ORDER
P.G. Chacko, Member (J)
Page 0121
1. M/s. Canaan Press Pvt. Ltd. imported three consignments of second-hand machinery and filed the following Bills of Entry:
(i) Bill of Entry No. 209082 dated 26.2.99 covering 7 machines
(ii) Bill of Entry No. 214339 dated 9.4.99 covering 11 machines
(iii) Bill of Entry No. 214823 dated 15.4.99 covering 12 machines
The above Bills of Entry were assessed and clearance of the goods was obtained on the condition [stipulated in the EXIM Policy] that the goods would not be alienated for a period of five years. All the 7 machines covered by the first Bill of Entry were disposed of by the company within the said period of five years. 3 out of the 11 machines covered by the second Bill of Entry and 5 out of the 12 machines covered by the remaining Bill of Entry were also disposed of likewise. Thus, in respect of 7 + 3 + 5 = 15 machines, the “actual user condition” stipulated under the EXIM Policy was not fulfilled by the importer. In terms of the EXIM Policy as amended with effect from 1.4.1999, specific licence was required for import of second-hand machinery. The Customs authorities found that the exact date on which the 12 machines covered by the Bill of Entry dated 15.4.99 were placed aboard the ship was 10.4.1999 and not 27.3.99, which was the date indicated as the date of shipment in the Bill of Lading. But these goods had been imported without any licence. Thus, it appeared to the authorities that 7 + 3 + 12 = 22 machines covered by the above Bills of Entry had been imported in contravention of the relevant provisions of the Customs Act and hence were liable to be confiscated under Section 111 of the Customs Act. It further appeared to them that the date of shipment in respect of the machines covered by the third Bill of Entry had been manipulated and that the company Page 0122 (M/s. Canaan Press Pvt. Ltd.) and its Managing Director, Shri C. Jebamani were involved in such manipulation. Hence the company and its Managing Director were held liable to be penalized under Section 112 of the Act. After completing investigations, the department issued a show-cause notice to the company and its Managing Director proposing to confiscate the machines and to impose penalties on the noticees. These proposals were contested. The adjudicating authority confiscated 10 machines [7 covered by the first Bill of Entry and 3 covered by the second] valued at Rs. 7,04,848/- under Section 111(d) and (o) of the Customs Act, allowing the goods to be redeemed by the company on payment of a fine of Rs. 1.75 lakhs under Section 125(1) of the Act. It also confiscated the 12 machines covered by the third Bill of Entry, valued at Rs. 3,76,416/-, under Section 111(d) of the Act and allowed the same to be redeemed by the company on payment of a fine of Rs. 90,000/,- under Section 125(1) of the Act. The authority also imposed penalties of Rs. 1.30 lakhs and Rs. 30,000/- on the company and its Managing Director, respectively under Section 112(a). The appeals filed by the company and its Managing Director against the decision of the original authority were rejected by the first appellate authority. Hence these appeals.
2. After hearing both sides and considering their submissions, I find that there is no dispute of the fact that 15 machines [7 covered by the first Bill of Entry, 3 covered by the second and 5 covered by the third] were disposed of by the company before expiry of the period of five years stipulated for actual user by the importer, under the relevant EXIM Policy. Hence, in respect of these machines, the importer committed breach of the EXIM Policy provisions, thereby attracting Section 111 [rendering the goods liable to confiscation] and Section 112 [rendering the importer liable to be penalized]. In respect of the 12 machines covered by the Bill of Entry dated 15.4.99, it is not in dispute that the goods were shipped on 10.4.1999. On and from 1.4.99, import of second-hand machinery required specific licence as per the EXIM Policy as amended. Admittedly, these 12 machines were imported without any such licence. Hence these goods also attracted Section 111 and consequently the importer attracted Section 112. In the result, the appellants do not have any sustainable case against the confiscation and penalty.
