Rajnikant Brothers vs Collector of Customs

R. Jayasimha Babu, J.—The assessee''s grievance is with regard to the quantum [of] redemption fine which has been determined by the

Tribunal at 150% of the invoice value. The assessee complains that no basis has been set out in the order for determining the quantum of fine at

that level. The Collector who had imposed the redemption fine of Rs. 1,20,00,000/- with respect to goods - almond in shells - of the value of Rs.

49.89 lakhs as per the invoice at the time of import in January, 1986, had relied upon the purchase code by the officials in one of the stores at

Delhi in the month of May, 1986 of shelled almonds which had been purchased at the rate of Rs. 200/- per hundred grams.

The amount so fixed by the Commissioner was reduced by the Tribunal on the ground that in its view that sum was excessive. Among the

factors noted by the Tribunal was the fact that at the time of import there was ambiguity as to whether the importation of dry fruits by export

houses claiming the benefit of additional licence under the terms of the Import Policy of 1978-79 was permissible. During the year of import the

importation of such goods was permissible only by the dry fruits merchants and not by persons like the petitioner who is a diamond merchant. The

Tribunal also took note of the fact that the petitioner had to store the goods for a long period of time. However, the Tribunal did not advert to the

basis on which the Collector had made his determination, namely the purchase of 100 grams of shelled almonds by his officials from the market in

the month of May, 1986 and as to how that price could form an acceptable basis for fixing the value of the goods imported in January, 1986,

which were almond in shells and not shelled almonds.

Though the Tribunal had initially declined to make a reference, this court at the instance of the assessee, called for reference of the question as to

whether the Tribunal was justified in fixing the redemption fine at Rs. 75,00,000/- without any evidence as to what the market value was on the

date of import. The other question reference of which was called for was as to whether the Tribunal was justified in fixing the redemption fine at

Rs. 75,00,000/- when in similar circumstances the Bombay Customs had levied redemption fine of only 20% of CIF values. The second question

certainly must be answered in favour of the revenue. The fact that the Collector at one place has one standard cannot result in an obligation being

imposed on every other Collector in the country, much less the Tribunal, to adopt the case standard irrespective of the circumstances of the case.

Collector''s orders are not binding precedents. The second question is answered against the assessee and in favour of the revenue.

The order of the Tribunal does not advert to the market price as on the date of import. It considered the material which the Collector had

regarding the market price for shelled almonds some months after the date of import. The Tribunal also referred to a report in the Economic Times

of 17-5-1986 which reported that Almond California had jumped by Rs. 200/- to Rs. 250/- in the dry fruits market as on that date. Apparently,

there was some increase in price between the date of import and the time at which the Collector made the order. It was, therefore, necessary for

the Tribunal, to determine as to what the market price was on the date of import, and the extent to which the price prevailing in the month of May

should be discounted to arrive at the price that prevailed in January.

The Tribunal has without stating any specific reason held that the redemption fine of Rs. 75,00,000/- was justified. If this figure is one which can

be regarded as an amount which does not exceed the market price as on the date of import, there will be no scope for interfering with this order of

the Tribunal as it is for the Tribunal to decide the amount of the redemption fine so long as it does not exceed the ceiling. As, from the order of the

Tribunal it is not very clear that the Tribunal had kept in view the relevant date for determining the market value, it has become necessary to direct

the Tribunal to re-do the exercise.

We will not ordinarily interfere with the discretion exercised by the Tribunal in the matter of determination of the question of redemption fine, as

that in the matter which is well within the province of the Tribunal to determine. It is only when the redemption fine levied is in excess of the market

value, it can be said that the Tribunal has exceeded its jurisdiction. We, therefore, make it clear that if the amount of redemption fine which the

Tribunal may decide to impose after examining relevant material is found by it to be an amount not exceeding the market value as on the date of

import there will be no scope of further interference with the order of the Tribunal.

That the market value for the purpose of Section 125 of the Customs Act is the value as on the date of import, is evident from the fact that the

amount of duty leviable at the time of import is with reference to the value as at the time of importation, as provided in Section 14 which refers to

the price at that time in the place of importation or exportation in the course of international trade. Redemption fine is intended to cape up the profit

that the person who has imported the goods in violation of the law is likely to make any reason of the import, as the goods are being allowed to be

retained by him.

We, therefore, set aside the order of the Tribunal and remand the matter to the Tribunal to determine the market value of those goods in India at

the time of import and decide the quantum of redemption fine which shall not exceed such market value. Parties to bear their respective costs.