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Issues involved: Challenge to order seeking to confiscate imported goods under Section 125 of the Customs Act, 1962.
Summary: The petitioners, engaged in manufacturing containers, imported tin sheets under a contract for prime quality tin plate. However, upon examination, it was found that the imported goods were Tin Plate Waste instead of Tin Plate Prime as declared. The petitioners, unaware of the discrepancy, sought to place the goods in a Bonded Warehouse and paid provisional customs duty. The Collector of Customs held that the goods were mis-described and liable for confiscation under Section 111(d) of the Act, offering an option to redeem on payment of a fine. The petitioners challenged this order, contending they were innocent victims of fraud by the foreign supplier. The High Court noted the absence of mala fide intent on the part of the petitioners and their proactive steps upon discovering the fraud. It was observed that the petitioners had paid for Tin Plate Prime and customs duty accordingly, justifying clearance of the goods. The Court held that confiscation was unjustified, quashing the order and directing return of bank guarantees. The Court emphasized that the petitioners were not party to the fraud, having paid for Tin Plate Prime but receiving Tin Plate Waste due to the foreign supplier's deception. Despite the discrepancy in goods imported and declared, the petitioners acted in good faith and suffered financial losses. Notably, the rate of customs duty for Tin Plate Prime was higher, further supporting the petitioners' innocence. The Court found no violation of Customs Act provisions by the petitioners and deemed the confiscation unwarranted. Consequently, the order was set aside, and bank guarantees were to be returned to the petitioners.
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