2004 (96) ECC 515 (Tri)

CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL

South Zonal Bench -- Chennai

Shri P.G. Chacko, Member (J) and Shri Jeet Ram Kait, Member (T)

Commissioner of Customs, Tuticorin

Versus

Square D Textiles Export Ltd.

C/ROM/49/2003 in C/206/2001

Misc. Order 435/2004, dt. 9.7.2004, Certified on 21.7.2004

Rectification of mistake

Reduction in redemption fine & penalty by taking lenient view by the Tribunal -- The Tribunal has reduced the redemption fine and penalty after considering the submission of both sides and in appreciation of the facts and circumstances and the evidence available on record. Such conclusion reached by the Tribunal in appreciation of evidence cannot give rise to any ROM application -- The Tribunal cannot recall their order if passed on merit and when there is no mistake apparent on the face of records.

Application dismissed

PRESENT :

Shri M.S. Kumaraswamy, Cons. for the appellant.

Smt. R. Bhagya Devi, SDR for the respondent.

Cases Cited :

1. Biddle Sawyer P. Ltd. v. Collector of Customs, 1989 (40) ELT 113 (Tri).............. [Para 2]

2. Collector of Customs v. U. Juguraj, 1994 (74) ELT 705 (Tri.).............................. [Para 2]

3. Collector v. Pradyumna Steel Limited, 1996 (82) ELT 441 (SC).......................... [Para 2]

4. Dinkar Khindria v. Collector of Customs, New Delhi, 2002 (83) ECC 875 (Tri-LB). [Para 4]

5. Jain Exports Pvt. Limited v. Collector, 1988 (33) ELT 199 (Tri.).......................... [Para 2]

6. Om Prakash Bhatia v. CC, New Delhi, 2001 (76) ECC 778 (LB)......................... [Para 4]

7. Quality Exports & Ors. v. CCE, Meerut, 2000 (39) RLT 85 (CEGAT)................... [Para 4]

Per : Jeet Ram Kait (Oral)

This application has been filed by Revenue for Rectification of Mistake (ROM). They are aggrieved that the Tribunal has taken a lenient view in reducing the redemption fine to Rs. 10 lakhs and penalty to Rs. 2 lakhs without attributing proper reasons for such a lenient view.

2. In this connection, the Ld. SDR has invited our attention to paras 2 and 3 of the ROM, which is reproduced here as under:

"2. Aggrieved by the above Order-in-Original dated 29.3.2001, the Importer filed Appeal No. C/206/2001 and the hon'ble Tribunal vide its Order No. 158/2003 dated 11.3.2003, by taking a lenient view, drastically reduced the Redemption Fine to Rs. 10 lakhs and penalty to Rs. 2 lakhs without attributing proper reasons for such a lenient view.

3. It is submitted that an apparent (rectifiable) mistake has occurred in the above said order dated 11.3.2003 of the Tribunal and the occurrence of such mistake is evident as submitted below.

A. It is a well settled proposition of law that for every illegal transaction, the RF and penalty should be imposed/determined in such a way that the entire Margin of Profit is wiped out. The Hon'ble Supreme Court in the case of Collector v. Pradyumna Steel Limited, 1996 (82) ELT 441 (SC), has held that ignoring the well settled law is an apparent mistake, which is an apparent mistake to be rectified. Therefore, the mistake committed through drastic reduction in RF and penalty without proper reasoning needs to be rectified by way of restoring the original RF and penalty imposed in the Order-in-Original by the Commissioner.

B. Since the duty sought to be evaded in this case was Rs. 1.27 Crores, the Commissioner after considering the relevant factors like Margin of Profit & Actual User Status; has imposed suitable Redemption Fine of Rs. 20 lakhs and Penalty of Rs. 10 lakhs. However, the Hon'ble Tribunal, by mistake, has not given any reasons for taking a lenient view and reducing the RF and penalty. If a lenient view is taken with regard to imposition of RF and penalty, such leniency should be substantiated by proper reasons. This view has already been taken by the same Tribunal vide Collector of Customs v. U. Juguraj, 1994 (74) ELT 705 (Tri.).

C. The Redemption Fine of Rs. 20 lakhs and the Penalty of Rs. 10 lakhs have been reasonably imposed by the Commissioner by taking into account the magnitude of the offence committed by the Importer. In this case, the duty sought to be evaded by the importer works out to Rs. 1.27 crores and such grave offence warrants atleast a reasonable Redemption Fine of Rs. 20 lakhs and a justified penalty of Rs. 10 lakhs. However, by mistake, the Hon'ble Tribunal, without assigning any proper reasons, took a lenient view and drastically reduced the Redemption Fine by Rs. 10 lakhs and the penalty by Rs. 8 lakhs. Inasmuch as the importer has not fulfilled the conditions stipulated in the Exemption Notification No. 111/95 dated 5.6.95, which is not eligible to them, such gross reduction of RF and penalty is unwarranted and this mistake is rectifiable by confirming the original RF and penalty.

