A person imported a consignment paid duty assessed by the department there is no self assessment in customs clears the goods and then use the goods or sell it as per his business requirement. Following sometime the department passes an order saying that the goods has been confiscated and supplied him an choice to redeem the goods on payment of redemption fine. He doesnt know what really should he do with this selection. Therefore he requested the department to confiscate the goods totally.
Jokes apart the basic query which arises here as to what extent law need to be stretched. In the present context this paper seek to examine that regardless of whether the goods that are not offered for confiscation may be confiscated below Customs Act 1962 This paper is an humble attempt to examine this question. Chennai tripsheet model
To Confiscate suggests to appropriate private property to public treasury. As a result soon after confiscation the goods becomes a home of your government as well as the government can handle it as it would like. By way of solution of redemption fine government offers to some person to take ownership with the goods. Redemption fine is just not a penalty and it has no penal connotation. In Blue Dart Express v. Commissioner of Customs1 the Tribunal observed that redemption fine in lieu of confiscation just isnt a fine as understood in criminal jurisprudence. Redemption fine will not be a penalty in that sense. Its only an selection towards the individual to spend an quantity in lieu of confiscation. It consists of no penal connotation.
Proceeding of confiscation is really a proceeding against the goods they are proceedings in rem. In rem literally signifies against the house not against the individual. A proceeding in rem is 1 taken immediately against the house and has for its object the disposition of the property without having reference for the title of person claimants. Distinguishing the terms in rem and in personam supreme Court held in Vishawanathan v. Abdul Wajid2 that a judgment in rem settles the destiny with the res itself and binds all persons claiming an interest within the home inconsistent with the judgment despite the fact that pronounced in their absence a judgment in personam despite the fact that it may concern a res merely determines the rights of the litigants inter se to the res.
The confiscation proceedings are proceeding in rem3. The department can proceed even when the offender is unknown. In CC v. Bhooramal4 it had been held that confiscation proceeding is often initiated even without ascertaining as to who is the genuine owner of goods. Therefore the proceeding of confiscation is often a proceeding against the goods and goods only- can the proceeding be sustained in the event the goods are usually not accessible for confiscation
WHEN GOODS Arent Accessible Option TO REDEEM CANT BE GIVEN- CONFISCATION NOT Attainable-
In many instances notably in Crafts Studio v. CCE5 Honble Tribunal held
The appellant also contends that given that the goods had already been cleared they could not happen to be confiscated and redemption fine imposed on them. In assistance of this proposition the appellant has relied around the decision of this Tribunal within the case of Prudential Pharmaceuticals Ltd. v. CC Chennai 2001 136 E.L.T. 1057 T….. Having said that the appellants submission with regards to imposition of redemption fine merits acceptance in view in the decision of this Tribunal inside the situation of Prudential Pharmaceuticals Ltd.
In Mahalaxmi International Export v. CC6 the tribunal held that after the goods are cleared from customs they can not be confiscated and redemption fine can not be imposed. It held in para 10
We discover merit in the appellants submission with regard to imposition of redemption fine. In the present case the goods are not obtainable for confiscation. Nor had they been originally cleared against a bond. In such a case the law doesnt permit imposition of redemption fine as held by us inside the Ram Khazana Electronic Ors. v. CC AIR Cargo Jaipur Supra 2003 156 E.L.T. 122 Tribunal.
On this reasoning the tribunal held in Sansui India v. CC7 that when the goods are certainly not seized and not readily available together with the department for actual confiscation this kind of goods cannot be confiscated and question of giving choice to importer to spend fine in lieu of confiscation will not arise. It held in para 4
Section 111 from the Customs Act describes the goods brought from a place outside India which shall be liable to confiscation for various actions or omissions. Section 125 from the Customs Act provides that whenever confiscation of goods is authorised by the Customs Act the adjudicating authority may well within the situation of prohibited goods and shall within the situation of any other goods give to the owner from the goods an option to spend fine in lieu of confiscation. Inside the present matters the goods imported by the Appellants were cleared out of Customs charge after evaluation of Bills of Entry and payment of duty. It had been only by means of investigation conducted subsequent to the release of goods the Department came to know about the under-valuation. Nevertheless the goods released for the Appellants were never seized. Hence the goods though were liable to confiscation was never offered using the Department for actual confiscation. In the event the goods arent offered with the Department the query of their confiscation and giving any choice for the importer to spend fine in lieu of confiscation beneath Section 125 in the Customs Act will not arise. It really is also not the situation in the Revenue that the goods were seized and are released to the Appellants provisionally. In view of these facts the Revenue can not confiscate the goods and order the goods to be redeemed on payment of redemption fine.
