Legal principle

Goods that are merely 'restricted' (not prohibited) under the Foreign Trade Policy cannot be absolutely confiscated absent specific recorded reasons, since Section 125 confers a discretion to allow redemption on fine that must be exercised consciously; nor can an appellate authority enhance penalty by substituting Section 114AA where the original authority had acted under Section 112(a).

Court decision

The Tribunal allowed the appeal, set aside the Order-in-Appeal and upheld the original authority's order: the goods remain releasable on payment of the redemption fine of Rs. 30,000 under Section 125, and the penalty of Rs. 10,000 under Section 112(a) stands. The absolute confiscation ordered by the Commissioner (Appeals) was unsustainable, and the enhancement of penalty under Section 114AA was 'absolutely misplaced' and set aside, since Sections 112(a) and 114AA 'are entirely on different premises'. The decision was in favour of the appellant-importer.

Facts

M/s Ascent Circuits Pvt. Ltd. imported a 'Posalux Machine DLR Measuring Unit' which, on examination, was found to be second-hand goods restricted under the Foreign Trade Policy. The original authority (Order-in-Original No. 405/2022-23-DC dated 05.08.2022) allowed redemption of the goods on payment of Rs. 30,000 under Section 125 and imposed a penalty of Rs. 10,000 under Section 112(a) of the Customs Act, 1962. On the Revenue's appeal, the Commissioner (Appeals) by Order-in-Appeal No. 16-17/2024 dated 29.01.2024 held the goods liable for absolute confiscation without any redemption fine and enhanced the penalty under Section 114AA from Rs. 10,000 to Rs. 1,00,000. The importer appealed to the CESTAT Bangalore against this Order-in-Appeal.

Key provisions

• Section 125, Customs Act, 1962 — Option to pay fine in lieu of confiscation
• Section 114AA, Customs Act, 1962 — Penalty for use of false and incorrect material
• Section 128A, Customs Act, 1962 — Procedure in appeal
• Section 112(a), Customs Act, 1962 — Penalty for improper importation of goods
• Section 111, Customs Act, 1962 — Confiscation of improperly imported goods etc