Mehta Fine Arts vs CESTAT

R. Sudhakar, J.—The premises of the appellant firm was inspected by the Directorate of Revenue Intelligence, during which it was found that out of 18 second-hand printing machines imported vide different Bills of Entry, for a value of Rs. 40,16,557/- (CIF), only two machines were found available in the premises. Hence show cause notice was issued to the appellant to explain as to why confiscation of goods should not be made and penalty should not be imposed, for violation of EXIM Policy, as per the provisions of Customs Act. After considering the explanation submitted by the appellant, the adjudicating authority, namely the 3rd respondent herein, passed the following order, on 8-5-2000.

"1. I order confiscation of 16 nos. of second-hand printing machines already sold by the party in the local market for Rs. 40,81,000/- under Section 111(o) of the Customs Act, 1962. I, however, give an option to the party to redeem the same on payment of fine of Rs. 12,75,000/- (Rupees twelve lakhs seventy five thousand only) under Section 125 of the Customs Act, 1962.

I impose the penalty of Rs. 1.5 (Rupees one lakh and fifty thousand only) on M/s. Mehta Fine Arts, Sivakasi under Section 112(a) of the Customs Act, 1962"

Challenging the same, the appellant filed an appeal before the 1st respondent Tribunal. The Tribunal by final order, dated 17-5-2002, set aside the order of the adjudicating authority and remanded the case to the original authority for a de novo consideration. After do novo enquiry, the adjudicating authority, namely the 2nd respondent, passed the following order-in-original, dated 14-10-2004.

"(i) I hold that the 16 numbers of second-hand printing machinery (CIF) Value Rs. 36,06,557/- imported vide various Bills of Entry through Tuticorin port and sold to various parties by M/s. Mehta Fine Arts, Sivakasi are liable to confiscation under Section 111(o) of the Customs Act, 1962.

(ii) I impose a penalty of Rs. 4,50,000/- (Rupees Four Lakhs and Fifty Thousand only) on the importer under Section 112(a) of the Customs Act, 1962.

(iii) I order that the amount of Rs. 75,000/- paid as pre deposit may be adjusted against the dues as above."

Aggrieved by the same, the appellant preferred an appeal before the 1st respondent Tribunal. The Tribunal, vide order dated 5-3-2012, rejected the appeal of the appellant, as under:

"In all these three cases the appellants have imported second-hand printing machines subject to actual user condition. However, the impugned machines were sold in contravention of the actual user condition within five years of import. As such, the adjudicating Commissioner has imposed penalty amounting to 10% of the value of the printing machines. The learned counsel appearing for the appellants pleads for reduction in penalty amounts. We find that though in these cases the goods were liable for confiscation, no redemption fine has been imposed as the machines were not available. Hence, the penalty of 10% imposed in respect of the impugned machines is quite reasonable and the same does not require any reduction. Consequently, all the three appeals are rejected."

Challenging the same, the appellant is before this Court with this appeal. On 7-6-2012, while admitting this appeal, this Court framed the following substantial questions of law for consideration.

"(1) Whether the 1st Respondent Tribunal erred in confirming the enhanced penalty under Section 142(a) of the Customs Act in the de novo proceedings, when the same was lesser in the earlier proceedings against the appellant?

(2) Whether the imposition of enhanced penalty is justifiable in the de novo proceedings afresh, in the absence of appeal under Section 129-A of the Customs Act by the Revenue against the earlier order passed by the original adjudicating authority?"

When the matter came-up for hearing today, we heard the learned counsel for the appellant and the learned counsel appearing for the Revenue.

There is no bar on the adjudicating authority, in a de novo proceedings, to determine the quantum of fine or penalty. The fine and penalty imposed has been set aside and the matter is live for re-adjudication. Hence earlier order imposing fine or penalty does not have any relevance. The adjudicating authority, at its discretion, may impose appropriate fine or penalty. It does not matter whether the proceedings have been initiated afresh or heard by way of de novo proceedings on the orders of the Tribunal. Question of challenging enhancement of penalty does not arise in a case of this nature, where the adjudication order itself has been set aside in its entirety and the matter remanded back to the original authority for re-adjudication, namely de novo enquiry. We find no provision of law that bars the adjudicating authority from imposing fine or penalty as he may deem fit in the facts and circumstances of the case. In view of the above, the substantial questions of law are answered in favour of the Revenue. The civil miscellaneous appeal is, accordingly, dismissed. No order as to costs. Connected miscellaneous petition is also dismissed.