Judgment:
1. The appellants had imported various items, separately declared in the subject BE, however, on examination of the items mentioned in the invoice, it appeared to the Customs Authorities that the following items, out of the items under import were individually covered by the enteries in the ITC (HS) classification of Export and Import as published in the Export/Import Policy 1992-97 as amended and published on 25.03.95 to be restricted for the imports; the items are - The Collector, finding that no corresponding to ITC Circular No 10/92-97, was issued under ITC (HS) classification. He did not consider the present import to be permissible without a licence and since no licence was produced, he confiscated the items valued at Rs 12,31,648/- under section 111 (d) of the Customs Act 1962 and gave an option to reduce the same on a fine of Rs 6 lakhs and imposed a penalty of Rs 3 lakhs under section 112 of the Customs Act 1962.
(a) The import was not of individual item but of 'The Article Sound System' and only individual components of this system were separately classified.
(b) Import of such 'Professional Grade Audio/Video Studio Equipment could be made without a licence as per I.T.C. Circular No 10/92-97 dated 05.8.92.
(c) The Hon'ble Minister while releasing the I.T.C. (HS) classification at a Press Conference had made a statement that introduction of the same was not an attempt to change the policy.
(d) No penalty was required to be imposed and no mention of sub section of Section 112 has been made in the order, which is bad in law.
(a) the Collector order is finding that the items are in the restricted list & I.T.C. (HS) classification has been given statutory status vide Import Policy Para 146, therefore, the subject goods being part of the consignment under import required an import licence. We cannot find, any reason to differ with this finding, as we do not find the goods to be described as 'the article sound system' but are separately claimed for assessment as individual item. The policy for the individual item, as evident from ITC (HS) classification, would be applicable, as rightly held and found by the Collector.
(b) We find that the Collector has imposed a redemption fine of Rs 6 lakhs on goods valued at Rs 12,31,648/- without determining any margin of profit and considering that a major number of items under the import were not liable for confiscation, & we are aware that the Minister of Commerce's statement in a Press Conference cannot be the Import Policy to avoid liability of (SIC) in, which we uphold the ITC (HS) Policy should have an entry at a sub division stating the items to be 'importable free of licence, the statement is required to be followed up by an amendment. However, this statement of the Hon'ble Minister can be considered a mitigating factor to reduce the redemption. Therefore, we do not uphold the fine of Rs 6 lakhs imposed. Considering that the matter is pending for a long time, we do not find any purpose will be met by remanding the matter back to the Adjudicating authority to redetermine the redemption fine, we would order its reduction to Rs 4 lakhs to be adequate, considering the rate of duty and the amounts paid.
(c) As regards penalty, even though the ITC (HSN) Policy was introduced much earlier to the present imports, we can arrive at a finding that due to the PN issued under the earlier policy, the importers could be under a reasonable belief, more so due to the Press Statement of the Hon'ble Minister, that the items in question were freely importable and the substantial portion of the import has been allowed so, therefore, penalty in such circumstances will not be called for, especially without determining the sub section of section 112 of the Customs Act and determination of the conduct mentioned in the sub sections. We are of the view that even if Mens-Rea is not essential ingredient for certain acts under section 112, the levy of penalty would certainly depend on its existence. We reply on the oft cited decision of the Supreme Court in Hindustan Steel (AIR 1970 SC 253) & Akber Beddruddin Jiwani 1990 (47) ELT 160, 180 (SC); Jain Exports (P) Ltd 1990 (47) ELT 213 (SC); B. Vijay Kumar AIR 1987 SC 1794 to come to a conclusion, in the facts of this case, that penalty has been imposed on a technical breach of the law and is not called for; as we do not find any act of defiance of law or conduct contemnatious or dishonest to call for visit of a penalty made the heavy penalty of Rs 3 lakhs imposed in this case. We set it aside.
5. In view of our findings, we allow the appeal partially in the above terms.