Second-hand machinery import under 100% EOU scheme defeats misdeclaration-based confiscation, redemption fine, and penalty.

Imported second-hand machinery was considered eligible for clearance under the 100% EOU scheme, which allowed import of second-hand capital goods. Once that eligibility was accepted, the allegation of misdeclaration and the resulting confiscation under Section 111(m) of the Customs Act could not be sustained. As confiscation failed, the redemption fine also had no legal basis, and the penalty under Section 112 likewise could not stand. The document therefore states that confiscation, redemption fine, and penalty were set aside.

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Issues: Whether the imported second-hand machinery was liable to confiscation for alleged misdeclaration and whether the redemption fine and penalty could be sustained when the goods were found eligible for clearance under the 100% EOU scheme.

Analysis: The order recorded that the goods were used machines and, on the facts, the appellant's claim for clearance under the EPCG route could not sustain. At the same time, the order also accepted the appellant's entitlement to clearance under the 100% EOU scheme and noted that second-hand capital goods could be imported under that scheme. Once such eligibility was acknowledged, the finding of misdeclaration leading to confiscation under Section 111(m) of the Customs Act could not be maintained. With confiscation not surviving, the consequential redemption fine also had no basis. For the same reason, penalty under Section 112 of the Customs Act could not be sustained.

Conclusion: Confiscation, redemption fine, and penalty were set aside, and the appeal was allowed.

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