2016 (9) TMI 358 - HC - Customs

Confiscation of goods - section 111 of the Customs Act, 1962 - option to pay redemption fine - section 125 of the Customs Act, 1962 - demand of duty and interest - Section 61(2) of the Act read with Section 72(b) of the Act - imposition of penalty - section 112 of the act - Extension of warehousing period - Section 61(1) of the Customs Act, 1962 - B/E Nos. 1 and 2 - confiscated goods vesting to the Central Government - Section 126 of the Act - auction of the goods - Held that - payment of duty, interest and penalty made belatedly but before auction process. the Court permits the Department to encash the DD deposited by the auction purchaser, release the goods imported thereunder to the auction purchaser and issue the requisite sale confirmation. This is subject to the Department abiding by the further directions that may be issued by the Court at the time of disposal of this petition. It is made clear that GIL would have no right to seek the return of the aforementioned goods that are handed over to the auction purchaser. As far as B/E No.3 is concerned, the appeal preferred by GIL against the Order-in-Original dated 30th December 2014 is stated to be pending before the CCA. In terms of the Circular No. 711/4/2006 dated 14th February 2006 issued by the CBEC, the Department had to seek the permission of the CCA before proceeding with the auction. Accordingly, the Court directs status quo in respect of the auction of the confiscated goods covered by B/E No. 3 to be maintained till such time the CCA passes appropriate orders in relation thereto. Petition to be placed before the Hon ble the Chief Justice for being listed before a Larger Bench

Summary

Issues:
1. Validity of auction process initiated by the Department of Customs for goods imported by the Petitioner.
2. Confiscation and redemption of goods under Bills of Entry (B/Es).
3. Delay in payment of duty, penalty, interest, and redemption fine by the Petitioner.
4. Permission for clearance and ex-bonding of goods.
5. Legality of auctioning confiscated goods.
6. Interpretation of provisions regarding auction of goods under the Customs Act, 1962.

Analysis:
1. The Petitioner challenged the auction process initiated by the Department of Customs for goods imported under three Bills of Entry (B/Es). The Petitioner imported goods and warehoused them under Section 59 of the Customs Act, 1962. The Department issued Orders-in-Original confiscating goods under two B/Es, providing options for redemption by paying fines and penalties within stipulated periods.

2. The Petitioner made delayed payments for duty, penalty, interest, and redemption fines for the confiscated goods under the B/Es. Requests were made for permission to clear and ex-bond the goods, but the Department proceeded with an auction of the confiscated goods, leading to the legal challenge.

3. The Court examined the legality of auctioning confiscated goods under the Customs Act. The Petitioner argued that if payments were made before the auction, the Department should not recover more than the due amounts. Reference was made to relevant circulars and legal precedents to support the argument against auctioning the goods.

4. The Court acknowledged the need for detailed examination of the provisions regarding the vesting of confiscated goods in the Central Government and the rights of importers in such cases. It was decided that a larger Bench would consider the issue, especially in cases where payments were made belatedly but before the auction.

5. Specific directions were given regarding the auctioned goods under two B/Es, allowing the Department to proceed with encashing the auction purchaser's deposit. However, the question of excess recovery beyond due amounts was left for the Larger Bench to decide. For goods under the third B/E, the auction was stayed pending the outcome of the appeal before the Commissioner of Customs (Appeals).

6. The Court directed the matter to be placed before a Larger Bench for further consideration of the issue raised by the Petitioner regarding the auctioning of confiscated goods and the rights of importers in such situations. The case was scheduled for a hearing before the Larger Bench on a specified date.

This detailed analysis covers the key issues addressed in the judgment, providing a comprehensive overview of the legal proceedings and decisions made by the Court.