Legal principle

Where seized goods are not 'prohibited goods' under Section 2(33) of the Customs Act, grant of the redemption option under Section 125(1) is obligatory and not discretionary, and a later notification restricting imports operates prospectively only.

Court decision

The writ petition was allowed in favour of the petitioner: the Court held the silver goods were not 'prohibited' or 'restricted' at the time of import — under the ITC HS Policy they were freely importable subject only to RBI guidelines, and the 2019 Notification changing 'free' to 'restricted' was prospective — so the petitioner was entitled to the statutory (obligatory) option of redemption under Section 125 on payment of redemption fine, duty and other charges; the respondents were directed to decide the redemption fine within six weeks of the petitioner's appearance on 15 June 2026, to be paid within the statutory 120 days with outstanding duty and penalty. However, the penalty of Rs 45,00,000 under Sections 112 and 114AA was upheld, and the petitioner volunteered to deposit Rs 25,00,000 as cost in Court by 15 July 2026.

Facts

The petitioner, claiming to be the owner/importer of silver jewellery, was named by two noticees apprehended on 20 May 2016 while attempting to cross the green channel at IGI Airport; silver jewellery of 80% purity (gross weight 98.849 kgs, net 95 kgs, valued at Rs 29,06,522) was seized on 21 May 2016 under Section 110 of the Customs Act, 1962 by panchanama. By Order-in-Original dated 7 March 2017, the Additional Commissioner ordered absolute confiscation of the silver jewellery under Section 111, denying redemption, while allowing redemption of electronic items (valued Rs 2,20,53,542) on a fine of Rs 30,00,000, and imposed a penalty of Rs 45,00,000 on the petitioner under Sections 112 and 114AA, with lesser penalties on other noticees. The Commissioner (Appeals) dismissed the appeal on 23 March 2018, holding the silver articles to be 'prohibited goods' under Section 2(33), and revision under Section 129DD was dismissed on 22 June 2021. The petitioner then filed this writ petition seeking release of the silver jewellery on payment of redemption fine and duty under Section 125.

Key provisions

• Section 125, Customs Act, 1962 — Option to pay fine in lieu of confiscation
• Section 2(33), Customs Act, 1962 — Definitions
• Section 7, The Foreign Trade (Development and Regulation) Act, 1992 — Importer-exporter Code Number.
• Section 11, Customs Act, 1962 — Power to prohibit importation or exportation of goods
• Section 77, Customs Act, 1962 — Declaration by owner of baggage
• Section 111, Customs Act, 1962 — Confiscation of improperly imported goods etc
• Section 112, Customs Act, 1962 — Penalty for improper importation of goods
• Rule 3, Baggage Rules, 2016 — Passenger arriving from countries other than Nepal, Bhutan or Myanmar
• Section 102, Customs Act, 1962 — Persons to be searched may require to be taken before gazetted officer of customs or magistrate
• Section 114AA, Customs Act, 1962 — Penalty for use of false and incorrect material
• Section 108, Customs Act, 1962 — Power to summon persons to give evidence and produce documents
• Rule 4, Baggage Rules, 2016 — Passenger arriving from Nepal, Bhutan or Myanmar