2020 (3) TMI 770 - AT - Customs

Absolute Confiscation - import of marble - restricted goods - DGFT Policy Circular No. 37 (RE-08) 2004-2009 dated 31/10/2008 - Section 48 of the Customs Act, 1962 - ground that the imported goods have already been disposed off during the pendency of appeal has no relevance to the payment of Redemption Fine - HELD THAT - Once confiscation of the goods is held to be valid in any proceedings, the property in the goods is vested in the Government and the sale proceeds being the total consideration of such property, as a natural corollary such sale proceeds will represent the confiscated goods. Once the confiscated goods allowed to the redeemed on a redemption fine, the sale proceeds which represent the goods, will be paid to the importer only after deduction of such fine. Thus, the redemption fine is to be charged from the importer while releasing the goods, the same also needs to be recovered from the sale proceeds which represent the consideration of the property. However, in view of the contradicting decisions on the matter at hand by the benches of the Tribunal, we refer the matter to Larger Bench on the issue whether the redemption fine and penalty, if any, imposed in the adjudication order needs to be recovered from the sale proceeds, if the confiscated goods are sold/disposed of by auction during the pendency of appeal . Appeal disposed off.

Summary

Issues:
1. Validity of confiscation of imported goods under Section 111(d) of the Customs Act, 1962.
2. Imposition of redemption fine and penalty under Sections 125 and 112 of the Customs Act, 1962.
3. Disposal of imported goods during the pendency of appeal and its impact on payment of redemption fine and customs duties.

Analysis:
1. The judgment revolves around the validity of the confiscation of imported marble blocks under Section 111(d) of the Customs Act, 1962 due to the failure of the importer to produce a valid import license as required for restricted goods. The Commissioner (Appeals) upheld the confiscation, emphasizing the necessity of a specific import license for valid importation. The order of confiscation was deemed appropriate considering the failure to produce the required license.

2. Regarding the imposition of redemption fine and penalty, the Commissioner (Appeals) set aside the payment of redemption fine of &8377; 20,00,000, stating that since the goods had already been auctioned by the department during the appeal process, the importer could not redeem them. The penalty of &8377; 10,00,000 was considered legally valid due to the goods being liable for confiscation and penalty imposition. The Commissioner directed the penalty to be deducted from the sale proceeds, with the balance to be paid to the importer.

3. The key issue arose from the disposal of the imported goods during the pendency of the appeal, leading to the unavailability of the goods for redemption. The revenue contended that the redemption fine should be deducted from the sale proceeds, irrespective of the goods' availability. Conversely, the respondent argued that once goods are unavailable for redemption, the redemption fine cannot be deducted from the sale proceeds. This conflicting stance prompted the Tribunal to refer the matter to a Larger Bench for clarification on whether the redemption fine and penalty, if imposed, should be recovered from the sale proceeds if the confiscated goods are sold during the appeal process.

The judgment highlights the complex interplay between import regulations, confiscation procedures, and the impact of goods disposal on redemption fines and penalties, necessitating a deeper examination by a Larger Bench to resolve the conflicting interpretations.