Per Jeet Ram Kait :

This appeal arises from Order-in-Original No. 53/99-CAU. dated 26.7.99 passed by Commissioner of Customs, Custom House, Madras-1 in which the Commissioner has held that 9000 kgs. of Guaicol is liable for confiscation under Section 111 (o) of the Customs Act 1962 and as the same were not available for confiscation, he has imposed a fine of Rs. 2,10,000/-. This amount of Rs. 2,10,000/- was appropriated out of the paid amount of Rs. 13,29,073/- towards payment of duty and interest in terms of Condition - (ii) of Customs Notification No. 30/97 dated 1.4.97 as amended under Section 28 of the Customs Act 1962. The Commissioner has also imposed a penalty equal to the amount of duty (i.e. Rs. 13,29,073/-) on the importers under Section 114 (A) of the Customs Act 1962.

2. Ld. Counsel Shri T. Ramesh submits that this Guaicol was used in the manufacture of final product which has been cleared on payment of Central Excise Duty. He further submits that there is no evidence against them that this quantity was not used in the manufacture of final product. He therefore submits that the goods as such are not liable for confiscation and the imposition of fine of Rs. 2,10,000/- on such case is not justified. In this connection, he relies on the High Court judgment rendered in the case of CC Trichy Vs. Sundaram Industries Ltd. in RCP No. 29/2000 dated 10.4.2001 wherein the Hon'ble High Court of Judicature has held while relying on the Supreme Court judgment in the State of Madhya Pradesh Vs. Bharat Heavy Electricals Ltd. reported in 1998 (25) RLT 327 (SC)=1998 (99) ELT 33 (SC) in which the penalty which was imposed equal to 10 times the amount of entry tax was reduced. The High Court has therefore, dismissed the departmental petition where the department had challenged the reduction ordered by the Tribunal in the mandatory penalty under Section 11AC of the CE Act. They have therefore submitted that the Tribunal may kindly exercise its discretion and reduce the quantum of penalty.

3. The Ld. Counsel also has relied on the Tribunal judgment in the case of Chinku Exports Vs. CC, Calcutta as reported in 1999 (33) RLT 395=1999 (112) ELT 400-Trib. in which it has been held that redemption fine cannot be imposed when goods are not available and hence the imposition of redemption fine cannot be sustained. The Tribunal in the case of Chinku Exports (supra) has held that the redemption fine imposed was totally outside the purview of legal provisions in this regard. He has, therefore, submitted that the order of imposition of redemption fine on the goods which were not available may be set aside.

4. Ld. DR submits that the raw material was imported free of import duty under the DEEC Scheme and to fulfill the export obligation. The Ld. DR has stated that they had not fulfilled the export obligation and the goods which were manufactured by them were diverted to the local market. It was on the intervention of the DRI that they have paid Custom duty on the imported raw material on the plea that they have not been able to use the raw materials.

5. While countering this argument of the Ld. DR, Ld. Counsel for the appellants stated that they had still one more year to fulfill the export obligation and they are not required to export 100% quantity as in the case of 100% Export Oriented Units. They are at liberty to sell certain quantity in the domestic market and since they had one more year to fulfill the export obligation, they cannot be completely charged that they had not fulfilled the export obligation and they were not likely to fulfill the export obligation.

6. We have considered the submissions carefully and the case records and find that in view of the Tribunal judgment cited supra, no redemption fine can be imposed on goods which are not available for confiscation. As regards the plea of the appellants for reduction of penalty, we find that equal amount of penalty has been wrongly levied in as much as they had used the raw materials in