The Commissioner of Customs Custom House New Harbour Estate Tuticorin-628 004 v. M/s.Sai Copiers & Ors.

IN THE HIGH COURT OF JUDICATURE AT MADRASDATED: 31.01.2008CORAM:THE HONOURABLE MR.JUSTICE K.RAVIRAJA PANDIANandTHE HONOURABLE MRS.JUSTICE CHITRA VENKATARAMANC.M.A.Nos.127 to 130 of 2008The Commissioner of CustomsCustom HouseNew Harbour EstateTuticorin-628 004. .. Appellant in all these C.M.As.versusM/s.Sai CopiersNo.14, Vairams ComplexNo.112, Thiagaraya RoadT.NagarChennai. ..1st respondent in C.M.A.No.127 of 2008M/s.Sri Venkateswara EnterprisesNo.567/3, Mount RoadTeynampetChennai-600 018. .. 1st respondent in C.M.A.No.128 of 2008M/s.TTC ServicesNo.5, Aziz Mulk Seventh StreetThousand LightsChennai-8. .. 1st respondent in C.M.A.No.129 of 2008M/s.Sun Copier Systems No.200, Maruthamalai Main RoadKalveerampalayamBharathiar University PostCoimbatore-641 046. .. 1st respondent in C.M.A.No.130 of 2008Customs, Excise and Service Tax Appellate TribunalSouth Zonal BenchShastri Bhawan Annexe, 1st Floor26, Haddows RoadChennai-600 006. .. 2nd Respondent in all these CMAs https://hcservices.ecourts.gov.in/hcservices/ PRAYER: CMA.Nos.127 to 130 of 2008 are filed under Section 130(1) of theCustoms Act, 1962, against the order of the Customs, Excise and ServiceTax Appellate Tribunal, South Zonal Bench, Chennai, dated 28.5.2007 madein Final Order Nos.674 to 680 of 2007.(Order in OriginalNos.7/07,259/07,156/06 & 155/06 respectively dated 28.12.06,12.12.06,12.12.06 & 20.7.06 on the file of the Commissioner of Customs,Tuticorin). For appellant in all these appeals :Mr.T.ChandrasekaranJUDGMENT(Judgment of the Court was delivered by K.RAVIRAJA PANDIAN,J.)In all these cases, the Revenue is on appeal under Section 130(1) of the Customs Act, 1962 against the Final Order Nos.674 to 680 of2007 dated 28.5.2007 on the file of the Customs, Excise and Service TaxAppellate Tribunal, South Zonal Bench, Chennai.2. The material facts for disposal of these appeals are asfollows:The first respondents – importers have imported old usedphotocopiers and filed bills of entry for clearance of the goods underOGL. The value of the goods as invoiced by the Overseas Supplier wasdeclared in the bills of entry. These imports were made subsequent tothe amendment of Para 2.17 of the Foreign Trade Policy by which theimport of second hand photocopiers would be allowed only against aspecific licence. After presentation of the bills of entry by the firstrespondent – importers, the goods were subjected to examination byOfficers of Customs, as also by a local chartered engineer. TheChartered Engineer appraised the value of the goods to be higher thanwhat has been declared by the importer. On the basis of the result ofinvestigation, the Department issued show cause notice to the importerscalling for their objections as to why the the imported goods should notbe confiscated for want of import licence, as to why penalty should notbe imposed on the importers and as to why the value appraised by theChartered Engineer should not be adopted for the purpose of assessment. 3. On adjudication, the Commissioner of Customs passed orders(a) enhancing the value of the goods under Rule 8 of the CustomsValuation Rules, 1988 read with Section 14(1) of the Customs Act on thebasis of the Chartered Engineer's appraisal, (b) confiscating the goodsunder Section 111(d) of the Customs Act read with Section 3(3) of theForeign Trade (Development and Regulation) Act with option forredemption against payment of fine under Section 125 of the Customs Actas well as payment of appropriate duty and (c) imposing penalties on theappellants under Section 112(a) of the Customs Act. https://hcservices.ecourts.gov.in/hcservices/

