Prohibited export substitution and Customs procedure breach justified confiscation, with penalties sustained but redemption fine reduced.

Substituted export cargo stuffed after the let-export stage, outside the prescribed Customs supervision, was found to be non-basmati rice instead of declared basmati rice. Because export of non-basmati rice was prohibited and the surrounding circumstances showed coordinated conduct by the exporter, CHA and CFS, the goods were liable to confiscation as an attempted export of prohibited goods. The redemption fine and penalties were upheld in principle because the involvement of all three entities was established, although the redemption fine was reduced on the facts. The key principle is that breach of export procedure, coupled with evidence of coordinated substitution, justifies confiscation and penalty, subject to factual moderation of fine.

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Issues: (i) whether the export of non-basmati rice in place of declared basmati rice rendered the goods liable to confiscation as a deliberate attempt to export prohibited goods; (ii) whether the redemption fine and penalties imposed on the exporter, CHA and CFS called for interference.

Issue (i): whether the export of non-basmati rice in place of declared basmati rice rendered the goods liable to confiscation as a deliberate attempt to export prohibited goods.

Analysis: The goods examined by Customs were substituted after the let-export stage and were found on preventive check to be non-basmati rice. Export of non-basmati rice was prohibited. The manner of stuffing violated the prescribed procedure, as the examined cargo was not stuffed in the presence of Customs officers and the surrounding circumstances showed coordinated conduct by the exporter, CHA and CFS.

Conclusion: The goods were rightly held liable to confiscation and the attempt to export prohibited goods stood established.

Issue (ii): whether the redemption fine and penalties imposed on the exporter, CHA and CFS called for interference.

Analysis: The Tribunal found no basis to accept the plea of mistake, but considered the earlier approach in similar matters while examining the quantum of redemption fine. The penalties were sustained as the three entities were found involved in the prohibited export attempt and the amounts imposed were not excessive in the circumstances.

Conclusion: The redemption fine was reduced from Rs. 10 lakhs to Rs. 5 lakhs, while the penalties were maintained.

Final Conclusion: The confiscation and penalties were sustained, but the redemption fine was reduced, resulting in only partial relief to the appellants.

Ratio Decidendi: Where substituted goods are stuffed in breach of the prescribed export procedure and the surrounding evidence establishes coordinated participation in an attempt to export prohibited goods, confiscation and penalties are justified, while the quantum of redemption fine may still be moderated on the facts of the case.

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