In Shivalaya Spinning v. CC8 the Tribunal declared clearly
In so far as redemption fine is concerned we agree with the contention of your ld. Counsel based around the decisions of the Apex Court cited by him that when the goods usually are not readily available for confiscation redemption fine cant be imposed. Therefore the order imposing redemption fine is set aside.
ONLY IMPORTED GOODS Can be CONFISCATED GOODS CLEARED FOR Property CONSUMPTION Are not IMPORTED GOODS-
Section 111 of the Customs Act say Confiscation of improperly imported goods. Thus Section 111 in the Customs Act is applicable only for the imported goods. Section 225 of the Customs Act defines imported goods as
imported goods means any goods brought into India from a place outside India but isnt going to include goods which have already been cleared for dwelling consumption.
This confiscation is usually assailed on this ground also. Underneath customs Act only imported goods could be confiscated. As per the definition of imported goods beneath Section 225 with the Customs Act goods cleared for home consumption doesnt remain imported goods. In Bussa Oversea v. C L Mahar9 Division Bench in the Mumbai High Court held that after goods are cleared for residence consumption from customs they cease to be imported goods and hence they may be not liable to confiscation. It explained in para 7
The first submission from the learned counsel is that the goods imported below 45 consignments were cleared for property consumption on the petitioners executing ITC bonds as required under sub-section one of Section 143 of your Act. The learned counsel urged that once the goods are cleared for dwelling consumption then the goods covered by the consignments cease to be imported goods in accordance together with the definition of expression imported goods beneath Section two of the Act and consequently this kind of goods are usually not liable for confiscation. There is considerable merit inside the submission on the learned counsel. The goods lose its character of imported goods on being granted clearance for dwelling consumption and thereafter the power to confiscate is usually exercised only in instances where the order of clearance is revised and cancelled. Shri Chagla then submitted that the proceedings for imposition of penalty beneath Section 112 arent permissible when the goods cant be confiscated beneath Section 111 on the Act. The submission just isnt correct. Section 112 deals together with the levy of penalty for improper importation of goods and Section 112a provides that any person who in relation to any goods does or omits to do any act which act or omission would render such goods liable to confiscation beneath Section 111 or abets the doing or omission of such an act is liable to a penalty. The power to impose penalty is usually exercised not only when the goods are readily available for confiscation but when this kind of goods are liable to confiscation. The expression liable to confiscation clearly indicates that the power to impose penalty might be exercised even when the goods will not be offered for confiscation. It is possible that the goods might be cleared for house consumption devoid of the Customs Authorities being aware that the clearance is sought by suppressing the relevant facts or by producing documents which are hot genuine. The mere fact that the importers secured such clearance and disposed from the goods and thereafter goods are not accessible for confiscation cant divest the Customs Authorities in the powers to levy penalty underneath Section 112 of your Act. Shri Chagla relied upon the determination of Calcutta High Court reported in 2000 123 E.L.T. 330 Cal. 1976 Tax. L.R. 1567 Thomas Duff and Co. India Ltd. v. Collector of Customs and others. The Calcutta High Court took the view in a case of export where a show-cause notice was issued as to why penal action really should not be taken that after the goods were exported andor not out there for confiscation then the Customs Authority had no jurisdiction to initiate the proceedings by issuance of show-cause notice for levy of penalty. It really is not attainable to share the view taken by the Calcutta High Court. The power to levy penalty isnt dependant upon availability on the goods imported or exported. The power to levy penalty arises because the importer or exporter has done or omitted an act in relation to goods and which renders such goods liable for confiscation. The power in our judgment to levy penalty is available when the Customs Authorities come for the conclusion that the goods imported or exported were liable to confiscation because of act or omission around the part on the importer or exporter as the case might be. The power is not dependant upon the availability from the goods. It truly is therefore not feasible to accede towards the submission of Shri Chagla that as the goods covered by 45 consignments were not out there for confiscation beneath Section 111 of the Act the Customs Department could not have commenced proceedings underneath Section 112 from the Act for levy of penalty.
