SOORAJ GRAPHICS Vs. COMMISSIONER OF CENTRAL

JUDGEMENT

(1.) THE appellants imported 138 units of secondhand Photocopier assembly and filed Bill of Entry on 21.8.2004 for clearance of the goods for home consumption. As the import was without specific licence, the customs authorities proposed to confiscate the machines under Section 111(d) of the Customs Act, treating the machines as 'consumer goods' which were restricted for import. They also proposed penalty on the importer under Section 112(a) of the Act. These proposals were contested. In adjudication of the dispute, the original authority confiscated the goods (valued at Rs. 4.5 lakhs) with option for redemption on payment of fine of Rs. 1,00,000/ - as well as on a payment of appropriate duty. It also imposed penalty of Rs. 4.5 lakhs on the party under Section 112(a) of the Act. In an appeal filed by the party against the order of the original authority, learned Commissioner (Appeals) reduced the quantum of penalty to Rs .60,000/ - and upheld the rest of the decision of the lower authority. In the present appeal, the importer is aggrieved by the decision of the lower appellate authority.

(2.) AFTER examining the records and hearing both sides, I find that the question arising for consideration is whether second hand photocopying machines imported by the appellants should be treated as 'capital goods' which were freely importable at the relevant time or as 'consumer goods' which required specific import licence. This issue is already covered in favour of the Department by the judgment of the Hon'ble High Court of Kerala in Customs Appeal No. 11/2005 [Commissioner of Customs, Cochin v. Atul Commodities Pvt. Ltd], wherein the Tribunal's Larger Bench decision holding such machines to be capital goods was set aside and it was held, after considering the relevant Policy Circulars issued by the Directorate -General of Foreign Trade (DGFT), that such machines merited consideration as 'consumer goods'. Ld. Counsel for the appellants has fairly accepted the High Court's decision, but still he reiterates the challenge against redemption fine and penalty. The fine imposed on the party in lieu of confiscation of goods valued at Rs. 4.5 lakhs is Rs. 1,00,000/ - and the penalty imposed on them is Rs. 60,000/ - According to learned Counsel, these are unconsciously high while, according to learned SDR, these are reasonable. After considering the rival submissions and taking judicial notice of the general practice in the Department, I am of the view that the quantum of fine should not exceed 15% of the value of the goods in a case of this nature and the quantum of penalty should be around 10% of the fine. In taking this view, I have also considered the fact that, at the time of the import in question, it was widely held in legal circles that second -hand photocopying machines were capital goods, which trend appears to have been reversed with the Kerala High Court's decision rendered on 7.4.06. Accordingly the fine and penalty on the appellants are reduced to Rs. 65,000/ - and Rs. 6,500/ - respectively Subject to this modification, the impugned order is sustained and the appeal is disposed of.