D. The original Redemption Fine and penalty have been imposed by the Commissioner after taking into account the magnitude of violation. If and only if such suitable RF and penalty are imposed, then only it will act as a deterrent for the violators of Law. Therefore, the original Redemption Fine of Rs. 20 lakhs and penalty of Rs. 10 lakhs needs to be fully restored.

E. The penalty has been imposed under Section 112(a) of the Customs Act. Since the impugned goods are dutiable goods, as per clause (i) of Section 112 (a), the Importer is liable for a penalty not exceeding the duty sought to be evaded on such goods or five thousand rupees whichever is greater. As could be seen, the penalty imposed by the Commissioner is below 8% of the duty sought to be evaded. Inasmuch as the Commissioner himself has extended leniency by imposing only penalty, which is below 8% of the total duty evasion, further leniency shown by the Hon'ble Tribunal and that too without proper reasons is not at all sustainable in law. This mistake may please be rectified by upholding the Order-in-Original of the Commissioner in total.

F. Redemption Fine and penalty should commensurate with the gravity of offence and Margin of Profit as held in the case reported in 1990 (49) ELT 94 (Tri.).

G. The imposition of Redemption Fine in lieu of confiscation under Section 125 cannot be so exercised as to give a bonanza or profit to an illegal transaction of import. When the Redemption Fine imposed by the Commissioner has not exceeded the limit stipulated under Section 125, no interference is called for. These views were already taken by the Tribunal in the case of M/s. Jain Exports Pvt. Limited v. Collector, 1988 (33) ELT 199 (Tri.) and thus have become settled point of law. Therefore, the mistake committed by reducing the Redemption Fine and Penalty needs to be suitably rectified.

H. While quantifying the Redemption Fine and Penalty, it is relevant to quote/refer the Tribunal's decision in the case of Biddle Sawyer P. Ltd. v. Collector of Customs, 1989 (40) ELT 113 (Tri), wherein it was held that when the quantum of Redemption Fine is already reduced by the Board to about 10% of the value of goods, it is not further reducible."

In view of this submission, the Ld. SDR prayed that the Hon'ble Tribunal may be pleased to modify its earlier Final Order No. 158/2003 dated 11.3.2003 by restoring the redemption fine of Rs. 20 lakhs and penalty of Rs. 10 lakhs originally imposed by the Commissioner or to pass such other orders for suitably enhancing the redemption fine and penalty with appropriate reasons and thus render justice.

3. Appearing on behalf of the respondents Shri M.S. Kumaraswamy, Consultant, submits that the only remedy available to the department is to go in appeal, as there is no apparent mistake in the order on facts and law. In view of the above facts and circumstances, Ld. Consultant submits that if the Revenue is aggrieved against the order of the Tribunal, they have got a remedy to go in appeal against the order of the Tribunal.

4. Heard both sides. From the perusal of records and the ROM application, especially para 3, we do not find any reason to entertain this ROM, as there is no mistake apparent on the face of the records. The Tribunal has reduced the redemption fine and penalty after considering the submission of both sides and in appreciation of the facts and circumstances and the evidence available on record. Such conclusion reached by the Tribunal in appreciation of evidence cannot give rise to any ROM application. The Larger Bench in the case of Dinkar Khindria v. Collector of Customs, New Delhi, 2002 (83) ECC 875 (Tri-LB) : 2000 (118) ELT 77 (Tri-LB) has already held that the Tribunal cannot recall their order if passed on merit and when there is no mistake apparent on the face of records. Further, the Tribunal in the case of Quality Exports & Ors. v. CCE, Meerut, 2000 (39) RLT 85 (CEGAT) while interpreting the term `Mistake apparent from record' has held that the mistake should be glaring mistake of fact or law which should be apparent from the record and that mistake made out by process of argument are outside the purview of Section 35C(2). Further, the Larger Bench of the Tribunal comprising of 5 members in the case of Om Prakash Bhatia v. CC, New Delhi, 2001 (76) ECC 778 (LB) : 2001 (45) RLT 119 (CEGAT-LB) has held that mistake apparent from the records is not to be spelt out on the ground that all the grounds mentioned in appeal memo were not dealt with. In view of the above, we do not find that there is any mistake apparent on the records calling for rectification. The ROM application is, therefore, dismissed. Ordered accordingly.

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