2011 (1) TMI 1189 - AT - Customs

Confiscation penalty Held that - proposal for confiscation and imposition of penalty needs to be preceded by issuance of show-cause notice. If it is the case of the Revenue that the goods imported by the respondents herein were prohibited goods due to non-availability of IEC number and would in turn be liable for confiscation under Section 111(d) of the Customs Act, 1962, Revenue should have issued a show-cause notice under Section 124 of the Customs Act, 1962 proposing to confiscate the goods and for consequent actions like redemption fine and/or for imposition of penalty. In the absence of any such proposition, the learned Commissioner (Appeals) was correct in coming to the conclusion that there is no contravention of Section 111(d) of the Customs Act, 1962, appeals filed by the Revenue are rejected

Summary

Issues:
Violation of Section 7 of Foreign Trade Act - Importation without IEC Number - Confiscation under Section 111(d) of Customs Act - Imposition of penalty under Section 117 of Customs Act.

Analysis:
The case involves appeals where the issue is the importation of goods without a valid Importer-Exporter Code (IEC) Number as per Section 7 of the Foreign Trade Act. The Department argues that such goods are prohibited and liable for confiscation under Section 111(d) of the Customs Act, with penalties under Section 112. The Department relies on legal precedents to support its position. The Order-in-Original states the importer lacked a valid IEC, making them liable for penalty under Section 117 of the Customs Act. However, the Commissioner (Appeals) found the order lacking details on the imported goods and highlighted that mere absence of IEC does not make goods prohibited. The Commissioner noted the need for specific conditions to deem goods as prohibited under Section 111(d). As no show-cause notices were issued for confiscation or penalties under Section 124, the Commissioner upheld the original order, emphasizing the necessity of due process before confiscation. The Commissioner's decision was based on procedural correctness and legal requirements under the Customs Act, leading to the rejection of Revenue's appeals.

In conclusion, the Tribunal upheld the Commissioner (Appeals) decision, emphasizing the importance of following due process and issuing show-cause notices before confiscation or penalty imposition under the Customs Act. The judgment highlights the significance of specific conditions for goods to be considered prohibited under Section 111(d) and the necessity of fulfilling legal requirements for confiscation actions. The case underscores the procedural adherence and legal clarity required in customs matters, ensuring fair treatment and proper application of relevant laws.