Legal principle

There is a fundamental distinction between prohibited and restricted goods, and a harmonious reading of the Foreign Trade Act and Section 125 of the Customs Act does not detract from redemption of restricted goods imported without authorisation upon payment of the market value, since the Customs Act makes no provision for re-export.

Court decision

The Supreme Court dismissed the Revenue's appeals, finding no reason to interfere with the impugned orders: the respondents were entitled to redemption of the consignment on payment of the market price at the reassessed value with fine under Section 112(a), subject to the direction to deposit a bond without sureties for 90% of the enhanced valuation, leaving it to the DGFT to decide whether confiscation should be ordered or release granted on redemption at market value (with set-off to the respondents). The result favoured the respondents/importers.

Facts

Respondents M/s Atul Automations Pvt Ltd and M/s Parag Domestic Appliances imported consignments of Multi-Function Devices (digital photocopiers and printers, 'MFDs') in October–November 2016 without the authorisation required under the Foreign Trade Policy 2015–2020. The Commissioner of Customs held the imports violated the Foreign Trade Policy framed under the Foreign Trade (Development and Regulation) Act, 1992 and Rule 15(1)(2) of the Hazardous and Other Wastes (Management and Transboundary Movement) Rules, 2016, imposed a redemption fine under Section 125 of the Customs Act, released the consignment only for re-export, and imposed penalties under Sections 112(a) and 114AA of the Customs Act including on the Directors. The Tribunal held the MFDs were not 'waste', directed release under Section 125 for substantial compliance with Rule 13 of the Waste Management Rules, and reduced/set aside the penalties; the High Court held the MFDs were 'other wastes' under Rule 3(1)(23), restricted (not prohibited) goods, and upheld release subject to a simple bond without sureties for 90% of the enhanced assessed value. The Revenue appealed to the Supreme Court.

Key provisions

• Section 125, Customs Act, 1962 — Option to pay fine in lieu of confiscation
• Section 112(a), Customs Act, 1962 — Penalty for improper importation of goods
• Section 114AA, Customs Act, 1962 — Penalty for use of false and incorrect material
• Section 11, Customs Act, 1962 — Power to prohibit importation or exportation of goods
• Section 18A, Customs Act, 1962 — Voluntary revision of entry, post clearance