Filing of appeals by the Department - Clarification on computing monetary limits involving Redemption fine & Penalty

By Vijay Kumar

BY instruction F.No.390/Misc./163/2010-JC: dated October 20, 2010, the CBEC had fixed monetary limits of Rs. 1 lakh and Rs. 2 Lakhs, for appeals to CESTAT and High Court respectively. DDT 1472 [22.10.2010] had commented, "But isn't the threshold limits too low? They should be at least Rs 5 lakhs and Rs. 10 Lakhs respectively".

Thankfully, the monetary limits were enhanced by the CBEC as communicated vide Instruction F.No.390/Misc./163/2010-JC., Dated: August 17, 2011, as under -

Paragraph 2 of the said Instruction read -

"2. For ascertaining whether a matter would be covered within or without the aforementioned limits, the determinative element would be duty/tax under dispute. To illustrate it further in a case involving duty of Rs. 5 lakhs or below with equal penalty and interest, as the case may be, no appeal shall be filed in the Tribunal. Similarly, no appeal shall be filed in the High Courts if the duty involved does not exceed Rs.10 lakhs with or without penalty and interest. Further, the Commissionerates shall not send proposal to the Board for filing Civil Appeal or Special Leave Petition in the Supreme Court in a case involving duty up to Rs.25 lakhs, whether with penalty and interest or otherwise. However, where the imposition of penalty is the subject matter of dispute and the said penalty exceeds the limit prescribed, then the matter could be litigated further. Similarly, where the subject matter of dispute is the demand of interest and the amount of interest exceeds the prescribed limit, then the matter may require further litigation."

Board had also clarified certain queries raised by the field formations and also informed that the revised monetary limits will come into force with effect from 01.09.2011.

It appears that a couple of queries arose in the minds of the field formations pursuant to the issuance of the Instruction dated 17/08/2011 cited above.

And the Board has now issued clarification on the same.

The field formations are seeking clarification on the applicability of the threshold limit in the cases where either redemption fine alone is in dispute or both redemption fine and penalty are in dispute.

The reference is elaborated thus - For example, in one case the Tribunal confirmed the duty but set aside the penalty of Rs. 5 lakhs and redemption fine of Rs. 15 lakhs imposed by the adjudicating authority. As the Instruction ibid did not specifically mention about redemption fine, a clarification has been sought whether the word "penalty" mentioned in para 2 of the Instruction ibid would include redemption fine or otherwise.

The Board after examining the matter clarifies thus -

++ Redemption fine is an option in the hand of the owner of goods to redeem goods confiscated by the department for violation of any provisions of the Customs Act. On the other hand, penalty is imposed on any person who violates the provisions of the Customs Act while importing or exporting the goods out of India. Therefore, the nature and scope of penalty is different from that of the redemption fine. While penalty is in persona, redemption fine is on goods. However, both redemption fine and penalty are imposed for violations of the statutory provisions. Therefore, even though redemption fine cannot be said to be covered under the word ‘penalty' the treatment given to both redemption fine and penalty is required to be identical and hence, redemption fine and penalty would need to be clubbed to decide the applicability of threshold limit prescribed.

++ Accordingly, it is clarified that if the imposition of redemption fine alone is the subject matter of dispute, and if such redemption fine exceeds the monetary limits prescribed, then the matter could be litigated further in Courts and Tribunal. Further, if both the amount of redemption fine and penalty are in dispute and if such redemption fine and penalty in dispute, taken together, exceed the prescribed monetary limit then the matter should be litigated further.

CBEC Instruction in F.No.390/Misc./163/2010-JC dated June 3, 2013.