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TMI Blog2012 (5) TMI 67X X X X Extracts X X X X X X X X Extracts X X X X ..... lso imposed on CD-R originating from some mother countries like Thailand, Vietnam, Korea, Iran, Malaysia and UAE. 4. On the basis of intelligence reports, Directorate of Revenue Intelligence came to know that some importers were indulging in evasion of anti dumping duty. On 21st June, 2008, premises of three importers Viz. Neeru Trading Company, Ashok Enterprises and Nihal Trading Company were searched. On the basis of incriminating material, show cause notices were issued to Achievers International, its partner Vineet Gupta and Naveen Kumar sole proprietor of Neeru Trading Company. 5. Thereafter, Order in original dated 22nd October, 2009 was passed by Commissioner Central Excise (Adjudication), recording, inter alia, the following findings:- (a) Neeru Trading Company was a dummy entity and actual controlled and managed by Achievers International and its partner Vineet Gupta. (b) Naveen Kumar, the so-called proprietor was not conducting business or aware of the activities of Neeru Trading Company. He was merely a name giver. (c) Naveen Kumar admitted in his statement that he was a matriculate and a Villager, who was made to sign papers etc. by and at behest ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ies including Neeru Trading Company. Information was received from ICD Ballabhgarh/Faridabad that five containers containing DVD-R/CD-R had been imported by Neeru Trading Company and bill of entry dated 18th June, 2008, in respect of one container had been filed. Information was received from Assistant Commissioner of Customs, ICD, Loni that one container had been imported in the name of Neeru Trading Company vide bill of entry dated 16th July, 2008, which had been filed by Achievers International on procurement of the consignment by a High Seas Sale Agreement. As noticed above, in the order in original it has been held that this High Seas Sale agreement purported executed by Naveen Kumar was forged. 8. After noticing the aforesaid facts, the Commissioner (Adjudication) went into the question whether the aforesaid goods imported were prohibited goods within the meaning of Section 2(33) of the Customs Act, 1962 (Act, for short) and it was held that same were prohibited goods liable to be confiscated under section 111(d) of the Act. The Commissioner (Adjudication) also examined the question and held that the goods should not be released on payment of redemption fine under Section 12 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... given an option for redemption on payment appropriate fine. Considering that the goods were imported in August, 2008 and that the goods are electronic goods, we deem it appropriate to allow the goods on payment of fine of Rs.40 lakhs (Rupees Forty Lakhs only). This option should be exercised within three months from the date of receipt of this order. 6.3 Regarding the penalty imposed on Shri Vineet Gupta, we find that as the partner of M/s. Achiever International, he was instrumental in setting up frond entities and arranging import and clearance of goods using their names and the methods adopted by him were dubious in nature and therefore calls for imposition of penalty. However, as contended by learned Advocate there is no justification of separate penalty under 112(a) when there is a penalty imposed under section 114AA. Therefore penalty under 112(a) is set aside in full. Considering the entire facts and circumstances of the case, the penalty imposed under114AA on Shri Vineet Gupta, partner is reduced from Rs.30 lakhs to Rs.10 lakhs (Rupees Ten Lakhs only)." (emphasis supplied) 10. In the appeal filed by Achievers Internationals, they have challenged the order of the tribunal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Revenue:- (1) Whether redemption fine under Section 125 can be levied and the goods released when they are prohibited goods under the Customs Act, 1962 and the tribunal was right in issuing direction/order for release of the goods on the payment of redemption fine of Rs.40 lakhs? (2) Whether the order of the tribunal directing release of the goods on payment of redemption fine and the quantum thereof is perverse? (3) Whether the tribunal was justified in holding that separate penalties cannot be levied under Section 114AA and 112(a) of the Customs Act, 1962? (4) Whether the tribunal was right in reducing the penalty under Section 114AA from Rs.30 lacs to Rs.10 lacs and the order of the tribunal in this regard is perverse? In case question no. 3 is answered in favour of the Revenue:- (5) What should be the quantum of fine under Section 112(a) of the Customs Act, 1962? 13. Section 125 of the Act reads as under:- "125. 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 o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be imported or exported have been complied with." 17. The term prohibited goods under Section 2(33) of the Act, is much wider than Section 11(1) of the Act which gives power to the Central Government to issue notification prohibiting import or export of goods absolutely or subject to such conditions as may be specified. Section 2(33) applies to the goods prohibited absolutely or subject to conditions stipulated under Section 11 of the Act and also to import or export of goods subject to any prohibition under the Act or any other law for the time being in force. The expression prohibited goods is much broader and wider and is not confined merely to goods import and export of which is prohibited absolutely or subject to conditions by a notification issued under Section 11(1). In fact, the said aspect is no longer res integra, in view of the decisions of the Supreme Court in Sheikh Mohd. Omer vs. Collector of Customs, Calcutta & Ors. (1970) 2 SCC 728, Toolsidass Jewraj vs. Addl. Collector of Customs (1991) 2 SCC 443 and Om Prakash Bhatia vs. Commissioner of Customs, Delhi (2003) 6 SCC 161. As the first two decisions have been considered in the Om Prakash Bhatia's case (supra), ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cified in sub-section (2). Hence, prohibition of importation or exportation could be subject to certain prescribed conditions to be fulfilled before or after clearance of goods. If conditions are not fulfilled, it may amount to prohibited goods. This is also made clear by this Court in Sk. Mohd. Omer v. Collector of Customs, wherein it was contended that the expression "prohibition" used in Section 111(d) must be considered as a total prohibition and that the expression does not bring within its fold the restrictions imposed by clause (3) of the Import Control Order, 1955. The Court negatived the said contention and held thus: (SCC p. 