Adjudicating Authority having confiscated the goods under Section 111(m) of the Customs Act, 1962 and also having imposed penalty ought to have imposed redemption fine. The Commissioner (Appeals) has therefore imposed redemption fine under Section 125 of the Customs Act, 1962 which is legal and proper. The appellant has already been given a relief to the extent of re-credit of the duty applicable to the Stone Chips and the amount is to be quantified. The Ld. Authorised Representative submitted that the impugned order does not call for any interference.
4. Heard both sides.
5. The facts narrated above bring out that the shipment did not contain the goods for which the appellant had placed the order to the foreign supplier. For this reason, the appellant had filed Letter before the Adjudicating Authority to permit them to abandon the goods as provided under Section 23 of the Customs Act, 1962. The said request was acceded to by the Adjudicating Authority. It has been held by the Adjudicating Authority that no offence has been committed. The Commissioner (Appeals) imposed redemption fine of Rs.19 Lakhs observing that the goods having been confiscated and penalty imposed, the appellant has to pay redemption fine. As per Section 125 of the Customs Act, 1962 redemption fine is imposed in lieu of confiscation for the value of the goods which is being redeemed by the importer. In the present case, the goods having been abandoned there is no situation of redeeming the goods. The Adjudicating Authority has ordered for confiscation of the goods only because the goods have been abandoned. In such situation, the goods are taken into possession by the Central Government and disposed of in accordance with law. The goods can be taken into possession only if confiscated. The Adjudicating Authority has ordered for confiscation only to facilitate the custody of goods to the Central Government. The Commissioner (Appeals) has misconceived the provisions under Customs Act, 1962, that as there is confiscation of goods, redemption fine has to be imposed. When the appellant has abandoned the goods, there is no requirement to give option to redeem the goods. When the goods are not being redeemed and abandoned, the goods have to taken custody by the Central Government. In such situation of confiscation, imposition of redemption fine does not arise. Again, even though Adjudicating Authority has imposed penalty of Rs.30,000/-, there is no finding rendered as to the offence committed by the importer. Instead, it has been categorically stated in Paragraph 14 that no offence is committed by the importer. The appellant has paid the penalty and does not contest the same. So, the observation made by the Commissioner (Appeals) that since goods have been confiscated and penalty imposed, redemption fine has to be imposed is erroneous. Further, there is no appeal filed by the Department against the order of the Adjudicating Authority who refrained from imposing redemption fine. The Commissioner (Appeals) ought not to have imposed redemption fine in an appeal filed by the importer. In the case of Jaswal Neco Ltd. (supra) the Hon’ble Apex Court held that the appellant cannot be worse off by reason of filing an appeal. The relevant Paragraph reads as under:-
“18. However, Shri Lakshmikumaran is on firmer ground when he submitted before us that the Commissioner has held that the appellant is liable to pay Anti-dumping duty only under the Notification dated 27-10- 1998. The rate prescribed in the said Notification is lesser than the rate that would apply under the Notification dated 19-5-2000. As there was no appeal by the revenue against this finding of the Commissioner, the Tribunal could not have enhanced the rate at which the appellant would have to pay Anti-dumping duty in the appellant’s own appeal. The appellant cannot be worse off by reason of filing an appeal. To this limited extent, the appellant succeeds and the Tribunal’s order is set aside. The appellant will have to pay Anti-dumping duty calculated at the rates specified only in Notification No. 81/98, dated 27-10-1998.”
6. For these reasons, I am of the view that the redemption fine of Rs.19 Lakhs imposed by the Commissioner (Appeals) is not justified and requires to be set aside, which I hereby do.
7. The Ld. Counsel for the appellant has requested for re-credit of the duty applicable to Aluminium Alloy Ingots that has been debited in the Advance Authorisation Scrips. The Original Authority has denied the permission for such re-credit. However, the Commissioner (Appeals) has considered the request and allowed the re-credit of the duty applicable to Stone Chips. The appellant having not imported Aluminium Alloy Ingots is not liable to pay such duty. The appellant had placed order for Aluminium Alloy Ingots and they have not received the goods. However, the duty was debited in the Scrips. The appellant is therefore eligible for re-credit of duty that in the Advance Authorisation Scrips.
8. The impugned order is modified to the extent of setting aside the redemption fine and also setting aside the order directing re-credit of duty applicable to Stone Chips. The appellant is eligible for re-credit of duty that has been debited and applicable to Aluminium Alloy Ingots. It is made clear that as the appellant has not contested the penalty, the same is not disturbed. The appeal is allowed in above terms with consequential reliefs, if any, as per law.
(Order dictated and pronounced in open court)
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