Case Note & Summary
The Commissioner of Customs (Import), Mumbai, filed an appeal under Section 130 of the Customs Act, 1962, challenging the order dated 5 August 2008 of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), West Zonal Bench at Mumbai. The appeal was admitted on three substantial questions of law regarding the reduction of fine in lieu of confiscation of the supply vessel M.V. Sea Bulk Toota from Rs.1,00,00,000 to Rs.5,00,000, the setting aside of fine of Rs.50,000 and duty of Rs.43,860.30 with interest under Section 28AB in respect of 3.6 MTs of smuggled diesel, and the setting aside of fine of Rs.20,00,000 in respect of 147 MTs of diesel mixed with smuggled High Speed Diesel (HSD). The parties agreed that question (ii) need not be answered as the respondent had complied with it. The facts are that on 23 May 2006, specific information was received that the supply vessel 'Sea Bulk Toota' was indulging in illegal sale of smuggled diesel. Based on the information, the vessel was intercepted and 3.6 MTs of smuggled diesel was found. Additionally, 147 MTs of diesel stored in the vessel was mixed with the smuggled HSD in such a manner that it could not be separated. The vessel was confiscated and a fine of Rs.1,00,00,000 was imposed in lieu of confiscation, along with fines for the diesel. The CESTAT reduced the fine for the vessel to Rs.5,00,000 and set aside the fine for the 147 MTs of mixed diesel. The Revenue argued that the reduction was perverse and arbitrary. The High Court held that the CESTAT's findings were based on evidence, including the fact that the vessel was not designed for smuggling and the smuggled quantity was small. The Court found no perversity and dismissed the appeal, answering the questions in the negative.
Headnote
A) Customs Law - Confiscation of Vessel - Reduction of Fine - Section 125 Customs Act, 1962 - The CESTAT reduced the fine in lieu of confiscation of the supply vessel M.V. Sea Bulk Toota from Rs.1,00,00,000 to Rs.5,00,000. The High Court held that the reduction was based on evidence and not perverse or arbitrary, as the vessel was not designed for smuggling and the smuggled quantity was small compared to the vessel's capacity. (Paras 4-10) B) Customs Law - Confiscation of Goods - Mixed Diesel - Section 111, 115, 125 Customs Act, 1962 - The CESTAT set aside the fine of Rs.20,00,000 in respect of 147 MTs of diesel stored in the vessel in which smuggled HSD was mixed. The High Court held that since the smuggled HSD could not be separated, the entire diesel was liable to confiscation, but the CESTAT's decision to set aside the fine was based on evidence and not perverse. (Paras 4-10) C) Customs Law - Substantial Question of Law - Perversity - Section 130 Customs Act, 1962 - The Court held that the findings of the Tribunal were based on evidence and not perverse, and therefore no substantial question of law arose. The appeal was dismissed. (Paras 10-11)
Issue of Consideration
Whether the CESTAT's order reducing the fine in lieu of confiscation of the vessel from Rs.1,00,00,000 to Rs.5,00,000 and setting aside the fine of Rs.20,00,000 in respect of 147 MTs of diesel mixed with smuggled HSD is perverse and arbitrary.
Final Decision
The appeal is dismissed. The substantial questions of law are answered in the negative, i.e., against the Revenue and in favor of the Respondent. The CESTAT order is upheld.
Law Points
- Confiscation of vessel
- Reduction of fine
- Perversity
- Customs Act
- 1962
- Section 130
- Section 111
- Section 115
- Section 125
- Option to pay fine in lieu of confiscation
- Mixing of smuggled goods
