2005 (9) TMI 112 - HC - Customs

Summary

Issues:
1. Imposition of redemption fine under Customs Act for export with established liability to confiscation under S. 111.

Analysis:
The case involved the question of whether the adjudicatory authority under the Customs Act could impose a redemption fine in terms of S. 125 of the Customs Act for export when liability to confiscation under S. 111 is established. The applicant had imported a consignment of Iran origin dates, which were found to be not in conformity with general standards and infected with insects. The original authority confiscated the goods under S.111(d) of the Customs Act. The Joint Commissioner of Customs later confiscated the goods and imposed a redemption fine of Rs. 30,000, which was paid by the applicant for re-export to the original suppliers. The Commissioner (Appeals) set aside the order, but the CEGAT allowed the appeal, stating that redemption fine was rightly imposed due to the violation of law and non-compliance with food standards.

The applicant argued that redemption fine is usually imposed for goods intended for clearance in the domestic market, not for re-exported goods. It was also contended that the importer had no role in importing inferior goods, and the suppliers were willing to take back the goods. On the other hand, the Assistant Solicitor General contended that the Tribunal was justified in imposing the redemption fine, emphasizing that the non-imposition of a penalty was advantageous to the applicant.

The key issue revolved around the interpretation of S. 125 of the Customs Act, which allows the adjudging officer to impose a fine in lieu of confiscation. The court referred to previous judgments and legal provisions to establish that mens rea is not essential for invoking the power of confiscation under S. 111 of the Customs Act. The court clarified that once goods are confiscated, the importer must pay a redemption fine to reacquire ownership, regardless of whether the goods are cleared for home consumption or re-exported. The court upheld the imposition of the redemption fine, stating that it was necessary to get over the order of confiscation, and dismissed the appeal in favor of the Department.