Case Note & Summary
The appeal was filed by the Commissioner of Customs (Import) against the order of the Customs, Excise & Service Tax Appellate Tribunal (CESTAT) dated 25th September 2019. The respondent, Air India Ltd., imported aircraft parts under exemption Notification No.21/2002 for servicing, repair or maintenance of aircraft used for scheduled air cargo services. During an On-Site Post Clearance Audit for financial year 2011-12, the revenue found excess goods cleared under bond. The revenue issued a show cause notice and the adjudicating authority confiscated the goods under Sections 111(l), (m) and (o) of the Customs Act, 1962, imposed a redemption fine under Section 125 and a penalty under Section 112(a). The CESTAT upheld the confiscation but set aside the redemption fine and penalty. The revenue appealed to the High Court raising substantial questions of law. The High Court held that once confiscation is upheld, imposition of redemption fine under Section 125 and penalty under Section 112(a) is mandatory. The Tribunal's order setting aside the fine and penalty was not reasoned and was set aside. The appeal was allowed, restoring the fine and penalty.
Headnote
A) Customs Law - Redemption Fine - Section 125 of Customs Act, 1962 - Once confiscation of goods is upheld, imposition of redemption fine under Section 125 is mandatory and not discretionary. The Tribunal erred in setting aside the fine without valid reasons. (Paras 2-10) B) Customs Law - Penalty - Section 112(a) of Customs Act, 1962 - Penalty under Section 112(a) is mandatory upon confiscation of goods. The Tribunal's order setting aside penalty was not reasoned and is set aside. (Paras 2-10) C) Customs Law - Confiscation - Sections 111(l), (m), (o) of Customs Act, 1962 - Excess goods cleared under bond are liable to confiscation. The Tribunal upheld confiscation, but erred in setting aside fine and penalty. (Paras 2-10)
Issue of Consideration
Whether the CESTAT was right in setting aside the redemption fine imposed under Section 125 of the Customs Act, 1962 and penalty under Section 112(a) of the Customs Act, 1962 on the respondent assessee, even though confiscation of goods under Sections 111(l), (m) and (o) of the Customs Act, 1962 was upheld by the Tribunal.
Final Decision
Appeal allowed. The order of CESTAT setting aside redemption fine and penalty is set aside. The redemption fine and penalty imposed by the adjudicating authority are restored.
Law Points
- Redemption fine under Section 125 of Customs Act
- 1962 is mandatory upon confiscation
- Penalty under Section 112(a) is mandatory upon confiscation
- Excess goods cleared under bond are liable to confiscation
- Tribunal cannot set aside fine and penalty without valid reasons
