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Cus - Penalty is leviable, only if goods found liable for confiscation, are dutiable goods - There is no dispute that goods were not dutiable, by virtue of exemption notification - Penalty rightly set aside by CESTAT: High Court

By TIOL News Service

CHENNAI, OCT, 10 2015: THIS is a Revenue appeal.

The respondent filed four shipping bills in April and July 2002 for the export of finished leather [Heading 4106.19.09]. In respect of three out of four shipping bills, the respondent realised the sale proceeds in foreign exchange. Therefore, DEPB Credit in two scrips were obtained.

But, before the sale proceeds under the fourth shipping bill could be realised, the goods were rejected by the foreign buyer. However, the first respondent filed a bill of entry dated 15.3.2004, which, according to the appellant, contained a misdeclaration as to the country of origin.

As a consequence, confiscation proceedings were initiated and a SCN dated 11.8.2004 was issued u/s 124 of the Customs Act, 1962. The proposal was contested and the first respondent claimed the benefit of exemption in terms of Serial No.3 of the Table annexed to Notification No.94/96-Cus.

But the claim was rejected by the Commissioner, who ordered confiscation with the option for redemption on payment of fine. He also imposed a penalty and directed them to produce DEPB for debiting an amount of Rs.7,06,344/-. The redemption fine imposed by the Commissioner in lieu of the confiscation of the goods valued at Rs.84,19,320/- was Rs.10,00,000/-. The penalty imposed was Rs.5,00,000/-.

The penalty was set aside by the CESTAT and, therefore, the Revenue is in appeal.

Apparently, there is no appeal filed by the respondent against the imposition of redemption fine.

The High Court observed -

++ The fine imposed by the Commissioner of Customs in his order-in-original dated 30.9.2004, was under Section 112(a)(ii) of the Customs Act, 1962. Under Section 112(a)(ii), a person who does any act by which certain goods become liable to confiscation under Section 111, is liable to penalty. But the penalty is leviable, only if the goods in relation to which he is found liable for confiscation, are dutiable goods other than prohibited goods. There is no dispute about the fact that the goods in question in the case on hand were not dutiable goods, by virtue of the exemption notification.

++ Therefore the Tribunal rightly relied upon the law laid down in paragraphs 79 and 80 of the decision of the Supreme Court in Associated Cement Companies Ltd., v. Commissioner of Customs, - 2002-TIOL-08-SC-CUS-LB. Since the Tribunal has followed only the express language of Section 112(a)(ii) as interpreted by the Supreme Court in the case of Associated Cement , we find no merits in the appeal.

The Revenue appeal was dismissed.

(See 2015-TIOL-2241-HC-MAD-CUS)


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