4. Aggrieved by the said order, the importers filed appealsbefore the Customs, Excise and Service Tax Appellate Tribunal. TheTribunal confirmed the order of the Commissioner, Customs in respect ofconfiscation of the goods, however reduced the redemption of fine andpenalty to 15 percent and 5 percent respectively of the value of thegoods. The Department aggrieved by the order of the Customs, Excise andService Tax Appellate Tribunal in reducing the penalty as stated above,filed the present appeals by formulating the following common questionsof law:(i) Whether the Customs, Excise and Service TaxAppellate Tribunal was justified in reducing the redemptionfine imposed under Section 125 of the Customs Act, 1962without giving any reasons, when the adjudicating authorityimposes deterrent fine in order to stop the imports inviolation of the Foreign Trade Policy?(ii) Whether the Customs Excise and Service Tax AppellateTribunal was justified in reducing the penalty imposed underSection 112(a) of the Customs Act, 1962 without giving anyreasons, when the adjudicating authority imposes deterrentpenalty in order to stop the imports in violation of theForeign Trade Policy?5. Learned counsel appearing for the appellants referring thenotification of the Central Board of Excise and Customs CircularNo.78/2003-Cus dated 1.9.2003, contended that the Board has issued thecircular to the effect that in case of import of second hand machineryimported in contravention of the EXIM policy, the fine imposed should besuch so that the importer does not, under any circumstance, make aprofit on its use or resale in India. The penalty should also becommensurate with the offence committed, particularly when the importersdeliberately imported goods knowing fully well that the import of suchgoods is restricted under the EXIM Policy. He further contended that inthis case there was no evidence adduced by the importers that they hadmade an attempt to procure import licence for the purpose of importingthe goods. Thus, he contended that the action of the importers isdeliberate and the Central Excise and Service Tax Appellate Tribunalshould not have reduced the redemption fine and penalty. 6. We heard the argument of the learned counsel appearing forthe appellants and perused the material on record.7. Section 125 of the Customs Act, 1962 reads as follows: " Section 125: Option to pay fine in lieu of confiscation:(1) Whenever confiscation of any goods isauthorised by this Act, the officer adjudging itmay, in the case of any goods, the importationor exportation whereof is prohibited under thisAct or under any other law for the time being inforce, and shall, in the case of any othergoods, give to the owner of the goods or, wheresuch owner is not known, the person from whose https://hcservices.ecourts.gov.in/hcservices/ possession or custody such goods have beenseized, an option to pay in lieu of confiscationsuch fine as the said officer thinks fit:Provided that, without prejudice to theprovisions of the proviso to sub-section (2) ofsection 115, such fine shall not exceed themarket price of the goods confiscated, less inthe case of imported goods the duty chargeablethereon.(2) Where any fine in lieu of confiscation of goods isimposed under sub-section (1), the owner of such goodsor the person referred to in sub-section (1), shall, inaddition, be liable to any duty and charges, payable inrespect of such goods. "8. Section 112 of the Customs Act, 1962, which authorisesimposition of penalty for improper importation of goods, reads asfollows:"Section 112: Penalty for improper importation ofgoods, etc.:Any person-(a) who, in relation to any goods, does or omits todo any act which act or omission would rendersuch goods liable to confiscation under Section111, or abets the doing or omission of such anact, or(b) who acquires possession of or is in any wayconcerned in carrying, removing, depositing,harbouring, keeping, concealing, selling orpurchasing, or in any other manner dealing withany goods which he knows or has reason to believeare liable to confiscation under section 111,shall be liable,-(i) in the case of goods in respect ofwhich any prohibition is in force under thisAct or any other law for the time being inforce, to a penalty not exceeding the valueof the goods or five thousand rupees,whichever is the greater;(ii) in the case of dutiable goods, otherthan prohibited goods, to