3. Learned Counsel submitted that the quanta of redemption fines and penalties imposed by the original authority were excessive and that, in the matter of determining the amounts of fines, the authority did not follow the normal norms. In this connection, it was pointed out that, in a similar case of importation of second-hand machinery, only less than 10% of the assessable value of the goods was imposed as redemption fine by the Chief Commissioner of Customs, Chennai vide Order-in-Original No. 21/2001 dated 31.1.2001. In the said case, the assessable value of the imported machines which were confiscated under Section 111(d) and (o) was about Rs. 2.94 crores and the quantum of fine imposed in lieu of confiscation was Rs. 25.00 lakhs. Learned Counsel further submitted that the Chief Commissioner’s order was upheld by this Tribunal. However, he did not produce any order of the Tribunal in this context. Nevertheless, it was Page 0123 argued, on the basis of the Chief Commissioner’s order, that the normal norm for the department in the matter of quantifying redemption fine in lieu of confiscation of any imported goods was 10% of the assessable value of the goods. As regards penalties, learned Counsel submitted that the authorities below ought to have imposed lesser penalties in the facts and circumstances of the case.
4. Learned SDR vehemently spoke in defence of the impugned order. She also relied on the Tribunal’s decision in Standard Fire Works Ltd. v. Commissioner of Customs, Trichy , wherein the redemption fine and penalty imposed by the Commissioner of Customs on an importer of second-hand machinery were affirmed by the Tribunal after finding that the date of shipment of the goods had been manipulated at the supplier’s end.
5. After giving careful consideration to the submissions, I find that the department has a strong case on the strength of Standard Fire Works (supra). Para 3 of the order passed by the Tribunal in the cited case is reproduced below:
3. After carefully considering the submissions, we find that there is no dispute of the fact that the goods in question were shipped to India on 104.1999. it is also pertinent to note that show-cause notice was waived by the party in the fact of the department’s proposal to confiscate the seized machines. Now they cannot turn round and say that the confiscation is bad on account of the date of shipment having been manipulated at the supplier’s end. Admittedly, second-hand machines shipped after 1.4.99 required specific licence for their import into India. The appellants did not have any such licence and they chose to obtain clearance under OGL. Though such clearance might smack of fraud on the Revenue, the learned Commissioner of Customs, in fairness, restrained himself from penalising the importer, after observing that there was no evidence of manipulation on their part in relation to the Bill of Lading. We also reject the argument that it was not open to the Department to seize the goods without challenging the assessment. The seizure/confiscation of the goods imported in breach of the restriction was independent of the assessment of the goods to duty. The offending goods were liable to confiscation. Coming to the quantum of redemption fine, we find that fine of Rs. 2 lakhs imposed by the Commissioner under Section 125 of the Customs Act is still below what could have been imposed on the party under the said provision, having regard to the value of the machines and the duty paid thereon. The machines were valued at over Rs. 19 lakhs and the duty paid thereon was over Rs. 10.50 lakhs. In terms of Section 125, a higher amount than Rs. 2 lakhs could perhaps have been imposed as redemption fine. Learned Commissioner has, obviously, been fair to the appellants in this regard.
Page 0124
6. The present appellants’ case appears to be worse inasmuch as Shri C. Jebamani, Managing Director of the company, in all his statements, accepted manipulation of date of shipment. He even requested for condonation of the offence. None of the statements was retracted. On the other hand, in the case of Standard Fire Works (supra) the importer was pleading innocence with regard to the date of shipment shown in the Bill of Lading.
7. Even in the aforesaid circumstances, there must be a reasonable measure of fairness in the matter of imposing redemption fine and penalty. Learned Counsel referred to Chief Commissioner’s order and also submitted that the said order was upheld by this Tribunal. This submission was not contested. In the circumstances, I am of view that the redemption fine should be around 10% of the assessable value of the goods. Accordingly, the fine of Rs. 1.75 lakhs is reduced to Rs. 1.00 lakh (Rupees One lakh only) and fine of Rs. 90,000/- is reduced to Rs. 75,000/- (Rupees seventy-five thousands only). The penalties imposed by the learned Commissioner on the company and its Managing Director are proportionately reduced to Rs. 50,000/- (Rupees fifty thousands only) and Rs. 10,000/- (Rupees ten thousands only), respectively. The impugned order will stand modified accordingly. The appeals are disposed of.
(Operative portion of the order was pronounced in open Court on 14.12.2005)