Legal principle

Where imported goods violate import policy or regulatory conditions but are not absolutely prohibited, confiscation under Section 111(d) may be upheld, but absolute confiscation is unsustainable and the adjudicating authority must ordinarily grant an option of redemption under Section 125 on payment of redemption fine and applicable duties.

Court decision

The Tribunal held the cross-objections maintainable under Section 129A(4) notwithstanding withdrawal of the departmental appeal, upheld the finding that the vehicle was liable for confiscation under Section 111(d), but set aside the absolute confiscation and allowed the respondent an option to redeem the vehicle on payment of a redemption fine of Rs.11,20,000/- under Section 125 along with applicable customs duties and interest; the penalty of Rs.1,00,000/- as reduced by the Commissioner (Appeals) was not disturbed. The decision was substantially in favour of the respondent on the modality of confiscation, with the Revenue's withdrawal of its appeal also noted.

Facts

M/s. Home Designers and Fabricators Pvt. Ltd. imported a Toyota Land Cruiser Prado TZ-G Right-Hand Drive vehicle under Bill of Lading dated 12.09.2018, covered by IGM No. 2206355 dated 02.10.2018 at Chennai Port, declaring it as a used vehicle, but no Bill of Entry was filed and the consignment remained uncleared from 04.10.2018 despite Section 48 notices by the custodian. The Automobile Association of Southern India (AASI) certified on 11.03.2021 that the vehicle was brand new and unused with an odometer reading of 8 kilometres, valuing it at Rs.1,12,00,000/-. The department treated this as mis-declaration of a new vehicle as used, along with non-compliance with Chapter 87 of the Import Policy read with the Motor Vehicles Act, 1988 and Central Motor Vehicles Rules, 1989, and issued a show cause notice proposing confiscation under Section 111(d) and penalty under Section 112(a). The adjudicating authority ordered absolute confiscation and imposed a penalty of Rs.22,00,000/-; the Commissioner (Appeals) upheld confiscation but reduced the penalty to Rs.1,00,000/-, whereupon the Revenue appealed against the penalty reduction but later withdrew its appeal under the Government Litigation Policy, with the respondent's cross-objections against absolute confiscation directed to be heard on merits.

Key provisions

• Section 111(d), Customs Act, 1962 — Confiscation of improperly imported goods etc
• Section 125, Customs Act, 1962 — Option to pay fine in lieu of confiscation
• Section 129A(4), Customs Act, 1962 — Appeals to the Appellate Tribunal
• Section 112(a), Customs Act, 1962 — Penalty for improper importation of goods
• Section 48, Customs Act, 1962 — Procedure in case of goods not cleared, warehoused, or transhipped within thirty days after unloading
• Section 3(3), Customs Act, 1962 — Classes of officers of customs
• Section 2(26), Customs Act, 1962 — Definitions