The appellant seeks to impugn the correctness of an order passed by the Customs, Excise & Service Tax Appellate Tribunal dated 2 April 2014 in an appeal by the appellant.
The appellant has raised the following questions of law:
"(i) Whether the Hon'ble Tribunal is justified in imposing Rs.10 lacs as redemption fine and Rs. 5 lacs as penalty on the appellants under the facts and circumstances of the case.
(ii) 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.
(iii) 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 appellant filed a shipping bill on 6 February 2009 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 at ICD Loni carried out an inspection and examination on 6 February 2009, it was revealed that the goods were non-basmati rice and were not of the description contained in the shipping bill. The authorized signatory of the appellant, in a statement under Section 108 of the Customs Act 1962, recorded on 7 February 2009, admitted that the goods which were presented for examination were non-basmati rice though basmati rice was declared. The export of non-basmati rice was prohibited by notifications of the DGFT dated 1 April 2008 and 5 November 2008. The matter was adjudicated by the Commissioner, Customs & Central Excise, Ghaziabad. By an order dated 25 February 2009, the Commissioner ordered confiscation of the goods under Section 113 (d) and Section 113 (i) but furnished to the appellant an option of paying a redemption fine of Rs.14 lacs in lieu of confiscation. A penalty of Rs.8 lacs was also imposed.
When the appellant carried the matter in an appeal to the Tribunal, it was sought to be urged that the value which had been declared in respect of the mis-declared goods should be reduced from the value of the actual goods stated in the consignment. The Tribunal dismissed the appeal since it took the 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.15 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 submission which has been urged in support of the appeal, is based on the provisions of Section 125 of the Customs Act, 1962. It has been urged on behalf of the appellant by the learned counsel that the redemption fine which is imposed in lieu of confiscation could have only been imposed on the actual value of goods that were sought to be exported. In particular, reliance was placed on the proviso to sub-section (1) of Section 125 under which it has been specified that the redemption fine shall not exceed the market price of the goods confiscated. In the present case, it was submitted that the redemption fine of Rs.14 lacs was quantified on the basis of the value of goods of Rs.67.82 lacs, mis-declared by the appellant in the shipping bill whereas, as a matter of fact, the goods not being basmati rice as declared but only a consignment of parboiled rice would be valued at much less. Hence, it was submitted that the redemption fine could only have been raised on the actual value on the mis-declared consignment.
We do not find any merit in the submission. Section 125 of the Customs Act, 1962 provides as follows:
"Option to pay fine in lieu of confiscation.-(1) Whenever confiscation of any goods is authorised by this Act, the officer adjudging it may, in the case of any goods, the importation or exportation whereof is prohibited under this Act or under any other law for the time being in force, and shall, in the case of any other goods, give to the owner of the goods [or, where such owner is not known, the person from whose possession or custody such goods have been seized,] an option to pay in lieu of confiscation such fine as the said officer thinks fit :
Provided that, without prejudice to the provisions of the proviso to sub-section (2) of section 115, such fine shall not exceed the market price of the goods confiscated, less in the case of imported goods the duty chargeable thereon.
(2) Where any fine in lieu of confiscation of goods is imposed under sub-section (1), the owner of such goods or the person referred to in sub-section (1), shall, in addition, be liable to any duty and charges payable in respect of such goods."
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. Now, it is in the background of the provisions of Section 125 that the legality of the order would have to be assessed.
The total consignment that was sought to be exported was 125 MT. Even according to the appellant, in the submission which was recorded by the adjudicating officer, non-basmati rice locally was valued at Rs.18,000/- to Rs. 20,000/- per MT. Hence, even if that were to be used as a yardstick, it is evident that the consignment would be of a value between Rs.22.50 lacs to Rs.25 lacs. Under the proviso to sub-section (1) of Section 125, the market value of the goods which are sought to be confiscated constitutes a ceiling because, the proviso stipulates that such fine shall not exceed the market price of the goods confiscated. The adjudicating officer has imposed a redemption fine of Rs.14 lacs.
The grievance of the appellant is that the redemption fine of Rs. 14 lacs was founded on the mis-declared value of Rs.67.82 lacs, 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 sub-section (1) to Section 125. In fact, before the Tribunal, it was sought to be urged, as recorded in the impugned order, 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.
Be that as it may, the Tribunal has, in the exercise of its discretion and considering that the redemption fine was on the higher side, reduced it from Rs. 14 lakhs to Rs.10 lakhs and the penalty from Rs. 8 lakhs to Rs. 5 lakhs.
The case of the appellant was that the goods were mis-declared as a result of a mistake of its labourers. That is besides the point, because the fact does remain that, in his declaration of the goods which were meant for export, the appellant had mis-declared the goods. A case for confiscation of the goods was, therefore, clearly made out. 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 shall, accordingly, dismissed since it does not give raise to any substantial question of law. There shall be no order as to costs.