P.G. Chacko, J. - (1.)THERE are two applications in each appeal, one for waiver of predeposit and stay of recovery in respect of penalty and the other for early disposal of the appeal. After hearing both sides, we are of the view that the appeals can be finally disposed of at this stage. Accordingly, after dispensing with predeposit and allowing the applications for early disposal of appeals, we take up the appeals for final disposal.
(2.)WE have examined the records. It appears that the appellants imported second -hand photocopiers in July 2006 without import licence and claimed clearance for home consumption under OGL. This claim was based on a premise that the goods were 'capital goods' and hence did not require any import licence. The adjudicating authority found the machines to be 'consumer goods' and, accordingly, ordered confiscation thereof under Section 111(d) and (m) of the Customs Act, giving an option to the importers for redeeming the goods on payment of fine. In the case of M/s. N.K. Enterprises, learned Commissioner determined the fine to be Rs. 6 lakhs for redeeming the goods of value (determined by himself) of over Rs. 30 lakhs. He also imposed a penalty of Rs. 3.3 lakhs on the party under Section 112 of the Act. In respect of M/s. Sri Balaji Office Equipment, the fine determined by the Commissioner is Rs. 7 lakhs in respect of goods of value of over Rs. 20 lakhs Ld. Commissioner imposed on the party a penalty of Rs. 3.5 lakhs.
(3.)LEARNED Counsel for the appellants submits that the appellant's have not yet redeemed the goods and are awaiting the results of these appeals. It is also submitted that M/s. N.K. Enterprises and M/s. Sri Balaji Office Equipment have already incurred demurrages to the extent of about Rs. 5 lakhs and about Rs. 2 lakhs respectively over a period of four months. In fact, this is the ground stated in the applications for early disposal of the appeals. It is also submitted by learned Counsel that the imports were made on a bona fide belief that the goods would be treated as 'capital goods' by the Indian Customs authorities in view of the Andhra Pradesh High Court's judgment in appeal No. 52 of 2005 upholding the Tribunal's Larger Bench decision in the case of Atul Commodities (P) Ltd. , wherein it had been held that second -hand photocopying machines were to be treated as 'capital goods' rather than 'consumer goods'.
Learned SDR submits that the Andhra Pradesh High Court's judgment was also considered by the Kerala High Court in its judgment dated 7.4.06 in Customs appeal No. 11/2006, wherein the same issue was decided in favour of the Revenue on detailed reasoning. It is also pointed out that the imports in question were made after the decision of the Kerala High Court and, therefore, it is not open to the appellants to raise any plea of bona fide belief. Both sides have also addressed the challenge in these appeals against the quanta of fine and penalty. Ld. counsel has relied on an order passed by one of us [Final Order No. 522/2006 in appeal No. C/243/2005] in the case of Sooraj Graphics v. CCE Coimbatore reported in 2006 (136) ECR 342 (Tri -Chennai)], wherein, in an apparently similar case, it was held that the quantum of fine should not exceed 15% of the value of the goods and that of penalty should be around 10% of the fine. We have examined the cited case law also. In that case, in the determination of quanta of fine and penalty, one of the factors considered by the Bench was 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, it was observed by the Bench, appeared to have been reversed with the Kerala high Court's decision dated 7.4.2006 (supra). In this connection, we observe that the trend -setting judgment of the Kerala High Court was known to the appellants at the time when the subject imports were made and, therefore, the plea of bonafide belief would not be tenable. In the circumstances, we do not think that the appellants can claim the benefit of Final Order No. 522/2006 in relation to the quanta of penalty, though they seem to have a legitimate claim for reduction of the quanta of fine on the basis of the view taken in the case of Sooraj Graphics (supra). As far as the penalty is concerned, the conduct of the importers will certainly be a factor entering into determination of quantum. This conduct stands established in this case. The appellants claimed clearance of the goods under OGL at a time when such goods required specified import licence in terms of the Kerala High Court's judgment.