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2024 (12) TMI 1322 - AT - CustomsImposition of redemption fine and penalty on re-export of goods - perishable goods or not - violation of import policies - HELD THAT - The Larger Bench relied upon by the Revenue in the case of Hemant Bhai R. Patel Vs Commissioner of Customs Ahmedabad 2003 (2) TMI 87 - CEGAT NEW DELHI observed that it is open to the adjudicating authority to impose redemption fine as well as penalty even when permission is granted for re-exporting the goods . Thus the Bench was only answering the question whether redemption fine and penalty can be imposed while ordering for re-export of goods. In the case of Commissioner of Customs Vs Elephanta Oil and Inds. 2003 (1) TMI 108 - SUPREME COURT the Hon ble Supreme Court observed that I n this view of the matter it is apparent that respondent knowing fully well the import policy imported prohibited goods i.e. import of canalised item namely beef tallow and therefore the Collector was fully justified in imposing the penalty under Section 112 of the Customs Act. In the present case the products imported are perishable and have to meet the standards specified by the Animal Quarantine Authority. The order of the original authority clearly held that the Animal Quarantine authority vide letter dated 05.01.2023 on testing the consignment was found to be positive for OIE pathogen hence could not be released. It is a fact that at the time of import the appellant had produced Veterinary Health Certificate from the country of import which stated that the product is free from all relevant OIE listed pathogens for fin fishes - The Board Circular No.100/2003-Cus dated 28.11.2003 (reproduced below) clearly states that depending upon the facts and circumstances of the case the Commissioner has the discretion to impose redemption fine and penalty thus implying that it is not necessary that in all cases redemption fine and penalties needs to be imposed. Conclusion - In cases where goods are allowed to be re-exported due to testing failures or other reasons beyond the importer s control the imposition of redemption fine and penalty may not be justified. The impugned order is set aside - Consequently the Appeal is allowed. 1. ISSUES PRESENTED and CONSIDERED The core legal issue presented in this case is whether the imposition of redemption fine and penalty is justified when goods are allowed to be re-exported, particularly in the context of the appellant's import of demineralised fish scale, which was found to violate import regulations. 2. ISSUE-WISE DETAILED ANALYSIS Relevant legal framework and precedents The legal framework revolves around the Customs Act, 1962, specifically Section 125 regarding redemption fines and Section 112 concerning penalties for improper imports. The Foreign Trade Policy 2015-2020 and the guidelines from the Animal Quarantine Authority also play a crucial role. Precedents cited include decisions from various tribunals and courts, such as the cases of Hemant Bhai R. Patel, Commissioner of Customs Vs. Elephanta Oil and Inds, and NL Technologies PL, which provide insights into the discretionary power of authorities to impose fines and penalties. Court's interpretation and reasoning The court examined whether the appellant's actions constituted a bona fide mistake and whether the imposition of fines and penalties was warranted given the circumstances. The court noted that the appellant had taken precautions, such as obtaining a Veterinary Health Certificate, to ensure compliance with import regulations. However, the consignment was found to contain OIE pathogens upon testing by the Animal Quarantine Authority, leading to its rejection. Key evidence and findings The key evidence included the Veterinary Health Certificate from China, the positive test results for OIE pathogens, and the appellant's history as a regular importer of similar goods. The court also considered the Board Circular No. 100/2003-Cus, which provides guidance on exercising discretion in imposing fines and penalties. Application of law to facts The court applied the Customs Act and relevant precedents to assess whether the appellant's case justified the imposition of fines and penalties. The court recognized the appellant's compliance efforts but also acknowledged the regulatory breach due to the positive pathogen test results. Treatment of competing arguments The appellant argued against the imposition of fines and penalties, citing their bona fide mistake and reliance on certifications. They referenced several judgments supporting their position. Conversely, the respondent emphasized the appellant's violation of import regulations and cited cases supporting the imposition of fines and penalties. Conclusions The court concluded that fines and penalties were not justified in this case due to the appellant's bona fide efforts to comply with regulations and the discretionary nature of imposing such sanctions, as outlined in the Board Circular. 3. SIGNIFICANT HOLDINGS Preserve verbatim quotes of crucial legal reasoning The court noted, "We do not find any justifying reasons for imposition of redemption fine and penalty. The impugned order is set aside. Consequently, the Appeal is allowed." Core principles established The judgment reinforces the principle that fines and penalties should not be imposed when goods are re-exported due to bona fide mistakes, especially when the importer has taken reasonable precautions to comply with regulations. The discretionary power of authorities to impose fines and penalties must be exercised judiciously, considering the facts and circumstances of each case. Final determinations on each issue The court determined that the imposition of redemption fines and penalties was unwarranted in this case. The appeal was allowed, and the order imposing fines and penalties was set aside, emphasizing the appellant's bona fide compliance efforts.
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