Customs duty remains payable after release on fine in lieu of confiscation for misdeclared imported goods.

Import restrictions, misdeclaration and under-valuation in customs valuation were examined where the importer brought artificial silk velvet instead of licensed cotton velvet and the goods were not cut to shape. The Customs authorities confiscated the unlicensed goods and imposed fines for misdeclaration, while also insisting that customs duty be paid before release. The court reasoned that liability to duty arises when goods cross the customs frontier and is not extinguished merely because confiscation is avoided by payment of a fine in lieu of confiscation. It further treated release on fine as restoring the goods to the importer, leaving the goods still liable to duty. The appeal was allowed and duty was held payable despite the fine.

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Issues: Whether customs duty remained payable on imported goods after confiscation was ordered with an option to redeem the goods on payment of fine in lieu of confiscation.

Analysis: The statutory scheme under the Sea Customs Act, 1878 and the Imports and Exports (Control) Act, 1947 treated excess or prohibited import as liable to confiscation and permitted redemption on payment of fine under Section 183. The Court held that such an order does not amount to an absolute confiscation vesting title in the Government unless the fine is not paid. The liability to customs duty under Section 20 attaches the moment the goods are imported across the customs frontier and is independent of the confiscation machinery. Payment of redemption fine only avoids or nullifies the confiscation and does not extinguish the fiscal charge. The later Customs Act, 1962 expressly provided that fine in lieu of confiscation is in addition to duty, which supported the same principle.

Conclusion: Customs duty remained payable, and the Collector was justified in refusing release of the goods unless duty was also paid.

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