JUDGMENT
S.S. Sekhon
1. These three appeals, are taken up for decision by this common order since the issue involved is the same, except for minor variations in the quantum of valuation and the quality of the goods under import. The importers had filed Bill of Entry in September 20.9.2000, 19.9.2000 and 16.10.2000 at Kolkata (Port) declaring the goods ‘pre-mutilated ragas’. However, on examination old and used in mutilated or in sufficient mutilated garments were found. It was the case of Revenue that such goods as found would require to be imported only against a valid licence and since no valid licence were produced, they were liable for confiscation under Section 111 (d) and or 111 (m) of the Customs Act, 1962 having been imported in violation of the law. The Commissioner (Appeals) with his impugned order after considering in detail the margin of profit and the case law on the subject came to a conclusion as follows:
26. I have carefully gone through the case records and have considered the submissions made on behalf of the appellants I find that there is no dispute regarding the two main issues involved in this case – (1) that the subject goods are not pre-mutilated rags, as declared, but old and used complete garments of various types, and (2) that the quantity of the subject goods was found to be in excess of the declared, quantity, and hence misdeclared
27. On the question of the impugned goods found to be old and used garments instead of completely pre-mutilated rags, the appellants have contended that they had placed order for the declared quantity of “old synthetic woollen (SIC) completely pre-mutilated and fumigated”. Which had been properly reflected in the relevant Bills of Lading, Commercial Invoice, Pacing List, Insurance Certificate, Certificate of Origin and Fumigation Certificate of the Sanitary Authority in USA apart from the invoice of the overseas supplier, packing list etc. and hence in accordance with the import documents the relevant bills of entry had been filed, and as such it cannot be contended that the appellants have deliberately committed the offence. While the appellants’ contention cannot be ignored, the fact remains that excess quantity of impugned goods as indicated at para-3 here-in-above, had been noticed in the form of old and used garments instead of old synthetic/woollen rags completely pre-mutilated and excess quantity detected as well. The impugned goods, therefore, required an import licence for clearance, which the appellants did not possess. In addition, the assessable value of the consignment sin questions were liable to be enhanced on the basis of the actual weight of such goods, and hence the goods were justifiably liable for confiscation.
28. I find that the adjudicating authority is justified in confiscating the impugned goods as such imports have attracted the provisions of Section 111(d) & 111(m) of the Customs Act, 1962. However, on the question of imposition of quantum of redemption fine, neither the impugned Show Cause Notices, nor does the impugned order reveals the manner of determination of margin of profit for fixing redemption fine. ON a prima-facie consideration of the rival submissions, it appears that imposition of redemption fine of as high as Rs. 12 Lakhs/Rs. 13 Lakhs respectively, which works out to approximately 300% as per the appellants contention is not only unjustified but is totally unwarranted considering the fact that as per practice existing in Calcutta Custom House in September 2000, similar/identical consignments were cleared on a redemption fine subject to a minimum of 20% of the CIF value as indicated in Calcutta Customs House letter dated 16.10.2001 (para 24 refers). It also appears that the adjudicating authority had not taken into account the valid expenses incurred by the appellants as contended (SIC) 12 herein-in-above. However, in a subsequent letter F. No. S60
(Misc)/160-2001-A(3) dated 18.10.2001, the adjudicating authority has worked out the quantum of redemption fine in respect of all the three appellants, the details of which are reproduced below:
Appellant : M/s Unique International
B/E No. SL-118702 Dated 20.9.2000 Goods : 425 Bales 20650 Kgs.
SI. No. Bales Weight (Kgs) Goods Sale Price (Rs.)
1. 62 3012 T-Shirts 3012 X 38 = 1,14,456/-
2. 196 9523 Sweaters 95123 X 33 = 3,14,259/-
3. 152 7386 Baby Garments 7386 X 35 = 2,58,510/-
4. 15 729 Trouser 729 X 37 = 26, 973/-
Total 425 20650 7, 14, 198/-
CIF VALUE ASSESSABLE VALUE
CIF @ US$ 0.45 CIF Rs. 4,28,849/-
US$ 9292.50 Duty Rs. 1,91,066/-
A/Value Rs. 4,33,137.37
Duty Rs. 1,91,065.64 MOP Rs. 94,347/-(225)
Clearance Rs. 52.000/-
Rent & Rs. 1,61,552/-
Detention
Total Rs. 2,13,552/-
M.O.P Rs. 94,347/-
Expenses Rs. 2,13,552/-
Rs. (-) 1,19,205/-
Redemption Fine : 85, 769. 80 (20%)
Appellant M/s Star Trading
B/E No. SL-118628 Dated 19.9.2000 Goods 450 Bales 21040 Kgs.
SI. No Bales Weight (Kgs) Goods Sale Price (Rs.)