a penalty notexceeding the duty sought to be evaded onsuch goods or five thousand rupees, whicheveris the greater;(iii) in the case of goods in respect ofwhich the value stated in the entry made https://hcservices.ecourts.gov.in/hcservices/ under this Act or in the case of baggage, inthe declaration made under section 77 (ineither case hereinafter in this sectionreferred to as the declared value) is higherthan the value thereof, to a penalty notexceeding the difference between the declaredvalue and the value thereof or five thousandrupees, whichever is the greater;(iv) in the case of goods falling bothunder clauses (i) and (iii), to a penalty notexceeding the value of the goods or thedifference between the declared value and thevalue thereof or five thousand rupees,whichever is the highest;(v) in the case of goods falling bothunder clauses (ii) and (iii), to a penaltynot exceeding the duty sought to be evaded onsuch goods or the difference between thedeclared value and the value thereof or fivethousand rupees, whichever is the highest. " (bold supplied)9. From the reading of the above provisions, it is clear thatthe statutory requirement is that the imposition of redemption fineshall not exceed the market price of the goods confiscated, less in thecase of imported goods, the duty chargeable thereon. The languageemployed "shall not exceed" indicates that the authorities under Act areempowered to impose redemption fine less than the market price of thegoods confiscated. Thus, a discretion is vested on the authorities witha rider that the imposition of redemption fine should not exceed themarket price.10. Likewise, under Section 112(a) also, the statutoryprescription is in the case of goods in respect of which any prohibitionis in force under the Customs Act, or any other law the penaltyimposable shall not exceed the value of the goods or Rs.5,000/-, whichever is greater. In respect of dutiable goods other than prohibitedgoods, the penalty could be imposed not exceeding the duty sought to beevaded on such goods or Rs.5,000/- which ever is greater. 11. Here again, the maximum that could be levied is onlyprescribed. There is no statutory prescription that the penalty shouldnot be reduced by the appellate authority. Before the Tribunal, theimporters relied on the earlier order of the Tribunal in the case of SRIVENKATESH ENTERPRISES VS. COMMISSIONER OF CUSTOMS, CHENNAI (2005) 192ELT 818, wherein the quantum of redemption fine imposed in lieu ofconfiscation of second-hand photocopiers valued at Rs.17.7 lakhs wasrestricted to Rs.2.5 lakhs and the quantum of penalty was restricted toRs.85,000/-. The same was followed in the case of the respondents alsoby the Tribunal. The fixation of the quantum of redemption is an https://hcservices.ecourts.gov.in/hcservices/ exercise of discretionary jurisdiction of the authorities under theCustoms Act. The Court can interfere only in the circumstances in whichit was demonstrated before it that the order of the Tribunal isthoroughly arbitrary, whimsical and resulting in miscarriage of justice.As already stated, the Tribunal has followed its own earlier decisionwherein the Tribunal has consistently imposed the redemption fine at 15percent and penalty under Section 112(a) at 5 percent of the value ofthe goods, which factum has not been disputed by the counsel appearingfor the Department. In the above said view of the matter, we find noquestion of law, much less a substantial question for entertaining theseappeals. Hence, the appeals are dismissed. However, there is no orderas to costs. Consequently, connected M.P.Nos.1, 1, 1 and 1 of 2007 inC.M.A.Nos.127 to 130 of 2008 are also dismissed.ksv/uskSd/- Asst.Registrar/true copy/ Sub Asst.RegistrarTo:1. The Commissioner of Customs Custom House New Harbour Estate Tuticorin-628 004.2. The Customs, Excise and Service Tax Appellate Tribunal South Zonal Bench Shastri Bhawan Annexe, 1st Floor 26, Haddows Road Chennai-600 006.+1 cc to Mr.T.Chandrasekaran, Advocate Sr.No.4648.NG(CO)DCP/15.2C.M.A.Nos.127 to 130 of 2008