2023 (10) TMI 1179 - HC - Customs

Payment of penalty as a condition to re-export can be imposed or not - Seeking permission to re-export the goods - Mis-declaration of quantity of goods - import of Shikakai and Areca nut - 9845 kgs of Areca nuts were in excess and 9920 Kgs of Shikakai were in short supply in terms of quantity declared in the bill of entry - HELD THAT - Penalty imposed by the respondent authorities is for violation of the provisions of the Act, 1962 which has nothing to do with the redemption of the goods which are permitted to be re-exported on payment of fine though the same is also subject matter of the appeal. In such circumstances, the respondent authorities ought to have permitted the petitioner to re-export the goods without insisting upon the payment of penalty imposed by the said order as the same is subject matter of appeal before the Appellate Authority. The paragraph No. 17.4 with regard to making it mandatory for the petitioner to pay the penalty as a condition precedent for re-export the goods is without any basis and the same is required to be modified. Therefore, the paragraph No. 17.4 of the impugned order would now read as that the petitioner is permitted to re-export the goods on payment of redemption fine only. The respondent authorities are directed to permit the petitioner to re-export the goods without insisting upon the payment of penalty imposed by the respondent authority in the order permitting re-export of goods on payment of redemption fine of Rs. 5,00,000/- only - Petition allowed in part.

Summary

Issues Involved:
1. Validity of the condition to pay penalty for re-export of goods.
2. Applicability of Section 125 of the Customs Act, 1962 for re-export.

Summary:

1. Validity of the condition to pay penalty for re-export of goods:

The petitioner challenged the imposition of penalty as a condition for re-exporting goods under the Order in Original. The petitioner argued that once the redemption fine of Rs. 5,00,000/- was paid, the penalty should not be a prerequisite for re-export. The petitioner had already challenged the imposition of this penalty before the Appellate Authority, and the appeal was pending. The court observed that the penalty imposed by the respondent authorities is for violation of the provisions of the Customs Act, 1962 and is unrelated to the redemption of goods permitted for re-export. Therefore, the court held that the respondent authorities should have allowed the petitioner to re-export the goods without insisting on the payment of the penalty, as it was under appeal.

2. Applicability of Section 125 of the Customs Act, 1962 for re-export:

The court examined Section 125 of the Customs Act, 1962, which allows for the imposition of redemption fine in lieu of confiscation of goods imported in contravention of the Act. The court noted that this provision does not make the release of goods conditional on the payment of a penalty. The court clarified that while the imposition of redemption fine for re-export is sub-judice before the Appellate Authority, the specific issue in this petition was whether the penalty could be a condition for re-export.

Judgment:

The court concluded that paragraph No. 17.4 of the impugned order, which made the payment of penalty a condition for re-export, was without basis and required modification. The court ordered that the petitioner is permitted to re-export the goods on payment of the redemption fine only, without the requirement to pay the penalty. The petition was partly allowed, and the respondent authorities were directed to permit the re-export of goods without insisting on the payment of the penalty. The court did not express any opinion on the merits of the matter pending before the Appellate Authority.