This judgment has been affirmed by the Honble Supreme Court10. Therefore it has been authoritatively decided that when the goods are cleared for residence consumption the goods cease to be imported goods and hence these goods can not be confiscated underneath Section 111 of the Customs Act on the other hand penalty may be imposed under section 112 for improper imports.
This view was followed by the tribunal in situation of Southern Enterprises v. CC11 wherein it held in para 6
Revenue cant confiscate the goods which have already been cleared for household consumption as they ceased to be imported goods as defined in Section 2 on the Customs Act and as held by the Bombay High Court within the situation of Bussa Overseas Properties P. Ltd. cited supra. The same view has been expressed by the Tribunal in the situation of Kishandas Sources India Impex P. Ltd. and within the situation of Leela Dhar Maheswari v. CCE.
NATIONAL TREATMENT OF IMPORTED GOODS-
This view is also in consonance with WTO agreement Article III of the GATT on national treatment of imported goods that after the imported goods passes customs barrier there must not be any discrimination between imported goods and goods locally produced. As a result when the goods are cleared for property consumption the cleared goods merges together with the local goods and they must not be differentiated from the locally produced goods.
GOODS RELEASED PROVISIONALLY OR ON BOND-
In a series of judgments the Apex Court and Tribunal have held that when the goods are released provisionally or underneath Bond the goods could be confiscated and redemption fine might be imposed. In Weston Components v. CC12 the Supreme Court held that
It is contended by the learned Counsel for the appellant that redemption fine could not be imposed because the goods were no longer inside the custody on the respondent-authority. It truly is an admitted fact that the goods were released for the appellant on an application made by it and around the appellant executing a bond. Beneath these circumstances if subsequently it truly is found that the import was not valid or that there was any other irregularity which would entitle the customs authorities to confiscate the said goods then the mere fact that the goods were released around the bond being executed would not take away the power of your customs authorities to levy redemption fine.
The view is supported by various other judgments in the Apex Court notably East India Commercial Company v. CC13 Jeevraj v. CC14 and Harbans Lal v. CCE15.
In Atlas Casting Metal v. CC16 the Tribunal held that when the goods has been released on bond the bond can be enforced and the goods might be confiscated.
On the other hand it really is humbly submitted that the above view just isnt correct. It really is clear from the definition of Section 225 that the moment the goods are cleared for home consumption theyre not imported goods. Clearance includes provisional clearance. As per section two2 with the Customs Act the term assessment includes provisional evaluation. In view of this definition even when the goods are provisionally cleared for house consumption the goods has been cleared for house consumption and also the goods cease to be imported goods.
Even around the basis from the provision of option to redeem under Section 125 of your Customs Act such possibility can only be offered in the event the possession in the goods are using the department. When the goods are provisionally cleared the possession will not be using the department and a solution to redeem cant be given. Thus even on this logic goods can not be confiscated when its provisionally released.
I am sure the judiciary will consider these grounds as and when suitable opportunity comes.
ARMS OF LAW MUST NOT BE OVERSTRECHED-
Every law is an infraction of human liberty17. Hence it truly is necessary that the law must not be extended from their natural meaning unless until there exists clear and unambiguous mandate in the legislature. Overstretching laws almost always make bad laws.
Despite these binding judgments and clear provisions of law on confiscation the department keeps on confiscating goods not out there for confiscation and cleared for home consumption and keeps on fighting infructuous litigation. This kind of vexatious litigation do not affect rich and powerful but greatly affect small importers. Aptly said
The net of law is spread so wide
No sinner from its sweep may well hide.
Its meshes are so fine and strong
They take in every child of wrong.
O wondrous web of mystery
Big fish alone escape from thee
Views expressed are personal views of author.
RAJESH KUMAR
1 1999 111 ELT 102
2 AIR 1963 SC 1 on page 15
3 S Indrasanrai Ltd. v. CC 1983 13 ELT 1305 SC
4 1983 13 ELT 1546 SC
5 2004 163 ELT 109
6 2004 169 ELT 68
7 2005 180 ELT 483
8 2002 146 ELT 610
9 2004 163 ELT 304
10 2004 163 ELT A 160
11 2005 186 ELT 324
12 2000 115 ELT 278 SC
13 1983 13 ELT 1342 SC
14 1997 94 ELT 459 SC
15 1993 67 ELT 20 SC
16 2005 186 ELT 575
17 Jeremy Bentham Chennai tripsheet model
