Legal principle

Goods provisionally cleared on a bond under Section 18 of the Customs Act pursuant to High Court directions, with the prescribed end-use condition complied with, cannot attract confiscation under Section 111(d), penalty under Section 112(a) or redemption fine under Section 125, and a show-cause notice under Sections 124/143 is not in accordance with the Section 18 provisional-release procedure.

Court decision

The Tribunal allowed the importer's appeal (C/21028/2015) and set aside the penalty of Rs.4,00,000 under Section 112(a), holding that the question of imposing penalty did not arise; it dismissed the Revenue's appeal (C/21153/2015) seeking redemption fine under Section 125 and commensurate penalty, holding no reason to impose either since the goods were imported and cleared based on High Court directions.

Facts

M/s. Maliakkal Industrial Enterprises imported 29 consignments of boric acid/boric acid anhydride for non-insecticidal use between 19.10.2005 and 26.06.2013; Notification No. 2 (RE-06)/2004-2009 dated 07.04.2006 permitted such imports only against an Import Permit from the Central Insecticides Board and Registration Committee. The importer did not furnish the permit, so clearances were made only provisionally, on execution of a Provisional Duty (PD) bond under Section 18 of the Customs Act, 1962 pursuant to directions of the Hon'ble High Court of Kerala, with a condition that the goods be used only for industrial purposes. The Revenue issued a show-cause notice dated 01.10.2014 under Section 124 read with Section 143 alleging confiscation under Section 111(d) read with Section 3(3) of the FT(D&R) Act, 1992 and penalty under Section 112(a). The Commissioner of Customs, Cochin, by Order-in-Original dated 28.01.2015, held the goods liable for confiscation and imposed a penalty of Rs.4,00,000 under Section 112(a), but declined to impose redemption fine since the goods were not physically available; both the importer and the Revenue appealed to the Tribunal.

Key provisions

• Section 112(a), Customs Act, 1962 — Penalty for improper importation of goods
• Section 124, Customs Act, 1962 — Issue of show cause notice before confiscation of goods etc
• Section 18, Customs Act, 1962 — Provisional assessment of duty
• Section 143, Customs Act, 1962 — Power to allow import or export on execution of bonds in certain cases
• 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 3(3), The Foreign Trade (Development and Regulation) Act, 1992 — Powers to make provisions relating to imports and exports.