JUDGMENT
S.S. Kang, Member (J)
1. The following issue is referred to the Larger Bench :-
“Whether while passing an order under Section 125 of the Customs Act, the authorities can direct confiscation of goods and payment of fine in lieu of confiscation together with a direction to re-export the goods.”
2. The referring Bench noticed the conflict of views expressed in the decisions of the Tribunal in the case of Goodyear India Ltd. v. Collector of Customs – Final Order No. A/32/90-NRB, dated 27-12-90, Padia Sales Corporation v. Collector of Customs – 1992 (61) E.L.T. 90, Skantrons (P) Ltd. v. Collector of Customs – 1994 (70) E.L.T. 635 and HCL Hewlett Packard Ltd. v. Collector of Customs – 1997 (92) E.L.T. 367.
3. Heard both the sides.
4. The contention of the appellants is that the adjudicating authority has no jurisdiction to confiscate the goods and impose redemption fine in lieu of confiscation while permitting the importer to re-export the goods. The appellants mainly relied upon the decision of the Hon’ble Supreme Court in Siemens Limited v. Collector of Customs – 1999 (113) E.L.T. 776. The contention of the appellants is that the Hon’ble Supreme Court while allowing re-export of the goods held that redemption fine in lieu of confiscation is not justifiable. In this case, the adjudicating authority confiscated the goods and allowed to redeem the goods on payment of redemption fine of Rs. 6,00,000/- and appropriate duty of customs if the importer desires to avail to keep it in India. The adjudicating authority also gave an option to the importer to re-export the goods within three months and in such case, no duty will be chargeable.
5. The portion whereby the adjudicating authority allowed reexport of the goods without payment of duty was not challenged by the Revenue. The goods were re-exported during the period as extended by the Court. In such a situation, the Hon’ble Supreme Court held that importer is not liable for redemption fine. Hence, the issue before the Hon’ble Supreme Court was different from the issue under consideration.
6. The appellants also relied upon the decision of the Hon’ble Bombay High Court in the case of Pacific International Traders v. Union of India, reported in 2002 (142) E.L.T. 544, in support of their plea. In this case the importer abandoned the goods and no bill of entry was filed by the importer. In such a situation, the Hon’ble High Court held that the Customs Department was not justified in detaining the goods abandoned by the exporter and the goods were allowed to be re-exported at the request of the exporter of the goods. The appellants also relied upon the decision of the Madras High Court in the case of Sankar Pandi v. Union of India and Anr. – 2002 (141) E.LT. 635 (Mad.) = 2002 (49) R.L.T. 130. We find that in this case, the importer made a request to re-export the goods and the goods were allowed to re-export on payment of redemption fine. The appellants challenged the order before the Hon’ble Madras High Court. Hon’ble Madras High Court after taking into consideration the facts and circumstances of the case, reduced the penalty and ordered that on payment of penalty, the petitioner is allowed to reexport the goods. We find that this decision also does not advance the case of the appellants on the issue under consideration.
7. The appellants relied upon the following decisions in support of their arguments :
(i) Padia Sales Corporation v. Collector of Customs reported in 1992(61) E.L.T. 90; (ii) Shubh Gems v. C.C.E. reported in 2000 (121) E.L.T. 426; (iii) G.V. International and Anr. v. C.C.E. reported in 2000 (118) E.L.T. 517 (T) = 2000 (39) RLT 272; and (iv) Alukkas Exporters v. C.C.E. reported in 2002 (145) E.L.T. 227 (T) = 2002 (48) RLT 311.
8. The contention of the Revenue is that the provisions of Section 125 of the Customs Act are independent provisions which empowers the Customs authority to impose fine in lieu of confiscation in respect of the importation or exportation of the prohibited goods. The prohibition of importation or exportation of the goods means not only absolute prohibition but prohibition subject to condition. The Revenue relied upon the decision of the Tribunal in the case of Kothari Filaments v. Commissioner of Customs (Port), Calcutta – 2002 (144) E.L.T. 80 (Tri.) and submitted that the Tribunal in this case after relying upon earlier decisions in the case of Goodyear India Ltd. v. Collector of Customs – Final Order No. A/32/90-NRB, dated 27-12-90 and in the case of K.K. Gems v. C.C. reported in 1998 (100) E.L.T. 70 (T) = 1998 (25) R.L.T. 440 held that the order passed by the Customs authorities in respect of imposition of redemption fine in lieu of confiscation where the goods were allowed to export also, is not contrary to law.
