2009 (8) TMI 115 - HC - Customs

Whether the goods held to be improperly imported are liable for confiscation under Section 111 of the Customs Act, 1962, even though the same are cleared and not available for seizure? Whether on the facts and the circumstance of the case the Hon ble CESTAT is correct in law in holding that since the imported goods were not available as being already cleared, the same was not liable for confiscation? Held that - The question of confiscating the goods would not arise if there are no goods available for confiscation nor consequently redemption. Once goods cannot be redeemed no fine can be imposed. The fine is in the nature of computation to the state for the wrong done by the importer/exporter. The tribunal was right in holding that in the absence of the goods being available no fine in lieu of confiscation could have been imposed. The goods in fact had been cleared earlier. The judgment in Weston (2000 (1) TMI 45 - SUPREME COURT OF INDIA) is clearly distinguishable. In our opinion, therefore, there is no merit in the questions as framed. Consequently appeal stands dismissed

Summary

Issues:
1. Whether goods improperly imported but cleared are liable for confiscation under Section 111 of the Customs Act, 1962?
2. Whether the imposition of redemption fine under Section 125 of the Customs Act is justified when the goods are not available for confiscation or cleared on undertaking/bond?

Analysis:

Issue 1:
The case involved a situation where incriminating documents were found during a search of the respondent's premises, revealing a substantial undervaluation of imported artificial flowers. The Commissioner of Customs issued a show cause notice, leading to the re-assessment of imported goods and the imposition of differential duty, interest, and penalties. Additionally, the imported goods were confiscated, and a redemption fine was imposed under Section 125 of the Customs Act, 1962. The respondent appealed to CESTAT, which confirmed the duty, penalties, and interest but set aside the redemption fine due to the goods being cleared and not available for confiscation.

Issue 2:
The CESTAT's decision was based on a judgment of the Punjab and Haryana High Court regarding the imposition of redemption fine when goods are not available for confiscation. The High Court of Bombay agreed with CESTAT, emphasizing that the concept of redemption fine applies when goods are available for redemption. If goods are not available for confiscation or redemption, no fine can be imposed. The court highlighted that the purpose of the fine is to compensate for wrongdoings by importers/exporters, and in this case, since the goods had already been cleared, there was no basis for imposing a redemption fine. The court distinguished the case from a previous Supreme Court judgment, stating that the circumstances were different, and upheld CESTAT's decision to set aside the redemption fine.

In conclusion, the High Court of Bombay dismissed the appeal, affirming that in the absence of goods available for confiscation or redemption, no fine can be imposed under Section 125 of the Customs Act, 1962. The court clarified that the imposition of a redemption fine is contingent upon the availability of goods for redemption, and since the goods in question had already been cleared, the redemption fine was not justified.