Sha Jagaroopjee Phukhraj Vs. Commissioner of Customs - Court Judgment

Excerpt:
1. in terms of the impugned order, cassia weighing 53460 kgs. for a declared price of us $ 900 per m.t. was confiscated u/s 111(d) and (m) of the customs act, 1962 and the appellant was given an option to redeem the same on payment of a redemption fine of rs. 30 lacs. the penalty imposed is rs. 10 lacs.2. the learned counsel did not seriously contest about the licensing angle in view of the fact that cassia was shown in the negative list.even though cassia is a drug, since it is shown in the negative list and a specific licence is required, therefore the same is liable to be confiscated u/s 111(d) of the customs act, 1962. so far as sec. 111(m) is concerned, the declared price is us $ 900 per m.t. it is now admitted even in the impugned order that the same is of second quality.the invoice of foreign trader which is produced before us goes to show that he purchased the same from china for us $ 830 per m.t. he supplied the same to the appellant for us $ 900 per m.t. the department wants to enhance the price at us $ 1035 per m.t. on the ground that at bombay the same was cleared at the above said price. but what was cleared at bombay was the first quality. therefore similar imports of second quality was not relied on by the department. they have merely relied on the price at new york and london which is not relevant for this case.in such circumstances, when the trader's invoice clearly shows that they purchased the same for us $ 830 and in the facts and circumstances of the case, no ground is made out for enhancement of the above said value and in this view of the matter, confiscation under section 111(m) is not proper.3. the next ground urged by the learned counsel is that at the time of import the duty on cassia was 50% and when the appellant filed the bill of entry the duty was 50%. in view of the finance act, the duty now is only 15%. on this ground, he stated that the bona fides of the appellant are to be taken into consideration and more particularly that he will not be able to compete in the market in view of the fact that he had already paid a higher percentage of duty. it was further pointed out that he is incurring a demurrage of rs. 7,200 per day which has now already aggregated to the tune of over rs. 5 lakhs as on date. the appellant could not clear the goods because of the heavy redemption fine and penalty imposed on the appellant. in this connection, the appellant drew our attention to the orders passed by the cc (appeals) in order nos. 2470-2477/96, dated 2-3-96 wherein the redemption fine was fixed at the rate of 75% of the c.i.f. value. in this order, the learned counsel further pointed out that the collector (appeals) placed reliance on the previous orders passed wherein similar redemption fine of 75% was imposed. this import in the above said orders of collector (appeals) was made in the month of april, 96 whereas the present import by the appellant is in the month of feb., 96. he, therefore, pointed out that in the facts and circumstances of the case, the redemption fine requires to be reduced. he also pointed out that the penalty of rs. 10 lakhs is very heavy and the same is also required to be reduced.4. the learned sdr pointed out that in similar circumstances, the tribunal imposed 100% redemption fine and in this connection he relied on a decision reported in 1994 (73) e.l.t. 749. but, on going through the said order, we find that value of the goods were not clearly mentioned thereunder and we cannot clearly say whether the redemption fine there was 100% or not. further, the learned counsel in this connection pointed out that in cochin itself a redemption fine of 50% was imposed and the order in this respect is also produced by him. the bill of entry in this respect is also produced which bears the number 1680, dated 2-4-96. under the bottom right hand side as per the assessment is concerned, the fine is rs. 4.25 lakhs in respect of the goods valued at rs. 8,90,340. the penalty in that case was rs. 50,000, as could be seen from the bill of entry.5. we have considered the submissions of both the sides. it is now seen that as per this bill of entry 50% was imposed as a redemption fine as per the practice of the customs. it is seen that in a majority of the cases the levy of redemption fine is 75%. in addition, it is seen that because of the heavy redemption fine imposed on the appellant they could not clear the goods and the demurrage has already raised to more than rs. 5 lakhs. further there was a decrease in the rate of duty in view of the finance bill introduced in the parliament. these are all make the circumstances which are in favour of the appellant. taking into consideration the overall facts and circumstance of this case, as narrated above, we are of the view that the value as declared by the appellant at us $ 900 per m.t. is to be accepted and in facts and circumstances of the case, the redemption fine should be reduced to 75% of the c.i.f. value. taking into consideration the totality of the circumstances, we reduce the penalty to a sum of rs. 1.00 lac (rupees one lac). the appeals are disposed of in the above terms. we order accordingly.

