Adjudication of confiscations and penalties - CBEC's Customs Manual 2023 - Customs

9. Adjudication of confiscations and penalties: 9.1 The Customs Act, 1962 enjoins quasi-judicial proceedings to be followed before any penalties are imposed and any confiscation action etc., initiated against any offending goods. Apart from issuing Show Cause Notice under Section 124 of the said Act, the persons concerned are required to be given opportunity of representation in writing and personal hearing in the matter. The notice and the representation may be at the request of the person concerned be made oral. Besides issue of notice under section 124, the proper officer may issue a supplementary notice under circumstances or manner prescribed by the Board. The adjudication authority is then required to pass final order taking due note of all evidence brought on record. 9.2 As per Section 122 of the Customs Act 1962, in every case, in which anything is liable to confiscation or any person is liable to a penalty, such confiscation or penalty may be adjudged:- (a) Without limit, by a Principal Commissioner of Customs or Commissioner of Customs or a Joint Commissioner of Customs; (b) up to such limit by such officers, as the Board may, by notification, specify. Board Notification 50/2018- Customs (N.T.) dated 8th June, 2018 specified the limits as below Table 30.1. Table 30.1: Limits for confiscation of goods for respective Customs Officers Sl. No. Customs Officer Value of goods liable for confiscation (1) Assistant Commissioner of Customs or Deputy Commissioner of Customs Above rupees one lakh but not exceeding rupees ten lakhs (2) A Gazetted Officer of Customs lower in rank than an Assistant Commissioner of Customs or Deputy Commissioner of Customs Not exceeding rupees one lakh 9.3 Generally, mens rea is not required to be proof for the imposition of penalty under the provisions of the Customs Act. The amount of penalty depends on the gravity of the offence and is to act as a deterrent for the future. 9.4 Section 125 of the Customs Act, 1962 provides for option to pay fine in lieu of confiscation. The proviso to section 125 states that redemption fine shall not exceed the market price of the goods confiscated. This is the maximum penalty which can be levied. As per section 126 of the Customs Act, 1962 when any goods are confiscated, such goods shall thereupon vest in the Central Government. The officer adjudging confiscation shall take and hold possession of the confiscated goods. Whenever the confiscation of goods is authorized as per the sub-section (1) of section 125, of the Customs Act, 1962, the adjudicating authority MAY in the case of any goods where the importation or exportation is prohibited under this Act or under any other law for the time being in force, and SHALL, in the case any other goods, give to the owner of the goods (or from whose possession or custody such goods have been seized), an option to pay in lieu of confiscation such fine as the said officer / authority thinks fit. If the proceedings are deemed to be concluded under the proviso to sub-section (2) of section28 or under clause (i) of sub-section (6) of section 28 in respect of the goods which are not prohibited or restricted, the provisions of this section (redemption fine) shall not apply. Without prejudice to the provisions of the proviso to sub-section (2) of section 115, such fine shall not exceed the market price of the goods confiscated, less in the case of imported goods the duty chargeable thereon. 9.5 Where any fine in lieu of confiscation of goods is imposed under sub-section (1), the owner of such goods or the person referred to in sub-section (1) shall, in addition, be liable to any duty and charges payable in respect of such goods. 9.6 As per sub-section (3) of section 125 of the Customs Act, 1962, where the fine imposed under sub-section (1) is not paid within a period of 120 days from the date of option given thereunder, such option shall become void, unless an appeal against such order is pending.