2017 (3) TMI 756 - AT - Customs

Confiscation of goods - the first appellate authority having held that the goods are liable for confiscation u/s 111(o) of the CA, 1962, has not confiscated the goods and has not imposed any penalty on the respondent - benefit of N/N. 16/2000-Cus dated 1st March 2000 - whether the appellant needs to be saddled with the confiscation of the goods imported by availing benefit of various notifications or otherwise; penalty to be imposed on appellant or otherwise? - Held that - condition number 48 of notification that in non-compliance of full or part, differential duty needs to be discharged by the importer is only requirement and there is no condition or requirement that adjudicating authority should confiscate the goods u/s 111(o) of the CA, 1962, nor there is any clause for imposition of penalty on the importer. The respondent has discharged the entire Customs duty having not met the conditions of notifications; on being pointed out by the Departmental Officer, if that be so appellant has fulfilled the mandate of notification by paying duty on being demanded - adjudicating authority was correct in dropping the proceeding initiated by the show-cause notice for confiscation the goods and imposition of penalty - appeal dismissed - decided against Revenue.

Summary

Issues involved:
1. Confiscation of goods imported under Customs Act, 1962
2. Imposition of penalty on the importer

Analysis:

Issue 1: Confiscation of goods imported under Customs Act, 1962
The Revenue filed an appeal against an Order-in-Original, arguing that the adjudicating authority did not confiscate the goods or impose penalties despite finding them liable for confiscation under Section 111(o) of the Customs Act, 1962. The Departmental Representative contended that failure to confiscate the goods and impose penalties rendered the order improper. The importer had availed various Customs Notifications for importing goods for the manufacture of mobile image intensifiers. However, it was discovered that the goods were not used for the specified purpose and were diverted for home consumption. The show-cause notice was issued demanding duty payment based on non-compliance with the notification conditions. The adjudicating authority concluded that since the importer paid the duty upon demand, there was no need for confiscation or penalty. The condition of the Customs Notification required the importer to discharge the differential duty in case of non-compliance, without mandating confiscation or penalty. The Tribunal upheld the adjudicating authority's decision, citing a similar case precedent from the Hon'ble High Court of Karnataka, emphasizing that payment of duty discharged the goods from the notification's ambit, precluding confiscation under Section 111(o) of the Act.

Issue 2: Imposition of penalty on the importer
The Departmental Representative argued that penalties should have been imposed on the importer for non-compliance with notification conditions, despite the importer cooperating with the department and paying the full duty. However, the importer contended that the duty payment fulfilled the notification requirements, absolving them from penalties or confiscation. The Tribunal agreed with the importer, referencing the Hon'ble High Court of Karnataka's decision that payment of duty and interest removed the goods from the notification's benefits, thus negating the need for penalties or confiscation. The Tribunal found the impugned order legally sound and rejected the Revenue's appeal, affirming that no interference was necessary. The appeal was consequently rejected, and the cross objection filed by the appellant was disposed of in support of the impugned order.

This detailed analysis of the judgment highlights the issues of confiscation of goods imported under the Customs Act, 1962, and the imposition of penalties on the importer. The Tribunal's decision, supported by legal precedents, emphasizes the significance of duty payment in fulfilling notification requirements and absolving the importer from penalties and confiscation.