APRIL 27, 2022

By R K Singh

Oh no!

2. The purpose of this article is to show how even a well-meaning and fine judicial mind can unsuspectingly fall prey to misapplication of judicial precedents. The subject matter is the CESTAT judgement in the case of Akshara and Company: 2022-TIOL-327-CESTAT-MAD (henceforth also referred to as the said judgement) authored by a Member who I have always admired and continue to, only increasingly so.

3. In the said judgement, certain goods were ordered to be confiscated and allowed to be redeemed for re-export on payment of redemption fine. In the appeal before CESTAT, the appellant did not challenge the confiscation but contended that redemption fine cannot be imposed when the confiscated goods are re-exported and cited the judgement of Supreme Court in the case of Siemens India Ltd 1999 (113) ELT 776(SC).

4. CESTAT in the said judgement set aside the redemption fine essentially on the ground that - "The Hon'ble Apex Court in the case of Siemens India Ltd. (supra) has held that the redemption fine cannot be imposed when the goods are exported".( Refer: para 9 of the Akshara judgement)

5. However perusal of the said Siemens judgement reveals that Supreme Court has no where, even by implication, held that redemption fine cannot be imposed when the confiscated goods are re-exported. In the case of Siemens, the primary adjudicating authority passed the following order:

"I order for confiscation of one unit of Laser Imager valued at Rs.20 lakhs under section 111 (d) of Customs Act 1962.

However, I give the option to M/s Siemens Ltd . Delhi for redeeming the Laser Imager on payment of fine of Rs.6,00,000/- only and appropriate duty of Customs leviable thereon, if they desire to avail to keep it in India.

I also give M/s. Siemens the option to re-export the Laser Imager to Germany within 3 months from the date of receipt of this order and in such case no duty will be chargeable. "

Although CESTAT interpreted the Siemens order of the primary adjudicating authority somewhat differently, it is clear from the plain reading of the adjudicating authority's order that it had imposed redemption fine only for the purpose of clearing goods for home consumption; it did not make any mention of redemption fine while allowing Siemens the option of re-exporting the goods within three months . As Siemens could not re-export the goods within three months, Supreme Court merely extended that period of three months and the re-export happened during the extended period. Supreme Court noting that the re-export did happen during the prescribed period, rightly interpreted the adjudicating authority's order to hold that no redemption fine was payable.

7. It may be mentioned in passing that High Court judgement in case of Shankar Pandi - 2003-TIOL-1525-HC-MAD-CUS cited in the said judgement hardly constitutes a binding exposition/interpretation of Siemens judgement of Supreme Court. It (i.e. the High Court judgement) does not conclude that as per Supreme Court's Siemens judgement, no redemption fine can be imposed on confiscated goods if the same are re-exported; it is evident from the manner para 3 of that (High Court) judgement begins:

"3. It appears that the question relating to re-export is covered by the decision of the Supreme Court rendered in the case of Siemens Limited v. Collector of Customs reported in S.C. 1999 (113) E.L.T. 776…" . (underline provided)

8. It needs to be reiterated that in the case of Siemens, the primary adjudicating authority itself did not impose any redemption fine in case the goods were re-exported within 3 months which period was extended by Supreme Court without making any other change in the order of the primary adjudicating authority. And as the goods were duly re-exported within the period so allowed, Supreme Court essentially gave effect to the order of the primary adjudicating authority that "in these circumstances", no redemption fine "was to be paid". Thus, neither expressly nor by implication, Supreme Court held that the redemption fine cannot be imposed when the goods are exported.

9. It is pertinent to mention here that CESTAT in the said judgement would have been well within its authority to set aside the redemption fine by recording a finding that in the given facts and circumstances, no redemption fine was warranted or needed to be imposed for re-export of goods. It is just that CESTAT was not right to do so (i.e. set aside the redemption fine) on the ground that there was a binding judicial precedent /ratio ( viz. no redemption fine can be imposed when the goods are exported) when there was/is none.

9. Thus, as stated earlier, Akshara judgement of CESTAT is an example of how judicial precedents can end up being so misapplied even by well-meaning and fine judicial minds.

I do admit that the said judgement involves a small amount and it is not always possible for CESTAT, which is perennially  pressed for time, to afford the luxury of devoting so much time  to a small case as has been done by this article's author who can afford such luxury and indulge in such pastime.

[The author is former Member CESTAT and Sr. Partner, TLC Legal Advocates. The views expressed are strictly personal.]