Export of non-basmati rice - Redemption fine imposable in lieu of confiscation is limited by ceiling of market price of confiscated goods - Tribunal could not have reduced value declared and legalized patent illegality: HC
By TIOL News Service
ALLAHABAD, JAN 19, 2015: THE appellant filed a shipping bill for the export of a consignment of 125.00 MT of "Indian Pusa 1121 Parboiled Rice", which was valued at Rs.67.82 lacs (FOB). When the customs department carried out an inspection and examination it was revealed that the goods were non-basmati rice and were not of the description contained in the shipping bill.
The authorized signatory in his statement admitted that the goods presented for examination were non-basmati rice though basmati rice was declared.
As the export of non-basmati rice is prohibited by DGFT, the matter was adjudicated and the Commissioner ordered confiscation of the goods u/s 113(d)/113(i) but allowed redemption of the same on payment of redemption fine of Rs.14 lakhs. A penalty of Rs.8 lakhs was also imposed.
Before the CESTAT the appellant urged that the value which had been declared in respect of the mis-declared goods should not be taken but the value of the actual goods while deciding the quantum of RF and penalty.
The Tribunal dismissed the appeal by taking a view that no court has power to legalise an illegality by reducing the mis-declared value to the actual market value of goods in the container, which was attempted to be exported. However, having due regard to the mis-declared value, the Tribunal came to the conclusion that the redemption fine of Rs.14 lakhs was on the higher side and, accordingly, reduced it to Rs.10 lakhs. The penalty was also reduced from Rs.8 lakhs to Rs.5 lakhs.
The appellant is before the High Court and inter alia raises the following questions of law:
"(i) Whether the Hon'ble Tribunal is justified in holding that the misdeclared value of the goods cannot be reduced to the actual market value of the goods attempted to be exported specially when the Act and the rules do not whisper so.
(ii) Whether the Hon'ble Tribunal is justified in imposing redemption fine and penalty when they do not doubt the submission of the appellants that the goods in question was loaded by mistake of the labourers and the consignment for export was lying as such in the factory."
The High Court extracted the provisions of section 125 of the Customs Act, 1962 and observed that there is no merit in the submission made inasmuch as -
+ Under Section 125, the adjudicating officer may, in the case of goods, the importation or exportation of which is prohibited, and shall, in the case of any other goods, give to the owner of the goods an option to pay in lieu of confiscation, such fine as the officer thinks fit.
+ On a plain reading of the language of the substantive part of sub-section (1) of Section 125, it is clear that the legislature has not imposed a restriction of the kind which has been sought to be implied on behalf of the appellant. What the proviso to sub-section (1), however, stipulates is a ceiling on the fine in lieu of confiscation, insofar as it stipulates that such fine shall not exceed the market price of the goods confiscated.
The High Court noted that non-basmati rice confiscated was valued at Rs.18,000/- to Rs.20,000/- per MT and as the consignment sought to be exported was 125 MT, the total market value would be between Rs.22.50 lakhs to Rs.25 lakhs. Further, the proviso to sub-section (1) to Section 125 stipulated a ceiling of redemption fine as being not exceeding the market price. Moreover, the adjudicating authority had imposed a redemption fine of Rs.14 lakhs.
The High Court, therefore, observed-
++ The grievance of the appellant is that the redemption fine of Rs.14 lakhs was founded on the mis-declared value of Rs.67.82 lakhs, as reflected in the shipping bill. We find no reason or justification to interfere with the order of the adjudicating officer (as reduced by the Tribunal insofar as quantum of fine is concerned) so long as the quantum of redemption fine was not in excess of the stipulation contained in the proviso to subsection (1) to Section 125.
++ In fact, before the Tribunal, it was sought to be urged, that the value declared in respect of the mis-declared goods must be reduced to the extent of the value of the actual goods in the consignment. The Tribunal was justified in holding that no such exercise could be carried out and the Court has no jurisdiction to do so, so as to legalize a patent illegality.
++ The order of the Tribunal, on a considered view of the matter, reducing the redemption fine and the penalty to the extent indicated in the order, is fair and does not call for interference in the appeal by the exporter.
The appeal was dismissed.
(See 2015-TIOL-133-HC-ALL-CUS)
