1998 (9) TMI 86 - SC - Customs

Whether the offer for further mutilation of the goods could have been accepted would arise only in a case where the import is found to be bona fide and the matter only related to the extent of mutilation of the goods which had been imported? The appellant could not claim the benefit of the offer to have the goods to be further mutilated to avoid confiscation in the present case where it was found that there was a fraud in the entire process of import. The decision of this Court in Collector of Customs v. Swastika Woollen Industries ( 1990 (3) TMI 71 - SUPREME COURT OF INDIA ) has therefore no application in the facts of the present case.

Summary

Issues:
1. Confiscation of goods under various sections of the Customs Act, 1962 and imposition of personal penalty.
2. Allegations of fraudulent import of goods and involvement of individuals.
3. Tribunal's findings on the cancellation of permission for transfer of goods and misuse of Open General Licence facility.
4. Distinction in the penalty imposed on different individuals by the Tribunal.
5. Failure to consider Section 125 of the Customs Act regarding the option to pay fine in lieu of confiscation.
6. Submission regarding the acceptance of an offer for further mutilation of imported goods.
7. Dismissal of the appeal and imposition of costs.

Analysis:

1. The judgment involves the confiscation of goods covered by a Bill of Entry under various sections of the Customs Act, 1962, and the imposition of a personal penalty. The Additional Collector of Customs had directed confiscation of synthetic rags and serviceable garments under different sections of the Act and imposed a penalty of Rs. 7 lakhs on the appellants under Section 112(b) of the Act.

2. The case highlighted allegations of fraudulent import of goods, with individuals being implicated in the process. The Additional Collector found that one individual was the brain behind fraudulently importing raw material, while others were involved in benefiting from the imports. The Tribunal upheld these findings, indicating guilt on the part of the individuals involved.

3. The Tribunal's findings included the cancellation of permission for the transfer of goods and the misuse of the Open General Licence facility. It noted that the case revealed the misuse of facilities meant for actual users, leading to the import and disposal of serviceable garments in the market, resulting in the confiscation of goods and imposition of penalties.

4. A distinction was made by the Tribunal in the penalty imposed on different individuals. While the penalty on one individual was set aside in a separate case, the Tribunal upheld the penalty and confiscation of goods in the present case based on the evidence against the appellants.

5. The judgment addressed the failure to consider Section 125 of the Customs Act, which provides for the option to pay a fine in lieu of confiscation. The Additional Collector's decision for absolute confiscation was deemed appropriate due to the fraudulent nature of the import, and the Tribunal agreed that no option for redemption was warranted in this case.

6. The submission regarding the acceptance of an offer for further mutilation of goods was rejected. The Court held that such an offer could only be considered in cases of bona fide imports, not in instances involving fraud. The Court cited a previous decision to support this stance, emphasizing that the offer for further mutilation did not apply in cases of fraudulent imports.

7. Ultimately, the appeal was dismissed, and costs were imposed on the appellants. The Court upheld the decisions of the lower authorities regarding the confiscation of goods and penalties, concluding that the appeal lacked merit and should be dismissed with costs amounting to Rs. 10,000.