Legal principle

Restricted goods become 'prohibited goods' under Section 111(d) once the required licence or condition is not complied with, so abandonment under Section 23(2) is unavailable to validate an otherwise invalid import, though any penalty under Section 112(a) must be proportionate to the importer's conduct.

Court decision

The Tribunal upheld the confiscation approach, holding that restricted goods without the required licence are prohibited goods for Section 111(d) and that penalty under Section 112(a) is imposable even where goods are abandoned. However, finding no malafide and the penalty disproportionate to the value of the goods abandoned, it reduced the penalty from Rs.4,00,000 to Rs.1,00,000, partly allowing the appeal and modifying the Order-in-Appeal to that extent.

Facts

M/s. Jennex Granite Industries, a 100% Export Oriented Unit, imported rough granite blocks but failed to file Bills of Entry under Section 46 of the Customs Act, leaving the consignment uncleared from 10.09.2013. The custodian issued a Section 48 notice on 05.11.2013 followed by a notice dated 07.12.2013 calling for clearance within 15 days, to which the importer gave no reply. Since rough granite blocks were a restricted item under the Foreign Trade Policy 2009-2014 requiring a specific licence or import authorization, a Show Cause Notice dated 23.12.2014 proposed confiscation under Section 111(d) and penalty under Section 112(a). The Joint Commissioner ordered absolute confiscation and a penalty of Rs.4,00,000, which the Commissioner (Appeals-II) upheld in toto, prompting this appeal.

Key provisions

• Section 112(a), Customs Act, 1962 — Penalty for improper importation of goods
• Section 23(2), Customs Act, 1962 — Remission of duty on lost, destroyed or abandoned goods
• Section 111(d), Customs Act, 1962 — Confiscation of improperly imported goods etc
• Section 11, Customs Act, 1962 — Power to prohibit importation or exportation of goods
• Section 48, Customs Act, 1962 — Procedure in case of goods not cleared, warehoused, or transhipped within thirty days after unloading
• Section 46, Customs Act, 1962 — Entry of goods on importation