Redemption fine and penalty under Customs law moderated where detained goods lost value and penalty basis differed from the show cause notice.

Redemption fine on confiscated goods permitted for re-export was reduced because prolonged detention and rapid technological change had materially diminished the goods' relevance and value, making the original fine excessive. Penalty was also set aside because it had been imposed under Section 112 of the Customs Act, 1962, while the show cause notice had proposed action only under Section 114(a); a penalty cannot be sustained on a statutory basis not put to notice. Confiscation and permission to re-export remained undisturbed, but the assessee obtained partial relief through reduction of the fine and quashing of the penalty.

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Issues: (i) Whether the redemption fine imposed on confiscated goods permitted to be re-exported required reduction; (ii) whether the penalty could be sustained when it was imposed under a provision not invoked in the show cause notice.

Issue (i): Whether the redemption fine imposed on confiscated goods permitted to be re-exported required reduction.

Analysis: The goods had remained detained for a long period and had lost relevance and value because of rapid technological change. In these circumstances, the originally imposed redemption fine was considered excessive in relation to the depreciated utility of the goods.

Conclusion: The redemption fine was reduced to Rs. 2 lakhs, payable on re-export of the goods, in favour of the assessee.

Issue (ii): Whether the penalty could be sustained when it was imposed under a provision not invoked in the show cause notice.

Analysis: The show cause notice proposed action under Section 114(a) of the Customs Act, 1962, whereas the penalty was imposed under Section 112 of the Customs Act, 1962. Since the statutory basis of the penalty differed materially from the notice, the penalty could not be sustained.

Conclusion: The penalty was set aside, in favour of the assessee.

Final Conclusion: The confiscation and direction permitting re-export remained undisturbed, but the redemption fine was reduced and the penalties were quashed, resulting in partial relief to the appellants.

Ratio Decidendi: A penalty cannot be sustained when imposed under a provision not invoked in the show cause notice, and redemption fine may be moderated where the detained goods have substantially lost value over time.

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