1987 (3) TMI 116 - HC - Customs

Summary

Issues Involved:
1. Non-release of imported goods.
2. Levy of redemption fine and Customs duty.
3. Exemption from payment of Customs duty under Section 25(2) of the Customs Act.
4. Delay in the release of goods despite payment of Customs duty.
5. Interpretation of Section 125 of the Customs Act concerning redemption fine and Customs duty.

Detailed Analysis:

1. Non-release of Imported Goods:
The petitioner, a Punjab State Government undertaking, challenged the respondents' action in not releasing the imported goods, which included machinery and equipment gifted by the Canadian Hunger Foundation and a Canadian of Indian origin for setting up an exotic cattle breeding farm.

2. Levy of Redemption Fine and Customs Duty:
Upon arrival of the goods in Bombay and their subsequent transport to Chandigarh and Ludhiana, discrepancies were found between the goods and the Customs Clearance Permit (CCP) and Bill of Entry. The goods were seized, and a show cause notice was issued alleging under-declaration of value, unauthorized import of farm/dairy machinery/equipment, and unauthorized import of other goods against prohibitions and restrictions. The Collector of Customs ordered confiscation of the goods with an option to redeem certain goods on payment of redemption fines. The Central Board of Excise and Customs upheld this order with a modification in the redemption fine amount.

3. Exemption from Payment of Customs Duty under Section 25(2) of the Customs Act:
The petitioner sought exemption from Customs duty under Section 25(2) of the Customs Act. The Central Government refused this exemption, noting that the goods did not fall under categories meant for distribution free of cost or at subsidized prices, but were producer goods intended for a commercial venture. The court upheld the Central Government's decision, stating that the petitioner's case did not meet the norms for exemption and the decision was neither arbitrary nor discriminatory.

4. Delay in the Release of Goods Despite Payment of Customs Duty:
The court criticized the delay in the release of Category 'A' goods despite the payment of Customs duty four years prior. The delay was attributed to lethargy on both sides, and the court emphasized that the goods should have been released promptly. The court directed the respondents to release the goods within two weeks and awarded costs to the petitioner due to the undue delay.

5. Interpretation of Section 125 of the Customs Act Concerning Redemption Fine and Customs Duty:
The petitioner argued that the redemption fine should include the element of Customs duty, contending that the goods in question were not "imported goods" as they had crossed the barrier without duty payment and were mixed with goods for home consumption. The court rejected this argument, clarifying that Section 125 states that redemption fine is in addition to Customs duty. The redemption fine must not exceed the market price of the goods minus the Customs duty. The court cited precedents to support that both redemption fine and Customs duty are payable independently. The court directed the assessment and payment of Customs duty on Category 'B' goods and ordered their release upon payment.

Conclusion:
The court concluded that the petitioner is liable to pay Customs duty on both Category 'A' and 'B' goods. The respondents were directed to assess and release Category 'B' goods upon payment of the assessed duty. The court issued a Writ of Mandamus for the release of Category 'A' goods within two weeks and awarded costs to the petitioner due to the delay in release.