LexM/S. U.K. ENTERPRISES & ANR. versus COMMISSIONER OF CUSTOMS AND CENTRAL EXCISE & ANR.
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7-J A M/S. U.K. ENTERPRISES & ANR. v. COMMISSIONER OF CUSTOMS AND CENTRAL EXCISE & ANR. B NOVEMBER 22, 2007 [ASHOK BHAN AND V.S. SIRPURKAR, JJ.] + Customs Act, I 962; Ss. 112, 114A & I 25: c Undervaluation-Import of Integrated circuits-Levy of customs duty based upon actual price-Differential amount of duty-Demand of-Penalty & redemption fine-Imposition of-Appeal and cross- appeals-Tribunal enhanced the penalty and the fine-On appeal, D Held: Imposing of enhanced penalty by the Tribunal was against the express provisions of law-Hence, penalty reduced to the duty amount in terms of the provision u/s. I I 4A of the Act-In the facts and under ).. the circumstances of the case, no interference in the order of the Tribunal enhancing the fine is called for. E Appellants-assessee had imported Integrated Circuits (I Cs) from a firm in Hong Kong. Directorate of Revenue Intelligence (DRI) after examining the consignment found that I Cs had been manufactured by a foreign firm. Based upon the information from the firm, the authorities .' F came to the conclusion that the declared price of the goods was undervalued. Taking into consideration the actual price of the goods in ~- question and after adding 10% towards profit of the dealer, the authorities fixed the value of the goods at Rs.23.4 Lac as against the declared value of over 2.3 Lac (CIF Goa). Accordingly, the authorities G demanded the differential amount of duty ofRs.4,91,000/-and imposed penalty ofRs.50,000/-under Section 114A of the Customs Act on the firm and Rs.50,000/- on the proprietor of the firm under Section 112 of ..._., the Act. Redemption fine ofRs.2,50.000/- under Section 125 of the Act was also imposed on the firm. Both the assessee as well as the Revenue H 436 j , • -4 A_. _.... ' MIS. U.K. ENTERPRISES v. COMMISSIONER OF CUSTOMS AND CENTRAL EXCISE 437 filed separate appeals before the Tribunal. The Customs, Excise and Gold (Control) Appellate Tribunal dismissed the appeal filed by the assessee and accepted the appeal filed by the Revenue and enhanced the amount of penalty on the assessee to Rs.10,00,000/-. However, the penalty imposed on the firm was set aside and the redemption fine was also enhanced to Rs.10,00,000/-. Hence the present appeals. Appellants contended that the maximum penalty which could be imposed under Section 114A of the Act can be equal to the duty demanded which, in the present case, was Rs.4,91,000/- whereas the Tribunal has enhanced it to Rs.10,00,000/-; and that under Section 125 of the Act, Revenue could impose the fine in lieu of confiscation as may be deemed fit but it could not exceed the market price of the goods confiscated, less in the case of imported goods the duty chargeable thereon. But the fine in the instant case has been increased to Rs.10,00,000/- without ascertaining the market value of the goods confiscated. Disposing of the appeals, the Court HELD: 1. The amount of penalty could not be more than the amount equal to the duty chargeable. A bare perusal of Section 114A of the Customs Act makes it clear that the liability to pay penalty can be equal to the amount of duty and could not exceed the payable duty. Hence, the penalty imposed was against the express provisions oflaw. In these circumstances, the amount of penalty is reduced to Rs. 4,91,000/-. [Para 9] [442-D, E, F] 2. Though the Tribunal had enhanced the amount of fine in lieu of confiscation to Rs.10,00,000/-without determining the market price of the goods in question on the date of imposing the fine, but, in the facts and circumstances of the case, this Court is not inclined to interfere with the order of the Tribunal insofar as the enhancement of the fine is concerned, as it is evident from the facts placed before this Court that the market price of the goods could not be less than Rs.10,00,000/-. Admittedly, the value of the goods has been fixed at Rs.23.4 Lac, which includes the profit of the dealer, as against the declared value of more A B c D E F G H 438 SUPREME COURT REPORTS [2007] 12 S.C.R. ' ~· A than Rs.2.3 Lac (CIF Goa). The purchase price would be deemed to be Rs.23.4 Lac minus 10% which was added as profit of the dealer which comes to Rs.21,06,000/-approx. Under the circumstances, it cannot be said that the market price of the goods, on the date ofimposition of fine, could not be less than the purchase price thereof. Even if it is assumed B that
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