Judgment:
1. In terms of the impugned order, cassia weighing 53460 kgs. for a declared price of US $ 900 per M.T. was confiscated u/s 111(d) and (m) of the Customs Act, 1962 and the appellant was given an option to redeem the same on payment of a redemption fine of Rs. 30 lacs. The penalty imposed is Rs. 10 lacs.

2. The learned Counsel did not seriously contest about the licensing angle in view of the fact that cassia was shown in the negative list.

Even though cassia is a drug, since it is shown in the negative list and a specific licence is required, therefore the same is liable to be confiscated u/s 111(d) of the Customs Act, 1962. So far as Sec. 111(m) is concerned, the declared price is US $ 900 per M.T. It is now admitted even in the impugned order that the same is of second quality.

The invoice of foreign trader which is produced before us goes to show that he purchased the same from China for US $ 830 per M.T. He supplied the same to the appellant for US $ 900 per M.T. The department wants to enhance the price at US $ 1035 per M.T. on the ground that at Bombay the same was cleared at the above said price. But what was cleared at Bombay was the first quality. Therefore similar imports of second quality was not relied on by the department. They have merely relied on the price at New York and London which is not relevant for this case.

In such circumstances, when the trader's invoice clearly shows that they purchased the same for US $ 830 and in the facts and circumstances of the case, no ground is made out for enhancement of the above said value and in this view of the matter, confiscation Under Section 111(m) is not proper.

3. The next ground urged by the learned Counsel is that at the time of import the duty on cassia was 50% and when the appellant filed the bill of entry the duty was 50%. In view of the Finance Act, the duty now is only 15%. On this ground, he stated that the bona fides of the appellant are to be taken into consideration and more particularly that he will not be able to compete in the market in view of the fact that he had already paid a higher percentage of duty. It was further pointed out that he is incurring a demurrage of Rs. 7,200 per day which has now already aggregated to the tune of over Rs. 5 lakhs as on date. The appellant could not clear the goods because of the heavy redemption fine and penalty imposed on the appellant. In this connection, the appellant drew our attention to the orders passed by the CC (Appeals) in order Nos. 2470-2477/96, dated 2-3-96 wherein the redemption fine was fixed at the rate of 75% of the c.i.f. value. In this order, the learned Counsel further pointed out that the Collector (Appeals) placed reliance on the previous orders passed wherein similar redemption fine of 75% was imposed. This import in the above said orders of Collector (Appeals) was made in the month of April, 96 whereas the present import by the appellant is in the month of Feb., 96. He, therefore, pointed out that in the facts and circumstances of the case, the redemption fine requires to be reduced. He also pointed out that the penalty of Rs. 10 lakhs is very heavy and the same is also required to be reduced.

4. The learned SDR pointed out that in similar circumstances, the Tribunal imposed 100% redemption fine and in this connection he relied on a decision reported in 1994 (73) E.L.T. 749. But, on going through the said order, we find that value of the goods were not clearly mentioned thereunder and we cannot clearly say whether the redemption fine there was 100% or not. Further, the learned Counsel in this connection pointed out that in Cochin itself a redemption fine of 50% was imposed and the order in this respect is also produced by him. The bill of entry in this respect is also produced which bears the number 1680, dated 2-4-96. Under the bottom right hand side as per the assessment is concerned, the fine is Rs. 4.25 lakhs in respect of the goods valued at Rs. 8,90,340. The penalty in that case was Rs. 50,000, as could be seen from the bill of entry.

5. We have considered the submissions of both the sides. It is now seen that as per this bill of entry 50% was imposed as a redemption fine as per the practice of the customs. It is seen that in a majority of the cases the levy of redemption fine is 75%. In addition, it is seen that because of the heavy redemption fine imposed on the appellant they could not clear the goods and the demurrage has already raised to more than Rs. 5 lakhs. Further there was a decrease in the rate of duty in view of the Finance Bill introduced in the Parliament. These are all make the circumstances which are in favour of the appellant. Taking into consideration the overall facts and circumstance of this case, as narrated above, we are of the view that the value as declared by the appellant at US $ 900 per M.T. is to be accepted and in facts and circumstances of the case, the redemption fine should be reduced to 75% of the c.i.f. value. Taking into consideration the totality of the circumstances, we reduce the penalty to a sum of Rs. 1.00 lac (Rupees one lac). The appeals are disposed of in the above terms. We order accordingly.