2020 (12) TMI 607 - AT - Customs

Release of absolutely Confiscated Imported goods - levy of penalty - Canadian Green Peas - prohibited goods - the goods acquired the nature of prohibited goods by virtue of the deeming definition under Section 2(33) of Customs Act, 1962 - DGFT issued N/N. 37/2015-20 dated 18.12.2019, under Section 3(2) of the foreign Trade (Development and Regulation) Act, 1992, the subject goods would deemed to be prohibited under Section 11 of the Customs Act, 1962 - whether the goods can be released on payment of redemption fine in terms of Section 125 of Customs Act, 1962? - HELD THAT - In the instant case, the impugned goods have been imported in violation of the conditions of the EXIM Policy Notification. By virtue of the same, the goods have acquired the nature of prohibited goods in terms of Section 2(33) of Customs Act, 1962 and have become liable for confiscation in terms of Section 111(d) ibid. In terms of Section 125 of the Customs Act, 1962, in case of goods other than prohibited goods, the adjudicating authority shall allow the goods to be redeemed on payment of fine in lieu of confiscation; in case of prohibited goods, the adjudicating authority has an option to allow the goods to be redeemed or to confiscate the goods absolutely. Whether absolute confiscation can be ordered in respect of goods which are not primarily prohibited goods but have acquired the nature of prohibited goods by virtue of the definition under Section 2(33) has been a subject matter of many judicial pronouncements - Courts and Benches of the Tribunal have been consistent in holding that such goods shall be allowed to be redeemed on payment of fine in lieu of confiscation. Though the Customs Act does not find mention of restricted goods , the Foreign Trade Policy along with Act and Rules made thereunder distinguish restricted and prohibited goods - it is provided that in respect of prohibited goods, the adjudicating authority may go for absolute confiscation. However, in respect of restricted goods, which are mostly commercial goods, the adjudicating authority can release the goods on payment of fine in lieu of confiscation. In the instant case, the appellant is an actual user and had been importing green peas regularly. In respect of the impugned import also they have applied to be DGFT for permission. It is pertinent to note that their application was not rejected and no order was passed on the said application. Under the circumstances, looking into the exigencies of the requirement of the impugned product, the appellants have imported the said goods. It is quite possible to accept the contentions of the appellants that they had a genuine expectation that their application would be considered in course of time and the permission would come forth about the time of import. Therefore, the impugned goods are in the nature of restricted goods, can be allowed to be redeemed on payment of fine in lieu of confiscation. The impugned goods can be allowed to be redeemed on payment of fine in lieu of confiscation under Section 125 of the Customs Act, 1962 and penalty under Section 112(a) of the Customs Act, 1962 - However, looking into the facts of the case that the appellant is a regular importer; is aware of the law and procedures regarding imports; has violated more than one condition of import, the interest of justice will be met if a deterrent redemption fine is imposed, in addition to the penalty already imposed by the Commissioner. The appeal is disposed of by allowing redemption of impugned goods on payment of fine of ₹ 12,00,000/- in lieu of confiscation under Section 125 of the Customs Act, 1962. However, penalty of ₹ 4,00,000/- imposed by the Commissioner is upheld - Appeal allowed in part.

Summary

Issues Involved:
1. Confiscation of imported goods.
2. Applicability of Section 125 of the Customs Act for redemption of confiscated goods.
3. Distinction between prohibited and restricted goods under the Customs Act.
4. Judicial precedents and their applicability to the case.

Issue-wise Detailed Analysis:

1. Confiscation of Imported Goods:
The appellant imported 210 MT of Canadian Green Peas, which were subject to import restrictions as per DGFT Notification No. 37/2015-2020. The Commissioner of Customs, Cochin, confiscated the goods absolutely and imposed a penalty of ?4,00,000. The appellant did not dispute the confiscation but sought redemption of the goods under Section 125 of the Customs Act.

2. Applicability of Section 125 of the Customs Act for Redemption of Confiscated Goods:
The appellant argued that Section 125 provides an option to pay a fine in lieu of confiscation. The section states that for prohibited goods, the adjudicating officer has discretion, but for other goods, redemption is mandatory. The appellant relied on judicial precedents where restricted goods were allowed redemption on payment of a fine, arguing that their goods, though restricted, should be treated similarly.

3. Distinction Between Prohibited and Restricted Goods Under the Customs Act:
The judgment emphasized the distinction between prohibited and restricted goods. Prohibited goods are those with an intrinsic taint, harmful to public health or national security, and are subject to absolute prohibition. Restricted goods, on the other hand, are commercial goods whose import is subject to certain conditions, such as obtaining a license. The court noted that the impugned goods, being restricted, could be redeemed on payment of a fine.

4. Judicial Precedents and Their Applicability to the Case:
The appellant cited several judicial precedents, including the Supreme Court's judgment in Atul Automations Pvt. Ltd., which allowed redemption of restricted goods on payment of a fine. The court also referred to the Kerala High Court's decision in the case of M/s Harihar Collections, where similar goods were allowed to be redeemed. The court found that treating importers at different ports differently would be unjust and inconsistent with judicial pronouncements.

Conclusion:
The court concluded that the impugned goods, being restricted and not absolutely prohibited, could be redeemed on payment of a fine. The appeal was disposed of by allowing redemption of the goods on payment of a fine of ?12,00,000, in addition to the penalty of ?4,00,000 imposed by the Commissioner.

(Order was pronounced in Open Court on 16/12/2020)