TMI Blog2017 (1) TMI 1223X X X X Extracts X X X X X X X X Extracts X X X X ..... of duty, on furnishing the bond and the undertaking and thereafter, the respondent-Unit clandestinely and illicitly diverted the goods to the open market, the goods which otherwise were liable to be confiscated, in lieu of confiscation, redemption fine was imposable. The matter is remanded to the Adjudicating Authority for imposition of redemption fine in lieu of confiscation with respect to the goods which were illicitly diverted into the open market - appeal allowed by way of remand. - Tax Appeal No. 1269 of 2014 - - - Dated:- 19-1-2017 - M. R. Shah And B. N. Karia, JJ. Mr Sudhir M Mehta, Advocate for the Appellant Mr Hardik P Modh, Advocate for the Opponent JUDGMENT ( Per : Honourable Mr. Justice M. R. Shah ) Feeling aggrieved and dissatisfied with the impugned judgment and order dated 11th February 2014 passed by the Customs, Excise Service Tax Appellate Tribunal, West Zonal Bench, Ahmedabad [hereinafter referred to as, the Tribunal ], the Revenue has preferred the present Appeal to considering the following substantial question of law : Whether in the facts and circumstances of the case, the Tribunal has committed substantial error of law i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ting Authority did not pass any order for confiscation of the raw materials and/or imposing the redemption fine in lieu of confiscation, despite there being a bond executed by the assessee. That, the Tribunal by the impugned judgment and order dismissed the said Appeal and confirmed the IOI and the order passed by the Adjudicating Authority in not confiscating the goods and/or imposing the redemption fine in lieu of confiscation on the ground that the goods were not there for confiscation, and therefore, the question of confiscation cannot arise. The learned Tribunal observed and held that once the goods were not available for confiscation, there is no question of imposing redemption fine in lieu of confiscation. Feeling aggrieved and dissatisfied by the impugned judgment and order dated 11th February 2014 passed by the learned Tribunal in holding that the Adjudicating Authority was justified in not confiscating the goods and/or not imposing the redemption fine, as the goods were not available for confiscation, the Revenue has preferred the present Tax Appeal to consider the following substantial question of law : Whether in the facts and circumstances of the case, the Tribuna ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that therefore, as the dues were adjudged by the Adjudicating Authority on the ground that the respondent being a 100% EOU, diverted the goods illicitly in the open market and the raw materials which were procured by forgoing Customs duty were not used for the purpose for which they were imported, the goods were liable to be confiscated under Section 125 of the Customs Act. However, as the goods were not available for confiscation and as the same were released by bond, redemption fine in lieu of confiscation was required to be imposed. It is submitted that therefore, the learned Tribunal has materially erred in holding that as the goods were not available for confiscation, the question of confiscation cannot arise and consequently, the redemption fine cannot be imposed. 3.4 Relying upon the aforestated decisions and submissions made, it was requested to allow the present Appeal and answer the question in favour of the Revenue and against the respondent-Unit. 4. Shri Hardik P. Modh, learned advocate appearing on behalf of the respondent-Unit submitted that in the facts and circumstances of the case, more particularly when even at the time of adjudication proceedings/show cause ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... osed penalties under various sections of the Act, which has not been disputed by the respondent-Unit. It is an admitted position that the respondent being a 100% EOU, diverted the goods illicitly into the open market and the raw materials which were procured by forgoing the Customs duty were not used for the purpose for which they were imported. From the material on record, it appears that when the respondent-Unit imported the goods and was permitted to ware house the goods in the private bonded warehouse without payment of the duty, the respondent-Unit furnished the Bond in form B- 17. In the said form, the respondent-Unit also agreed to abide by the conditions mentioned in the written Bond. The relevant conditions are reproduced as under :- 10. We, the obligor, shall fulfill the export obligations and conditions stipulated in Customs/Central Excise Notifications, as amended, under which the specified goods have been imported/sources, as well as the Import-Export Policy for April, 1997 to 2002, as amended from time to time and to pay on demand an amount equal to the Customs and Central Excise Duties leviable on the goods as are not proved to the satisfaction of Assistant/Depu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t is an admitted position that thereafter, the respondent-Unit clandestinely removed the goods and thereby committed breach of condition by diverting the goods illicitly into the open market and the raw materials which were procured by forgoing Customs duty have not been used for the purpose for which they were imported, and therefore, the goods were liable to be confiscated. 5.3 Section 125 of the Customs Act, 1962 provides that whenever confiscation of any goods is authorized by the Act, the Officer adjudging it may, in the case of any goods, the importation or exportation whereof is prohibited under the Customs 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, an option to pay in lieu of confiscation such fine, as the said Officer thinks fit. 5.4 As observed hereinabove, on the respondent-Unit diverting the goods illicitly into the open market and the raw materials which were procured by forgoing the Customs duty were not used for the purpose for which they were imported, the Customs authorities were authorized to confiscate such goods which are illicitly diverted. It is required to be noted t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a breach of any of the terms and conditions on which goods were permitted to be imported without payment of duty and permitted to be deposited in the Warehouse, confiscation of such goods can be said to be authorized thereafter, when it is found that the goods are not available for confiscation as the same were illicitly diverted to the open market, and the purpose for which the goods were permitted to be imported without payment of duty is frustrated, in lieu of such goods, redemption fine is imposable. 6. For the reasons stated above, as the goods were not available for confiscation, as the goods were already diverted/permitted to be warehoused without payment of duty, on furnishing the bond and the undertaking and thereafter, the respondent-Unit clandestinely and illicitly diverted the goods to the open market, the goods which otherwise were liable to be confiscated, in lieu of confiscation, redemption fine was imposable. 7. In view of the above and for the reasons aforestated, the present Tax Appeal succeeds. The impugned Order dated 11th February 2014 passed by the Customs, Excise Service Tax Appellate Tribunal, West Zonal Bench, Ahmedabad in Appeal No. E/435/2007-DB i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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