Legal principle

Confiscation under the Customs Act, 1962 is a discretionary power of the adjudicating authority, and where the authority, for recorded reasons and in view of payment of full duty and interest before show-cause notice, declines to confiscate goods held liable to confiscation, penalty under Section 112 does not automatically follow merely from such liability.

Court decision

The Tribunal rejected the Revenue's appeal and upheld the Order-in-Original in favour of M/s Robert Bosch India Ltd, sustaining the appropriation of duty and interest and confirming that there would be no confiscation, no fine in lieu of confiscation, and no penalty under Section 112.

Facts

M/s Robert Bosch India Ltd, an STP unit under the 100% EOU scheme, imported capital goods duty-free under Notification No.140/91-Cus dated 22.10.1991 (later substituted by Notification No.52/2003) for developing software meant for export, and stored them in bond. On verification of records and physical verification, the department found the goods had become obsolete and that the assessee had failed to obtain extension of the warehousing period as required under Section 61 of the Customs Act, 1962. Duty of Rs.27,36,259 and interest of Rs.1,01,671 (total Rs.28,37,930), calculated at the rate applicable on the date of expiry of the warehousing period after depreciation, was discharged by the assessee via TR-6 challan dated 8.3.2006 after it admitted the lapse by letter dated 1.3.2006, before show-cause notice. The adjudicating authority confirmed and appropriated the duty and interest, held the goods liable for confiscation under Sections 111(j) and 111(o), but in discretion declined to confiscate, imposed no fine in lieu of confiscation and no penalty under Section 112. The Revenue appealed against the non-confiscation and non-imposition of penalty.

Key provisions

• Section 61, Customs Act, 1962 — Period for which goods may remain warehoused
• Section 111(o), Customs Act, 1962 — Confiscation of improperly imported goods etc
• Section 112(a), Customs Act, 1962 — Penalty for improper importation of goods
• Section 72(1)(b), Customs Act, 1962 — Goods improperly removed from warehouse, etc