Legal principle

Goods imported in contravention of import restrictions notified under the FTDR Act, 1992 are liable to absolute confiscation under the Customs Act, 1962, and equity cannot aid importers who imported under the cover of interim orders, though the Court may, as a relaxation, permit re-export on payment of redemption fine and discharge of other statutory obligations.

Court decision

The Supreme Court allowed the appeals of the Union of India: it set aside the High Court's orders dated 15.10.2020 and 05.01.2021 and dismissed the importers' writ petitions; it approved the orders-in-appeal dated 24.12.2020 (absolute confiscation with enhanced penalty), quashing the orders-in-original dated 28.08.2020. The subject goods were held liable to absolute confiscation, subject to a relaxation that if the importer opted for re-export within two weeks, the authorities could grant it after recovering the necessary redemption fine and subject to other statutory obligations being discharged; failing that, the goods would stand absolutely confiscated. The prayer to keep questions of release and penalty open for statutory appeal was rejected (interveners' options confined to quantum of amounts including penalty), and costs of Rs. 2,00,000 each were imposed on the respondent-importers.

Facts

M/s. Raj Grow Impex LLP and M/s. Harihar Collections imported beans, peas and pulses whose import had been restricted by Central Government notifications dated 29.03.2019 under the FTDR Act, 1992 and a consequential DGFT trade notice dated 16.04.2019, effecting the imports under the cover of interim orders of various High Courts. After the Supreme Court in Agricas (26.08.2020) upheld those notifications, the Additional Commissioner of Customs (Adjudicating Authority) passed orders-in-original dated 28.08.2020 ordering confiscation but offering redemption under Section 125(1) of the Customs Act on payment of fine, whereupon the importers paid duty, redemption fine and penalty and some consignments were released. The DGFT objected that the goods were restricted items, and customs authorities asked Mumbai Port Trust to stop issuing delivery orders for the remaining consignments. The Bombay High Court, by order dated 15.10.2020 (modified 09.12.2020), directed release of the goods; meanwhile, on appeals filed at the direction of the Commissioner under Section 129D(2), the Commissioner (Appeals) by orders-in-appeal dated 24.12.2020 allowed the Department's appeals, ordered absolute confiscation and enhanced penalty, which the High Court stayed on 05.01.2021. The Union of India and customs authorities appealed to the Supreme Court against the High Court's orders.

Key provisions

• Section 125, Customs Act, 1962 — Option to pay fine in lieu of confiscation
• Section 111(d), Customs Act, 1962 — Confiscation of improperly imported goods etc
• Section 3, The Foreign Trade (Development and Regulation) Act, 1992 — Powers to make provisions relating to imports and exports.
• Section 11, Customs Act, 1962 — Power to prohibit importation or exportation of goods
• Section 129D(2), Customs Act, 1962 — Powers of Committee of Principal Commissioner of Customs or Chief Commissioners of Customs or Principal Commissioner of Customs or Commissioner of Customs to pass certain orders
• Section 9A, The Foreign Trade (Development and Regulation) Act, 1992 — Power of Central Government to impose quantitative restrictions.
• Section 112(a)(i), Customs Act, 1962 — Penalty for improper importation of goods
• Section 2(33), Customs Act, 1962 — Definitions
• Section 124, Customs Act, 1962 — Issue of show cause notice before confiscation of goods etc
• Section 3(3), Customs Act, 1962 — Classes of officers of customs
• Section 129A, Customs Act, 1962 — Appeals to the Appellate Tribunal
• Section 49, Customs Act, 1962 — Storage of imported goods in warehouse pending clearance or removal