Legal principle

Second-hand capital goods that are electronics and IT goods are 'restricted' under Para 2.31(I)(b) of FTP 2023 and confiscable under Section 111(d) absent DGFT authorisation, but a Section 114AA penalty cannot be imposed without proof of knowing or intentional use of a false declaration, which mere similarity of names with an overseas supplier or subsequent cancellation of BIS registrations cannot supply.

Court decision

The Tribunal modified the impugned order and partly allowed both appeals: confiscation under Section 111(d) was upheld solely because the MFDs are 'electronics and IT goods' under Para 2.31(I)(b) imported without DGFT authorisation, but the redemption fine was reduced from Rs.25,00,000 to Rs.10,00,000; confiscation was held unwarranted on the BIS, WPC and HOW Rules grounds, and the valuation re-determination furnished no independent basis for confiscation or penalty; the company's Section 112(a)(i) penalty was sustained but reduced from Rs.45,00,000 to Rs.15,00,000, while the Director's Section 114AA penalty of Rs.1,85,00,000 was set aside.

Facts

M/s. Atul Automation Pvt. Ltd. imported four consignments of old and used Multi-Function Copying Printer Machines (MFDs) through Kolkata Port under CTH 84433100, with descriptions confirmed by Chartered Engineer examination in the presence of Customs. The matter was referred to SIIB, statements were recorded under Section 108, the goods were seized and later provisionally released pursuant to Supreme Court orders. A Show Cause Notice dated 13.01.2025 alleged non-compliance with Para 2.31 of FTP 2023, the BIS Compulsory Registration Order 2021, the WPC Equipment Type Approval requirement and the HOW Rules 2016. The Principal Commissioner held the goods liable to confiscation under Section 111(d), imposed a Rs.25,00,000 redemption fine under Section 125, a Rs.45,00,000 penalty on the company under Section 112(a)(i), and a Rs.1,85,00,000 penalty on Director Atul Kamdar under Section 114AA.

Key provisions

• Section 112(a)(i), Customs Act, 1962 — Penalty for improper importation of goods
• Section 114AA, Customs Act, 1962 — Penalty for use of false and incorrect material
• Section 111(d), Customs Act, 1962 — Confiscation of improperly imported goods etc
• Section 108, Customs Act, 1962 — Power to summon persons to give evidence and produce documents
• Section 125, Customs Act, 1962 — Option to pay fine in lieu of confiscation
• Rule 12, Customs Valuation (Determination of value of Imported goods) Rules, 2007 — Rejection of declared value