JUDGMENT

(Delivered by Dr. ANITA SUMANTH.,J)

The appellant is the assessee and has filed this Civil Miscellaneous Appeal challenging order dated 30.01.2018 passed by the Customs, Excise and Service Tax Appellate Tribunal (in short, ‘CESTAT/Tribunal’).

2. The appeal has been admitted on 24.03.2021 on the following substantial questions of law:-

“i. Whether the respondent/Department can invoke the provisions of Section 111 and in particular Section 111(m) and the consequential provisions of Section 112(a) by confiscating imported goods merely on account of non declaration of the value of a portion of the imported goods which otherwise are in conformity with the tariff entries specified in Schedule I of the Customs Act, 1962?

ii. Whether the respondent/Department was justified in imposing a redemption fine and penalty as a condition precedent for redeeming the goods whose importation was permissible under the Import Trade Control Statutes and only suffered from the vice of the value not being correctly described on bona fide grounds? And

iii. Whether the respondent/Department even if entitled to impose a redemption fine and penalty in the imported goods, could only do so on the undeclared portion of the value of the goods imported and not the entire consignment value, thus failing to apply the principle of proportionality?”

3. We have heard Mr.Krishna Srinivasan, learned Senior Counsel, for M/s.S.Ramasubramaniam and Associates, for the appellant and Mr.K.Mohana Murali, learned Senior Standing Counsel, for the Department. We have also had the benefit of perusing the material papers and decisions and notifications cited by the parties.

4. The brief facts are as follows. The appellant had imported a consignment of ‘Dryers, Heater and Cooler’ falling within Tariff Entry 84 19 20 20, under Bill of Entry dated 31.07.2008. On arrival of the consignment, the authorities conducted an investigation and arrived at the conclusion that there had been an error in the valuation of the goods, and the consignment had been under valued.

5. The appellant was asked to furnish some clarifications and provided piecemeal information, ultimately accepting the charge levelled by the Department to the effect that the design charges for the goods imported should form part of the assessable value of the goods under Rule 12 of the Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 (in short, ‘Rules’).

6. An Order-in-Original came to be passed, wherein, the conclusions of the officer were as follows:-

‘a. I reject the value of AUD 4,16,520 C&F declared in respect of Bill of Entry No. 806644 dated 31.07.2008 under Rule 12 of the Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 and re- determine the same at AUD 10,13,270 C&F (A.V.Rs.4,27,09,243/-) as per the provisions of Section 14(1) of the Customs Act, 1962 read with Rule 3(1) and Rule 10(b)(iv) of the Customs Valuation (Determination of Value of Imported Goods)Rules, 2007.

b. I confiscate the impugned goods valued at Rs.4,27,09,243/- (Rupees Four Crore Twenty Seven Lakhs Nine Thousand Two Hundred and Forty Three Only) under Section 111(m) of the Customs Act, 1962. However, I allow the goods to be redeemed on payment of a Redemption Fine of Rs.43,00,000/- (Rupees Forty Three Lakhs Only) by the importers under Section 125 of the Customs Act, 1962.

c. I impose a penalty of Rs.21,50,000/- (Rupees Twenty One Lakhs Fifty Thousand Only) on the importers M/s. Walchandnagar Industries Ltd., Pune under Section 112(a) of the Customs Act, 1962.’

7. The appellant accepted the valuation arrived at by the authorities and remitted the duty of AUD 10,13,720 C&F basis corresponding to the enhanced value of Rs.4,27,09,243/-. No appeal was filed before the CESTAT challenging the departmental valuation. As far as confiscation was concerned, the Commissioner permitted redemption of the goods confiscated on payment of redemption fine of Rs.43,00,000/- under Section 125 of the Act.

8. The appellant c