Case Note & Summary
The Commissioner of Customs (General), Mumbai, filed an appeal under Section 130 of the Customs Act, 1962 against the order of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Mumbai, which had reduced the redemption fine imposed under Section 111(d), (f) and (n) of the Customs Act to 30% of the CIF value of the goods and the penalty imposed under Section 112 to 5% of the CIF value. The appellant contended that the Tribunal reduced the fine and penalty without giving any reasons and ignored its earlier order No.C-II/2268-7/WZB/2002 dated 10.1.2002, instead relying on an order No.398/05-C dated 2.5.2005 of CESTAT New Delhi. The respondent, LA GRANDE PROJECTS LIMITED, supported the Tribunal's order. The High Court framed three substantial questions of law: (a) whether the Tribunal was justified in reducing the redemption fine without reasons and ignoring its earlier order; (b) whether the Tribunal was justified in restricting the penalty to 5% without reasons; and (c) whether the order of CESTAT New Delhi settles any question of law and is binding on CESTAT Mumbai. The court noted that the learned counsel for both parties agreed that the order of CESTAT New Delhi does not settle any question of law and is not binding on CESTAT Mumbai. Consequently, the court held that the Tribunal's order was unsustainable as it reduced the fine and penalty without giving any reasons and without considering its earlier order. The appeal was allowed, the impugned order was set aside, and the matter was remanded to the Tribunal for fresh disposal in accordance with law.
Headnote
A) Customs Law - Redemption Fine - Section 111(d), (f), (n) of Customs Act, 1962 - Reduction of fine without reasons - CESTAT reduced redemption fine to 30% of CIF value without assigning any reasons and without considering its earlier order - Held that such reduction is unsustainable as it is arbitrary and not based on any reasoning (Paras 2-4). B) Customs Law - Penalty - Section 112 of Customs Act, 1962 - Reduction of penalty without reasons - CESTAT reduced penalty to 5% of CIF value without giving any reasons and ignoring its earlier order - Held that the order is liable to be set aside for lack of reasoning (Paras 2-4). C) Customs Law - Precedent - Binding nature of CESTAT orders - Order No.398/05-C dated 2.5.2005 of CESTAT New Delhi - Whether such order settles any question of law and is binding on CESTAT Mumbai - Held that an order of a co-ordinate bench is not binding on another bench and cannot be relied upon without considering the earlier order of the same bench (Paras 2-4).
Issue of Consideration
Whether the CESTAT was justified in reducing the redemption fine and penalty without giving reasons and by ignoring its earlier order while relying on an order of CESTAT New Delhi which does not settle any question of law.
Final Decision
Appeal allowed. Impugned order of CESTAT set aside. Matter remanded to CESTAT for fresh disposal in accordance with law.
Law Points
- Redemption fine under Section 111 of Customs Act must be imposed with reasons
- Tribunal must follow its own earlier orders or distinguish them
- Orders of one bench of CESTAT are not binding on another bench