732, para 11) "What clause (d) of Section 111 says is that any goods which are imported or attempted to be imported contrary to „any prohibition imposed by any law for the time being in force in this country‟ is liable to be confiscated. „Any prohibition‟ referred to in that section applies to every type of „prohibition‟. That prohibition may be complete or partial. Any restriction on import or export is to an extent a prohibition. The expression „any prohibition‟ in Section 111(d) of the Customs Act, 19 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and gives an option to the person to pay the same in lieu of confiscation. The option/discretion is clear from the use of word may'. Quantum of the fine is again discretionary as is apparent from the last part of sub-section(1) which stipulates that such fine as the said officer thinks fit can be imposed. The proviso to sub-section (1) stipulates that it shall not exceed the market price of goods confiscated less the duty chargeable thereon. Sub-section (2) clarifies that the duty imposable is in addition to the redemption fine. 21. We have quoted above the exact reasoning and the findings recorded by the tribunal in this regard. The tribunal has not disturbed or adversely commented upon the fact-finding recorded in the order in original. DVD-Rs/CD-Rs can be imported under open general licence. However, as noticed above, the term prohibited goods' in Section 2(33) is much wider than the goods stipulated in Section 11(1). The tribunal has recorded and held that Vineet Gupta, partner of Achievers International is a de facto and true owner of the goods but the same were imported in the name of M/s Neeru Trading Company, a proprietorship of Naveen Kumar. The IEC certificate of Neeru T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m and the finding recorded in the order in original that earlier there have been imports to the extent of Rs.10 cores in this manner. The order in original does not set out the details or break up, therefore, the figure is not established but it is apparent that the transactions in question were not the only transactions. There is no finding of the tribunal on this aspect. However, the most important aspect is that the tribunal has not taken into consideration the assessable value of the imported consignment. As per the order in original, the assessable value was Rs.1.87 crores and Rs. 34 lacs (Approx.). The market value thereof which includes the customs duty would be much more. It is stated by the Revenue that the market value of the imported consignment even today is more than Rs. 2.25 crores. The redemption fine of Rs. 40 lacs imposed, therefore, would be less than 20% of the market value of the consignment. Section 125 of the Act stipulates that the redemption fine cannot exceed the market value. It is therefore a mandatory requirement that before permitting the redemption on payment of fine, the market value of the goods should be ascertained and assessed. (see Mohan Meakins ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the thing empowered to be done, something in the object for which it is to be done, something in the conditions under which it is to be done, something in the title of person or persons for whose benefit the power is to be exercised, which may couple the power with a duty, and make it the duty of the person in whom the power is reposed to exercise that power when called upon to do so. This classic observation has been quoted with approval by this Court in several cases. (See Commr. of Police v. Gordhandas Bhanji and S.P. Gupta v. Union of India.) In Halsbury's Laws of England, 4th Edn., Vol. I, it has been observed: 28. Duty and discretion. * * * A statutory discretion is not, however, necessarily or, indeed, usually absolute: It may be qualified by express and implied legal duties to comply with substantive and procedural requirements before a decision is taken whether to act and how to act. Moreover, there may be a discretion whether to exercise a power, but no discretion as to the mode of its exercise; or a duty to act when certain conditions are present, but a discretion how to act. Discretion may thus be coupled with duties. 9. Discretion, in general, is the discernment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n stated by eminent judges in somewhat different forms of words but with substantial identity. When a statute gives a judge a discretion, what is meant is a judicial discretion, regulated according to the known rules of law, and not the mere whim or caprice of the person to whom it is given on the assumption that he is discreet (per Willes, J. in Lee v. Bude Rly. Co. and in Morgan v. Morgan). 25. The Supreme Court in the case of Shri Rama Sugar Industries Ltd. v. State of A.P., (1974) 1 SCC 534, has held: "11. It is, therefore, clear that it is open to the Government to adopt a policy not to make a grant at all or to make a grant only to a certain class and not to a certain other class, though such a decision must be based on considerations relevant to the subject-matter on hand. Such a consideration is found in this case. Halsbury (Vol. 1, 4th Edn. para 33 at p. 35) puts the matter succinctly thus: A public body endowed with a statutory discretion may legitimately adopt general rules or principles of policy to guide itself as to the manner of exercising its own discretion in individual cases, provided that such rules or principles are legally relevant to the exercise of it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shall be liable (i) in the case of goods in respect of which any prohibition is in force under this Act or any other law for the time being in force, to a penalty not exceeding the value of the goods or five thousand rupees, whichever is the greater; (ii) in the case of dutiable goods, other than prohibited goods to a penalty not exceeding the duty sought to be evaded on such goods or five thousand rupees, whichever is the greater; (iii) in the case of goods in respect of which the value stated in the entry made under this Act or in the case of baggage, in the declaration made under Section 77 (in either case hereafter in this section referred to as the declared value) is higher than the value thereof, to a penalty not exceeding [***] the difference between the declared value and the value thereof or [five] thousand rupees, whichever is the greater; (iv) in the case of goods falling both under clauses (i) and (iii), to a penalty not exceeding the value of the goods or the difference between the declared value and the value thereof or [five] thousand rupees, whichever is the highest; (v) in the case of goods falling both under clauses (i) and (iii), to a penalty not exc ..... 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