1988 (9) TMI 177 - Commissioner - Customs

Summary

Issues:
1. Whether the impugned goods imported as "Designer's Kit" under REP Licences are covered by the relevant licenses.
2. Whether the established practice of classifying the goods as "Designer's Kit" by the Custom House can be unilaterally altered.
3. Whether the impugned goods are liable for confiscation and penalty under the Customs Act.
4. Whether the burden of proof for establishing guilty knowledge in penalty proceedings rests with the Customs Authorities.
5. Whether the imposition of penalties requires proof of mens rea or criminal intent.

Analysis:
1. The Appeals were filed by the department against the clearance of goods under REP Licences, arguing that the goods were not covered by the licenses. The department contended that the goods were imported under incorrect classification and were liable for confiscation and penalty. The respondents argued that the goods were imported in good faith based on established practice and past approvals. The Collector observed that the Custom House's practice of classifying the goods as "Designer's Kit" over the years created a convention that could not be unilaterally altered without proper notification. The respondents' belief in the authorization of import was supported by past practices and lack of specific notice regarding the change in classification. The Collector noted that the goods were already cleared, making confiscation impractical, and emphasized the need for establishing guilty knowledge for penalty imposition.

2. The Collector highlighted the distinction between offences in rem (involving goods) and offences in personam (involving individuals) under the Customs Act. He referenced legal precedents to explain that confiscation of goods requires only a technical violation, while penalties and criminal prosecution necessitate establishing guilty knowledge or mens rea. The Collector noted that penalties cannot be imposed solely based on technical breaches without proving the individual's criminal intent. He emphasized the importance of proving guilty knowledge before imposing penalties, citing relevant court decisions to support his analysis.

3. The Collector concluded that the department failed to establish the respondents' guilty knowledge or criminal intent in importing the goods. He noted that even the Custom House believed the import was authorized, and there was no evidence of deliberate wrongdoing by the respondents. As the impugned goods were already out of Customs charge and not available for confiscation, the Collector deemed the appeals infructuous. He relied on various legal precedents to support his decision and rejected all 29 appeals filed by the department accordingly. The judgment emphasized the necessity of proving mens rea for penalty imposition and highlighted the lack of evidence in the case to support penal action against the respondents.