1. 36 1683 Shirts 1683 X 76 = 1,27,908/-
2. 24 1122 Jacket 1122 X 80 = 89, 760/-
3. 96 4489 Top 4489 X 38 = 1,70, 582/-
4. 158 7387 Trouser 7387 X 37 = 2,73,319/-
5. 136 6359 Baby Garments 6359 X 35 = 2,22,565/-
Total 450 21040 8,84,134/-
CIF Value ASSESSABLE VALUE
CIF @ US$ 045 CIF Rs. 4,36,948/-
US$ 9468 00 Duty Rs. 1,94,674/-
CIF Rs. 4, 36, 948 20 Total Rs. 6,31,622/-
A/Value Rs. 4,41,317.68
Duty Rs. 1,94,674.14 MOP Rs. 2, 53, 430/-(585)
Clearance : Rs. 52,000/-
Rent & : Rs. 1,82,612/-
Detention
Total : Rs. 2, 34,612/-
M.O.P. : Rs. 2,53,430/-
Expenses : Rs. 2,34,612/-
Rs. 18,818/-
Redemption Fine : Rs. 87,389.60 (20%)
Appellant : M/s. M.S. Impex
B/E No. SL- 119774 Dated : 16.10.2000 Goods : 52 Bales 22470 Kgs.
SI. No. Bales Weight (Kgs.) Goods Sale Price (Rs.)
1. 40 17285 Sweat Shirt 17285 X 38 = 6,56,830/-
2. 12 5185 Baby Garments 5185 X 35 = 1,81,475/-
Total 52 22470 8,38,305/-
CIF VALUE ASSESSABLE VALUE
CIF@ US$ 0.45 CIF Rs. 4,66,646/-
US$ 1,0111.50 Duty Rs. 2,07,905/-
CIF Rs. 4,66,645.72 Total Rs. 6,74,551/-
A/Value Rs. 4,71,312.18
Duty Rs. 2,07,905.32 MOP Rs. 1,63,326/-(35%)
Clearance Rs. 52,000/-
Rent & Rs. 1,80,156/-
Detention
Total Rs. 2,32,156/-
M.O.P. Rs. 1,63,326/-
Expenses Rs. 2,32,156/-
Rs. (-) 68,830/-
Redemption Fine : Rs. 93,329.20 (205)
29. In this connection, the appellants have relied on a decision reported in 1997(21) RLT 192 (CEGAT) in the case of Commissioner of Customs Calcutta v. Star Enterprises wherein it is held that while arriving at margin of (SIC) imposition of redemption fine, the calculation of all valid expenses including those clearing, loading, transportation, unloading godown rent etc. incurred by the importers before such goods are put up for sale is to be allowed deduction. In the other case relied upon by the appellants reported in 2000(122) ELT 722 in the case of V.G. Mohanan v. Commissioner of Customs, Chennai. it is held that “Higher redemption fine and penalty imposed in the case of present appellants although penalties imposed and redemption find levied much lower for an earlier identical import. Margin of profit same in both cases imposition of redemption find and penalty although discretionary but to the exercised judiciously. We have considered the submissions and have perused the two orders one passed in 1199 and the present order passed in 2 2000. The order passed in 2 2000 does not bring out any circumstances different as regards change in margin of profit, except that one person has utilised the name of another importer to import the goods. We therefore, cannot find any reason in the present order for imposition of higher penalties. We are aware that imposition of penalty and redemption fine are at the discretion of the adjudicating officer, but he has to take the totality of a particular case into consideration. However, discretion has to be exercised judicially by the adjudicator and he has also to consider the formula prescribed under Section 125 of the Customs Act, to determine redemption fine. Redemption fine is related to the margin of profit and for heavy redemption fine of almost 80% as in this case, it has to be established that the margin of profit is substantially higher than the case where the redemption fine of only 25% was imposed as in the case decided in 11 99. There is no such finding arrived at by the Commissioner in regard to the margin of profit having gone up considerably from 11 99 to 2 2000 or that the importer in the present case was a repeated offender of the Customs Act read with Import Trade Control law of the country. The order is therefore, required to be set aside for non-application of mind and it should go back for de-novo determination of the issue involved in this case”
30. In addition to the above case law, the appellants have also referred to a decision reported in 1995(80) ELT 189 (Tribunal) in the case of Parasakthi Pictures Mart v. Collector of Customs, (SIC) wherein it is held that substantial difference in quantum of fine and penalty between two such identical imports amounts to discrimination under Article 14 of the Constitution of India. In another decision of the Hon’ble CEGAT in the case of J & K Textiles v. C.C. Cochin reported in 1999. (114) ELT 458 (Tribunal). It is observed that the Hon’ble Tribunal has been consistently taking a view that the quantum of redemption fine in the case of such imports should be 25% of the CIF value.
31. I find that these case laws are squarely applicable to the facts of the present case in-as-much-as the adjudicating authority has failed to maintain a uniform practice in the matter of imposition of redemption fine in identical cases in relation to imports effected in September 2000. I also do not find any credible evidence in the impugned SCNs to justify imposition of such a heavy fine as has been inflicted by the adjudicating authority in the impugned orders.
