V.K. Ashtana, Member (T)
1. This is an appeal against order-in-original No. 252/97 dt. 15.12.1997 passed by Commissioner of Customs in which the imported goods namely assorted garments have been confiscated under Section 111(d) but are allowed for redemption on fine of Rs. 31 lakhs and penalty of Rs. 5 lakhs has been imposed on the appellants.
2. Heard Ld. Advocate Shri R. Raghavan for appellants who submits that their appeal is only on the ground of quantum of redemption fine and penalty. In this connection, he submits that the value of each piece of garment as declared on the Bill of Entry is Singapore Dollars 2.60 equivalent to Indian Rupees 64. The only point of dispute is on the quantification of the redemption fine which in turn, is based on the ascertained margin of profit. This ascertained margin of profit is further to be based on the market price. Whereas the appellants had submitted evidence in the form of a cash bill of M/s. Off Limits, Madras showing that Track bottoms were being sold in the market on 10.12.1997 at the rate of Rs. 225 per piece, Ld. Commissioner has not accepted this evidence even though he has conceded that there is no proof or evidence which necessitates for any increase in the declared CIF value. The reason given by the Ld. Commissioner in the impugned order is that these garments are in the nature of track suits and command a fancy price depending upon the shop in which they are displayed/purchased and that the prices therefore vary widely. On this ground alone, he has rejected the evidence of Rs. 225/- noted above. As against this, he has relied on an earlier assessment and adjudication where the margin of profit had been held to be 434% in case of low value garment and 231% in another case. In consideration of this, Ld. Commissioner has arbitrarily fixed the margin of profit at 300%. While doing so, submits Ld. Advocate, the Ld. Commissioner has not relied on any evidence of market enquiry which is a normal procedure followed by Custom Houses. Therefore, Ld. Advocate submits that their retail price evidence of Rs. 225/- cannot be brushed aside and the same should be accepted. If this is done, then keeping in view the fact that the consignment has been lying uncleared under the Customs control for the last 18 months and has therefore incurred substantial demurrage and appellant has incurred interest liability thereon, the margin of profit would have to be suitably adjusted in consideration of the market price of Rs. 225/-. Ld. Advocate submits that if this is done, the realistic margin of profit would be around 100% in view of the worksheet given by them on page 18 of the paper book. Ld. Advocate also submits that for goods with CIF value of Rs. 10,44,360/-, Ld. Commissioner has imposed a very heavy quantum of penalty of Rs. 5 lakhs. Since the goods have already been in customs custody for a long time the penalty imposed also needs to be reduced in view of interest of justice.
3. Heard Ld. DR Shri S. Kannan who submits that the order-in-original is a speaking order and discusses in detail the reason for arriving at the margin of profit of 300%. He stresses that the garments namely assorted track suits are sold at the widely varying prices and in various markets in Chennai. Therefore, there is no error in the order impugned which relies on earlier margins of profit taken into consideration.
4. We have carefully considered the rival submissions as well as the records of the case. We find that the declared CIF value is not disputed. We also find that the fact that the goods are liable to confiscation under Section 111(d) is also not disputed. The only dispute is regarding quantum of redemption fine and penalty imposed. In this connection, we are in agreement with the submissions of Ld. Advocate regarding estimated margin of profit involved being about 100% for the following reasons:
a) while the appellants have produced the evidence in the form of cash bill from the local market (the cost at the retail sale which would be highest price as compared to even wholesale price) being Rs. 225/- per piece, Ld. Commissioner has rejected the same merely on some theoritical premises that the price made would be higher if the same is sold in bigger shops etc. There is no evidence led by Revenue to contradict or even seriously challenge the cash bill noted above. Therefore, the conclusion of Ld. Commissioner appears to be more in the nature of involving an arbitrary or presumptious decision not backed by any evidence.
b) while we note that the order-in-original mentions that the margin of profit in earlier adjudication on previous occasions was varying between 434% and 231%, we find that Ld. Commissioner has not given any details of these imports or even the adjudication order itself.
5. In view of these circumstances, we find it is impossible to verify the accuracy of this profit range on which Ld. Commissioner has solely based his decision. We therefore feel that margin of profit adopted at 300% is without any corroborative evidence.
6. In view of the aforesaid analysis, we are inclined to accept the price in retail of these garments at Rs. 225/- as per the only evidence available on record.
Having accepted the same, we find that the quantum of gross profit involved in each piece would be Rs. 225/- MINUS Rs. 64/- as the order-in-original itself has conceded that this CIF value of Rs. 64/- appears to be correct. Therefore on an item a CIF value of Rs. 64/- the margin of profit appears to be Rs. 161/- for the retailer. We have to allow certain approximate deductions in view of the fact that the consignment has been under dispute for the last 18 months and therefore the additional cost of demurrage and interest for this period would have to be borne by the importer. We also have to add the element of duty to cost of Rs. 64/- per piece. This would be about Rs. 50/- per piece at the prevalent rate of 50% total. Therefore, we find that taking a holistic view the margin of profit on this consignment available to the importer as of today would be around 100%.
7. We therefore modify the order-in-original impugned to the following extent:
(A) The redemption fine is reduced from Rs. 31,00,000/- to Rs. 10,00,000/-(Rupees Ten Lacs only).
(B) In view of much lower margin of profit, we feel that interest of justice requires that penalty should also be reduced from Rs. 5,00,000/- to Rs. 75,000/-(Rupees Seventy Five Thousand only). The order-in-original impugned is only modified to the above extent.
8. The appeal succeeds partly accordingly.
(Pronounced and dictated in open court).