Kishanlal Balaram vs Collector of Central Excise

S. Kalyanam, Member (J)

Since tha above appeals are not contested or merits and are argued only in regard to the quantum of fine and the legality of the levy of penalty, They are taken up together and disposed of by a common order.

The appellants in the above cases imported Cloves from Ceylon in November, 1986 and proceedings were insulted against the appellants by the Additional Collector of Customs, Madurai, on the ground that at the relevant time of import the goods, in question viz. cloves were canalised for the purpose of import and therefore, the imports, were in contravention of law. The proceeding resulted in the respective impugned orders appealed against.

In custom Appeal No. 449/87 and 493/87 the value of the goods imported is the same viz. Rs. 2,07,319 and the quantity imported is also the same viz 2000 Kgs of cloves. In all the other Appeals the value of the goods imported and the quantity are the same.

Shri Venugopalan, the learned counsel for the appellants submits than the appellants had admittedly placed orders with the suppliers in Ceylon when the goods in question were permissible for import under the relevant Import Policy of the Government of India, under OGL. It is only after the appellants had entered into and concluded contracts in pursuance of which the shipments had been effected , the Import Policy of the Government of India was changed by placing the goods in question as a canalised item. It was therefore, urged that the appellant are not guilty of any mala fide intention with the intent to evade the provisions of the Import Control Order, 1955. The learned counsel, therefore, submitted that imposition of penalty in the facts nd circumstances of the case is not called for. The learned counsel also placed reliance on the orders passed on similar circumstances by the Collector of Customs, Madras, in Order No. S.8/534/555/554/86-ORA, dated 19.12.1986, the Collector of customs (Appeals), Madras in C.3/368/1987, dated 6.5.1987, and the Beach of the Tribunal of the Tribunal dated 30.12.1987 in Order no.

865/87. where in similar circumstances the parties had not been fastened with any penal liability in respect of import of Cloves. Regarding the quantum of fine, the learned counsel urged that since the Additional collector or under the impugned only relating to appellant Kishanalal balarm (Customs Appeal No. 449/87) has imposed only a fine of 10% on the value of the goods imported the same quantum may be adopted in respect of the other appeals.

Shri Bhatia, the learned Senior D. R., contended that while imposition of penalty may not not be warranted in the facts and circumstances of this case against the appellants particularly when the goods in question were permissible for importment under OGL under the relevant Licensing Policy at the time when the appellants had entered into contracts for import of the same and also because of similar view being taken by the Collector of Customs madras and other authorities of the Customs Department and also the Bench of the Tribunal, the quantum of fine may not be reduced.

The learned Senior D. R. placed reliance on the ratio of the Full Bench ruling of the Delhi high Court in the case of Jain Exports (P) Ltd. Vs. Union of India and Others, , and in particular placed reliance on the ration of the Bench in para 71 and contented that the quantum of fine must be commensurate with the profit margin as otherwise an importer, who has imported goods in contravention of law, would stand to made a minority gain from an illegal transaction of imports. The learned Senior D. R. also submitted that the Bench of the tribunal in Order no. 865/87, referred to supra, has imposed 15% as the quantum of fine and in the present cases also if the same percentage is adopted reduction in the quantum of fine may not be warranted.

I have carefully considered the submissions before me. The appeals are not contested on merits. It is not disputed before me that when the goods were actually imported the relevant licensing rules had been amended and the goods, which were originally permissible for import under OGL, came to be a canalised item later. The indisputable fact also remains that before the goods were canalised for purpose of imports, the appellant had entered into a contract in September, 1986 itself. Therefore, I do not find any mala fides on the part of the appellants in arranging for the import of the goods in question, because when the contract was concluded between the supplier and the appellants the goods were permissible for import under OGL. In such a situation, in me opinion, imposition of penalty is not warranted. I am fortified in this view by the ration of the ruling of the Bench of this Tribunal in Order NO. 865/87, dated 30.12.1987 referred to supra. The learned counsel for the appellants has also produced before me the orders passed by the Collector of Customs, Madras, dated 6.5.1987 referred to supra, and the order of collector of Customs (Appeals), Madras, wherein also in similar circumstances no penalty was imposed on the parties concerned.

The next question that arises for my consideration is with reference to the quantum of fine. Imposition of a quantum of fine is purely in excises of discretion by a quasi-judicial authority like the Tribunal and such discretion should be exercises judiciously keeping in mind the profit margin of the

goods. In the order of the Collector of Customs, Madras, dated 19.12.1986 in respect of import of cloves valued at Rs. 1,50,960 a fine of Rs. 15,000 has been levied working out of 10%. In the order of the Collector of Customs (Appeals), Madras, dated 6.5.1987 referred to above, respect of the import of Cloves valued at Rs. 31,199 a fine of Rs. 2,2,50 has been levied, which would work out to 7.22%. The Bench of the Tribunal in the said ruling referred to above has imposed a fine which would work out to about 15%. Be that as it may, I should like to observe that in the matter of levy of fine relevant considerations such as profit margin, etc. referred to in the full Bench ruling of the Delhi High court will have to be conform to a rigid mathematical formula. Depending upon the facts and circumstances of the case there may be a nominal variation in the percentage of fine in each case and such nominal or marginal variations are invitable particularly when a quasi- judicial authority is called upon to excise a desecration.

In the present case I should like to note that the same adjudicating authority has imposed a fine of about 10% of the value of the goods on appellant Kishanlal Balaram (in appeal No. C/449/87) and on appellant Ananda Trading company (in Appeal No, C/493/87) whereas in all other orders passed on the same date, except one order which was passed on 16.4.1987, a quantum of fine of 15% has been imposed. While I find some force in the submission of the learned conceal for the appellants that reduction in the quantum of fine should be given in all these cases where 15% has been imposed conforming to the quantum of 10% adopted by the appellants that reduction in the quantum of fine should be given in all these cases where 15% of fine has been imposed conforming to the quantum of 10% adopted by the very same adjudicating authority in two cases referred to above. I am not inclined to modify the order and reduce the quantum of fine, because the exercise of the discretion though marginally varies from one case to other cases cannot be said to be either arbitrate or perverse. A small variation by itself cannot be a circumstance warranting modification of the same by conforming to a rigid formula.

In the result the penalty imposed on each of the appellants under the respective impugned orders is set and the fine imposed confirmed. Except for the above modification, the appeals are otherwised.