Legal principle

Confiscation under section 111(j) fails unless the goods are established to have been removed from the warehouse after bonding without the proper officer's permission or in breach of its terms, and minor, rectified breaches of warehouse licence conditions do not attract penalty under section 117.

Court decision

The Tribunal allowed the appeal: confiscation under section 111(j) was held improper, and consequently the redemption fine under section 125 and the penalties under sections 112 and 117 were set aside; the impugned order-in-original was set aside in its entirety in favour of the licensee-appellant.

Facts

M/s Akshay Logistics was a public warehouse licensee under section 57 of the Customs Act, 1962 at Nhava Sheva. Officers visited its premises between 28 August and 5 September 2023 and found nine consignments of imported goods valued at ₹9,36,12,500 outside the designated (bonded) area of the 4352 m² licensed warehouse, prompting suspension of the licence under section 58B(2) with effect from 7 September 2023. The Commissioner of Customs (NS-I), by order-in-original dated 17 April 2024, confiscated the goods under section 111(j), allowed redemption under section 125, penalised the licensee under section 112, and imposed an aggregate penalty of ₹5,00,000 under section 117 for five deviations from licence conditions. The licensee appealed to the CESTAT Mumbai.

Key provisions

• Section 117, Customs Act, 1962 — Penalties for contravention etc not expressly mentioned
• Section 111(j), Customs Act, 1962 — Confiscation of improperly imported goods etc
• Section 71, Customs Act, 1962 — Goods not to be taken out of warehouse except as provided by this Act
• Section 58B(2), Customs Act, 1962 — Cancellation of licence
• Section 125, Customs Act, 1962 — Option to pay fine in lieu of confiscation
• Section 49, Customs Act, 1962 — Storage of imported goods in warehouse pending clearance or removal
• Section 112, Customs Act, 1962 — Penalty for improper importation of goods
• Section 57, Customs Act, 1962 — Licensing of public warehouses
• Section 68, Customs Act, 1962 — Clearance of warehoused goods for home consumption
• Section 59, Customs Act, 1962 — Warehousing bond
• Section 73A, Customs Act, 1962 — Custody and removal of warehoused goods