Full Judgment
(ii) I confiscate the above goods under Section 111 (d) and under Section 111 (m) of the Customs Act, 1962. However, I give an option to the importer to redeem the goods on payment of a fine of Rs. 16,00,000 (Rupees sixteen lakhs only) under Section 125 of the Customs Act, 1962.
(iii) I also impose a penalty of Rs. 8,00,000 (Rupees eight lakhs only) on M/s. Image Print "O" Pack, New Delhi, the importer under Section 112(a) of the Customs Act, 1962." 2. The appellants are not challenging the above valuation of the goods, nor are they disputing the liability of the goods for confiscation.
Their challenge in this appeal is limited to the question whether the quanta of redemption fine and penalty are reasonable or not.
3. Heard both sides. Ld. Counsel for the appellants has given a brief account of the relevant facts of the case. He submits that the same Commissioner has imposed lesser fine in respect of a similar second-hand machinery imported and cleared contemporaneously by other importers. Ld. Counsel has cited one instance, in which the Commissioner's order imposing a redemption fine of Rs. 3.6 lakhs and penalty of Rs. 2.4 lakhs on M/s. Sai Shakti Enterprises in a case of importation of second-hand photocopying machine has been modified by this Tribunal. A copy of the relevant Final Order No. 381/2004 dt.
21.4.04 passed by us in the case of Sai Shakti Enterprises v. CC, Chennai has been produced by the counsel. The fine was reduced to Rs. two lakhs and the penalty was reduced to Rs. 50,000 (Rupees fifty thousand only) in the above Final Order. As the facts of the instant case are essentially similar to those of SAI SAKTHI ENTERPRISES, Counsel argues, the quanta of fine and penalty in the instant case require to be reduced proportionately. This argument has been contested by the DR, who seeks to distinguish the two cases by submitting that the machinery imported by SAI SHAKTI ENTERPRISES was a consumer item (Photocopying machine) whereas, in the instant case, the imported machinery has considerably long residual life and is not a consumer item. Ld. DR has also reiterated the observations contained in the impugned order.
4. We have carefully considered the submissions. After examining the records of the present case and the Final Order passed by us in the case of M/s. SAI SHAKTI ENTERPRISES, we notice a glaring similarity between the two cases. In both cases, second-hand machineries, more than ten years old, were imported by the parties. The transaction value was rejected and the machinery was valued by the Commissioner on the basis of Chartered Engineer's Certificate and such valuation was accepted by the parties. The liability of the goods to be confiscated was also not disputed by them. The only grievance raised by the parties was in relation to the quanta of redemption fine and penalty. In either of the cases, the Commissioner did not consider the element of Margin of Profit while determining redemption fine. Apparently the redemption fine was determined, in either of the cases, in an empirical manner without reference to the provisions of Section 125 of the Customs Act.
The challenge by the parties in both the cases is against the manner of determination of redemption fine and penalty. In the case of M/s. Sai Sakthi Enterprises, we have examined the matter in detail and have found that the adjudicating authority did not exercise its discretion correctly in determining the fine under Section 125 and the penalty under Section 112 of the Customs Act. In view of the factual similarity of the two cases, we record the same finding in the instant case.
5. A redemption fine of Rs. 16 lakhs is exorbitant vis-a-vis the value of the goods (over Rs. 38,00,000). In the case of Sai Sakthi Enterprises, the fine was to the tune of Rs. 3.6 lakhs where the value of the goods was about Rs. 24 lakhs. We reduced the fine to Rs. 2 lakhs in that case. Employing the same yardstick, we reduce the quantum of redemption fine in the instant case to Rs. 8 lakhs. In the earlier case, we reduced the penalty from Rs. 2.4 lakhs to Rs. 50,000.
Similarly, we reduce the penalty in this case to Rs. 1,50,000. With this modification, the order of the Commissioner stands affirmed.