Customs confiscation and penalty can extend to a post-import buyer with prior knowledge of import restrictions.

Imported goods purchased after import can still remain liable to confiscation and redemption fine where the original import breached the import policy conditions and the confiscation order under the Customs Act remained unchallenged. A post-import buyer cannot avoid statutory consequences merely by asserting later purchase if the goods were imported in violation of the applicable notification. Penalty may also apply where the buyer had prior knowledge of the restriction and actively ated in the import and sale arrangement; however, the quantum must be proportionate to the proved role, so the penalty was reduced while confiscation and redemption fine were maintained.

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Issues: (i) whether the confiscation of the imported glycerine and the redemption fine could be sustained against the appellant, who claimed to be a purchaser after import, and (ii) whether the appellant was liable to penalty and, if so, to what extent.

Issue (i): Whether the confiscation of the imported glycerine and the redemption fine could be sustained against the appellant, who claimed to be a purchaser after import.

Analysis: The exemption under Notification No. 159/90 was available only if the replenishment material satisfied the prescribed conditions and the material was not dealt with in breach of the import policy condition. The initial importer had violated those conditions, and its appeal stood dismissed for non-compliance, leaving the confiscation order under Section 111(o) of the Customs Act, 1962 unchallenged. Since the confiscation arose from the importer's breach, the appellant could not dispute the confiscation merely by asserting purchase of the goods. A person claiming ownership of seized goods may still have to bear the statutory consequence of wrongful import and, if he seeks release of the goods, the redemption fine under Section 125 of the Customs Act, 1962 follows.

Conclusion: The confiscation and the liability to redemption fine were sustained against the appellant.

Issue (ii): Whether the appellant was liable to penalty and, if so, to what extent.

Analysis: The appellant's involvement was not limited to a post-import purchase. The appellant had negotiated the import, arranged payment of charges, participated in the movement of documents, made advance payment, and purchased the goods knowing that they were not meant for open-market sale. These circumstances established knowledge of the restriction and active participation in the illegal import and sale arrangement, bringing the case within the mischief of Section 112 of the Customs Act, 1962. At the same time, the Tribunal found the quantum imposed to be excessive in the facts of the case.

Conclusion: The appellant was liable to penalty, but the penalty was reduced from Rs. 20 lakhs to Rs. 5 lakhs.

Final Conclusion: The appellant succeeded only to the limited extent of reduction of penalty, while the confiscation and redemption fine remained undisturbed.

Ratio Decidendi: A purchaser cannot escape the consequences of confiscation and penalty where the evidence shows prior knowledge of the import restriction and active participation in the import arrangement, but the penalty must still be proportionate to the proven role and circumstances.

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