32. In view of the above, I am of the considered view that the practice adopted by the Custom House/adjudicating authority in the matter of imposition of minimum quantum of 20% CIF value is at variance with the consistent view of the Hon’ble CEGAT followed in the case of J & K Textiles v. C.C. Cochin reported in 1999 (114) ELT 458 (Tribunal) referred to at para 30 (above). I am, therefore, not inclined to accept the minimum quantum of 20% of CIF as worked out by the Custom House/adjudicating authority (para 28 refers). In the facts and circumstances of the case, it would be justifiable to maintain the quantum of redemption fine to a minimum of 25% of the CIF value as per the decision of the Hon’ble Tribunal referred to above.
33. In so far as the quantum of personal penalty is concerned, I find that about 60% penalty has been imposed by the adjudicating authority in respect of all the 3 appellants. Further, on a perusal of the Custom House letter dated 16.10.2001. get the impression that a higher penalty of 50(SIC) of CIF value is being imposed to negate the very purpose of computation of the quantum of redemption find and penalty imposed in the case of such appellants, it would be sufficient to observe that the quantum of redemption fine is to be worked out in terms of proviso to Section 125 of the Customs Act, 1962, whereas personal penalty is imposable under Section 112 of the Custom Act, 1962 for offences committed under Section 111 of the Customs Act 1962 (Section 111(d) & (m) in the present case]. These two statutory provisions viz. Section 125 and Section 112 of the Customs Act, 1962 are independent of each other and are not complementary in relation to the determination of quantum of redemption fine. The quantum of person penalty is to be determined in terms of gravity of the offence/extent of misdeclaration/the extent of mensrea in committing a certain offence, as per charges framed in the Show Cause Notice (SCN)
2. I have heard Shri P.K. Das and Shri H. Kundalia, ld. Advocate for the appellants and Shri D.K. Bhowmik and Shri A.K. Mondal, both JDRs for the Revenue. After considering the submissions made, I find
(a) Ld. advocates fairly concede that there was no contest as regards the nature of the goods which were found. They pleaded that the bonafides of the importers should be considered for imposition of fine and penalty, since the case, M/s Unique International. They were first time importing while M/s Star Trading and M/s Shafi Habib, Prop. M/s M.S. Impex, they has second consignment imported in the bonafide belief, that such goods could be cleared under the declarations as made by them without fine and penalty. They strongly relied upon the decision represented before the ld. Commissioner (Appeals) and also the case of J.K.Textiles [1999 (114) ELT 458 which had been decided by Two Member Bench of Chennai South Zonal Bench of this Tribunal wherein for similar goods, which were found to be and old and used garments not multilated, were released on a redemption fine of 25% and penalty of 5% of CIF. They strongly urged for a lenient view to be taken in these matters and submitted no valid reason have been cited and arrived at by the ld. Commissioner in his order for having departed from these norms which were fixed by the Higher Jurisdictional Tribunal which were binding upon on him and on this Bench siting Single. They drew by attention to the paper book, wherein charge of similar consignments cleared during July, August, September and October of year 2000 from Kolkata on fine of 21% approx. and penalty 5% were shown.
(b) Ld. DRs left to the matter to the discretion of the Bench in view of practice of the Customs House as seen from the chart and the Tribunal decisions. They submitted that since a mis-declaration has been established, suitable redemption fine and penalty had to be imposed in the instant case.
(c) Keeping in mind the case law and the fact that during the contemporaneous imports have been allowed on 21% approx., I would consider and I am bound to follow the Tribunal’s decision, to reduce the redemption fine to 20% of the CIF value and penalty to 5% of the CIF value as held by the Tribunal in the case of J.K.Textiles [1999 (114) ELT 458]. I am also aware of and considering the fact that in J.K.Textiles’ case redemption fine was arrived at 25%. However, keeping in mind that there were cases of release of such goods by the Calcutta Customs House and the decision which has been correctly applied by the Id. Commissioner (Appeals) of 1983 ELT 1261 (CEGAT) and 1993 (67) ELT 832 (Tribunal), I would also come to conclude, that the adequate for determination of quantum of redemption find should be the equivalent (SIC) as on contemporaneous imports at Kolkata Customs House, these redemption fines are in the range of 21%. Therefore, the redemption fine in this case should be 20% since from the date of imports i.e. in September/October 2000 till November, 2001, further expenses would have been incurred by the importers, on ware-house rent retention etc. and these reasons would also induces me to uphold the penalty of 5% only arrived at by following the case of J.K.Textiles (supra).
(d) The Commissioner’s (Appeals) Order is therefore, modified as above in these three appeals (20% CIF redemption fine and 5% CIF penalty) only.
3. In view of my above findings, all the three appeals are partly allowed in the above terms.
Dictated and pronounced in the open Court.