2020 (3) TMI 385 - HC - Customs

Seeking a sum which represents the value of goods destroyed by the Customs authorities - illegal trade - HELD THAT - The petitioner has not been able to build a case of mala fide or vindictive action on part of the adjudicating authority in originally initiating proceedings and eventually ordering confiscation of goods and imposing personal penalties on the petitioner and other co-noticees. In fact, other co-noticees did not challenge the order. Qua them such order be achieved finality. Only petitioner carried the order in appeal. Commissioner of Appeal had confirmed the order. The Tribunal remanded the proceedings for fresh consideration by the adjudicating authority. The Customs authorities cannot be saddled with refunding of the value of the goods to the petitioner. The Customs authorities having acted bona fide, the department cannot be asked to compensate the petitioner for incidental loss suffered by him on account of the pendency of the proceedings. It is neither the case of the petitioner that wholly mala fide in order to harass the petitioner the proceedings were initiated or that the same protracted. In fact, a part of the blame for destruction of the drugs must be attached to the petitioner itself. Under the Customs Act, provisions are there where under certain circumstances even after confiscation of the goods in respect of which any of the legal breaches are detected, the authority can provide for redemption fine and on payment of which in lieu of absolute confiscation, the goods can be returned to its owner. The petitioner could have applied for such redemption fine - The petitioner could also have urged the Customs authorities to auction the goods well in time so that the market price could have been fetched and if the petitioner ultimately succeeded such sale price could have been paid over to the petitioner. In the present case, during the pendency of the proceedings before the order of confiscation of the goods were set aside by the CESTAT and issues were re-decided by the adjudicating authority, the drugs had expired and, therefore, destroyed - Petition dismissed.

Issues involved:
1. Validity of the confiscation of goods by Customs authorities.
2. Petitioner's claim for compensation for the value of destroyed goods.
3. Allegations of arbitrary and illegal actions by Customs authorities.
4. Application of legal provisions for redemption of confiscated goods.
5. Comparison with previous legal judgments on similar cases.

Issue 1: Validity of the confiscation of goods by Customs authorities:
The petitioner's drug license had expired before the seizure of goods, leading to confiscation and penalties. However, the renewed license was produced during the proceedings, showing validity at the time of seizure. The adjudicating authority found the purchase of goods to be valid under the renewed license, leading to the deletion of personal penalties against the petitioner. Notably, the authority did not address the confiscation of goods in the final order, prompting further legal actions by the petitioner.

Issue 2: Petitioner's claim for compensation for the value of destroyed goods:
The petitioner sought direction for payment from Customs authorities for the value of goods destroyed during the pendency of legal proceedings. The Assistant Commissioner confirmed the destruction of goods due to expired drug validity, denying the petitioner's request for release or compensation. The petitioner argued that the destruction occurred without notice, alleging arbitrary conduct by Customs authorities.

Issue 3: Allegations of arbitrary and illegal actions by Customs authorities:
The petitioner contended that the Customs authorities acted arbitrarily by destroying the goods without informing during the appeal process. However, the department defended its actions as bona fide, emphasizing the expiration of the drug's validity as the reason for destruction. The absence of mala fide intent or harassment in initiating proceedings was highlighted by the department.

Issue 4: Application of legal provisions for redemption of confiscated goods:
The judgment highlighted that under the Customs Act, provisions exist for redemption fines to avoid absolute confiscation of goods. The petitioner could have explored options like applying for redemption fines or High Court intervention for release under certain conditions. Failure to utilize these provisions was noted, shifting some responsibility for the destruction of goods to the petitioner.

Issue 5: Comparison with previous legal judgments on similar cases:
References were made to past legal cases where compensation was awarded for unauthorized actions by Customs authorities during legal proceedings. However, the judgment distinguished the present case, emphasizing the expiration and subsequent destruction of goods before the final order on confiscation. The court dismissed the petition, citing the unique circumstances and lack of grounds for compensation.

In conclusion, the judgment addressed the validity of confiscation, petitioner's compensation claim, allegations of arbitrary actions, redemption provisions, and comparisons with past cases. The court dismissed the petition, emphasizing the expired drug validity as a key factor in the destruction of goods and rejecting the petitioner's claim for compensation from the Customs authorities.

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