Legal principle

Under Section 125 of the Customs Act, 1962 no condition can be imposed while offering redemption of confiscated goods — the owner may opt for home consumption on payment of duty, interest, fine and penalty, or for re-export on payment of fine and penalty — and valuation cannot rest on uncorroborated statements or invoices of witnesses not produced for cross-examination.

Court decision

The Tribunal allowed the appellant's appeal: confiscation was upheld, but valuation was fixed at USD 8,30,000 per the manufacturer's confirmed invoice while the Sahoo invoice was rejected; the re-export condition on redemption was struck down, leaving the appellant free to redeem for home consumption on payment of duty, interest, fine and penalties or to re-export on payment of fine and penalties; the Rs. 50 lakh redemption fine was maintained, the composite Section 112 penalty was reduced to Rs. 10 lakh and the Section 114AA penalty from Rs. 2 crore to Rs. 50 lakh, with set-off of amounts already deposited, and the Department was directed to redeem the goods within two weeks if the option was availed.

Facts

Passenger Yamal Manojbhai Jagada arrived at IGI Airport, New Delhi from Dubai on 04.10.2022 and was intercepted after crossing the Green Channel; a search yielded seven luxury watches (Jacob & Co., Rolex, Piaget), a diamond-studded gold bracelet and an iPhone 14 Pro, appraised at Rs. 23,21,74,140 involving duty of Rs. 8,93,87,044. The goods were seized under Section 110; the passenger first claimed the watches belonged to his Dubai-based uncle Hiren Dhakan on the strength of invoices later found fabricated, and was arrested under Section 104, depositing Rs. 2 crore during bail proceedings. A show cause notice dated 31.03.2023 proposed denial of free allowance, confiscation under Sections 111(d), (j), (l) and (m), duty demand with interest, and penalties under Sections 112 and 114AA; both noticees' Settlement Commission applications were rejected as non-maintainable under Section 127B. The Order-in-Original dated 13.09.2024 confiscated the goods but allowed redemption for re-export to Dubai on a Rs. 50 lakh fine under Section 125, imposed penalties of Rs. 50 lakh (Section 112) and Rs. 2 crore (Section 114AA) on the passenger, and dropped the case against the co-noticee. Both sides appealed; the Commissioner (Appeals) set aside the OIO and remanded for fresh adjudication mainly for denial of cross-examination, and both parties brought the matter to the Tribunal.

Key provisions

• Section 129A, Customs Act, 1962 — Appeals to the Appellate Tribunal
• Section 114AA, Customs Act, 1962 — Penalty for use of false and incorrect material
• Section 129DD, Customs Act, 1962 — Revision by Central Government
• Section 138B, Customs Act, 1962 — Relevancy of statements under certain circumstances
• Section 112, Customs Act, 1962 — Penalty for improper importation of goods
• Section 108, Customs Act, 1962 — Power to summon persons to give evidence and produce documents
• Section 111(d), Customs Act, 1962 — Confiscation of improperly imported goods etc
• Section 110, Customs Act, 1962 — Seizure of goods, documents and things
• Section 125, Customs Act, 1962 — Option to pay fine in lieu of confiscation
• Section 124, Customs Act, 1962 — Issue of show cause notice before confiscation of goods etc
• Rule 3, Baggage Rules, 2016 — Passenger arriving from countries other than Nepal, Bhutan or Myanmar
• Section 104, Customs Act, 1962 — Power to arrest