9. We find that in case of Padia Sales Corporation (supra), the adjudicating authority permitted the re-export of the goods on payment of redemption fine. The Tribunal modified the order holding that the goods are confiscated, but the appellants are entitled to redeem the same on payment of redemption fine. The ultimate effect of the order of the Tribunal was to delete permission given to the importer to re-export the goods. In the case of Skantrons (P) Ltd. (supra) it was held that imposition of redemption fine on confiscation of goods, while giving option to re-export, is not correct in law. In the case of HCL Hewlett Packard Ltd. (supra), after relying upon the decision of Padia Sales Corporation (supra), the Tribunal held that the adjudicating authority has no power to impose redemption fine in the case of re-export of the goods.
10. After going through the provisions of Section 125 of the Customs Act, we find that provisions of this section do not specifically provide that an option may be given to redeem the goods for re-export. It empowers an adjudicating authority in case of goods the import or export of which is prohibited under Customs Act or under any law in force, to grant an option to pay in lieu of confiscation such fine as the said authority thinks fit. The provisions of this section equally apply to the goods to be exported as well as imported goods. Where the goods which have been tendered for export are ordered to be confiscated and an option to redeem the goods on payment of fine, it would follow that option is for the export of the goods. This is no doubt different from re-export. Re-export is a facility permitting export of goods which have already been permitted to be imported. Except in cases where import is prohibited by any law, those goods which have been imported may be permitted to be exported. The formal procedure of filing a shipping bill and observing other formalities relating to export of goods would have to be followed. There is no prohibition on the adjudicating authority from permitting re-export of the goods. When an adjudicating authority after ordering confiscation of imported goods permits their re-export, he is in effect first ordering the redemption of the goods on payment of fine and thereafter permitting them to be re-exported. Each of these two actions is independent and is permitted by law. An order whereby both are combined, therefore, is not contrary to law.
11. If we take up the issue from another angle that where the adjudicating authority allows re-export of the prohibited goods and in such a case, by holding that the order of confiscation and redemption fine is not justifiable, this will make the provisions of Section 125 of the Customs Act redundant which specifically empowers the adjudicating authority to exercise his powers in respect of prohibited goods. As confiscation and redemption fine in lieu of confiscation and re-export are two independent actions, hence the view taken that in case the assessee is allowed to re-export, the confiscation and redemption fine is not justified, is not a correct view. Further, we find that this view is also taken by the Hon’ble Supreme Court in the case of C.C. v. Elephanta Oil & Industries Ltd. reported in 2003 (152) E.L.T. 257 (S.C.) rejected the contention of the importer that once the imported article is re-exported as directed by the department/ there is no question of levying any penalty or redemption fine. The Hon’ble Supreme Court held that power to levy the penalty under Section 112 of the Customs Act for improper importation of goods is different from the power of confiscation of goods under Section 125 of the Customs Act. The question of law referred to the Larger Bench is answered accordingly.
12. Now we take up the appeal for final disposal. In this case, the appellants filed bill of entry in respect of import of rough semi-precious stones declaring the value at the rate of US Dollars 60 per Kg. in respect of low grade aquamarine rough and US Dollars 30 per Kg. in respect of low grade peridot rough. The Revenue took the samples and advice of Trade Panel Members was taken in respect of the value of the goods and the Trade Panel Members ascertained the value at the rate of US Dollars 15 per kg. in respect of low grade aquamarine rough and US Dollar 10 per kg. in respect of low grade peridot rough. On account of misdeclaration of the value, the goods were ordered to be confiscated and an option was given to the appellants to redeem the same on payment of redemption fine and the goods were also allowed to re-export.
13. The contention of the appellants is that the bill of entry was filed on the basis of invoice value and the price mentioned in the shipping bill was a negotiated price and the appellants produced the copies of the correspondence between them and the exporter where the exporter agreed to supply the goods on the above mentioned price. The contention of the appellants is that in reply to the show cause notice, these letters were produced before the adjudicating authority and the adjudicating authority without considering the same held that the appellant has misdeclared the value of the goods.
14. We find that in reply to the show cause notice in para 5 the appellants specifically mentioned that supplier M/s. Lee Gems & Jewellery, Hongkong vide letter dated 15-3-2000 had agreed to supply the goods in question at a negotiated price. The appellants also produced a copy of the letter before the adjudicating authority. The appellants also produced copy of the letter dated 13-2-2002 where the supplier quoted the higher price which on negotiation was reduced. This evidence produced by the appellants is not taken into consideration while passing the impugned order by the learned Commissioner. The adjudicating authority in the impugned order held that the value declared by the Trade Panel Members appears to be an appropriate against the declared value. We find that the learned Commissioner also held that the appellants failed to produce any documentary evidence in support of the transaction value in spite of the fact that the letters from the exporters were produced before him along with the reply to the show cause notice. In these circumstances, we find that the goods were imported at a negotiated price and the value was declared which was duly supported by the evidence by way of correspondence between the appellants and the exporters. Therefore, the allegation of misdeclaration in terms of value is not sustainable. Hence, the impugned order is set aside and the appeal is allowed.