Notified route compliance under DFRC scheme is mandatory; duty survives for breach, but penalty may be waived.

The proviso to Notification No. 48/2000-Cus. allowing import through a route other than the notified route was treated as mandatory and capable of being exercised only before import; it could not be used for post facto regularisation after the goods had entered India. The DFRC scheme required adherence to the notified route to preserve customs scrutiny and prevent misuse. Goods imported through a non-notified route were nevertheless not prohibited goods, so confiscation and duty were sustained for non-compliance with the route condition, but penalty was found unnecessary and was set aside.

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Issues: (i) Whether the proviso to Notification No. 48/2000-Cus. dated 25.4.2000 permitting import through a route other than the notified route was mandatory and could be invoked after the goods had already entered India; (ii) whether confiscation and penalty were sustainable when the goods were not prohibited goods and the only lapse was movement through a non-notified route.

Issue (i): Whether the proviso to Notification No. 48/2000-Cus. dated 25.4.2000 permitting import through a route other than the notified route was mandatory and could be invoked after the goods had already entered India.

Analysis: The notification prescribed notified places and routes for the DFRC scheme, and the proviso empowered the Commissioner to grant permission by special order subject to conditions. The relaxation was intended to operate before import and could not be treated as a directory provision or as a basis for post facto regularisation after the goods had reached India. The scheme of exemption required adherence to the notified route to enable customs scrutiny and prevent misuse of the benefit.

Conclusion: The proviso was mandatory and could not be invoked after the goods had already entered India.

Issue (ii): Whether confiscation and penalty were sustainable when the goods were not prohibited goods and the only lapse was movement through a non-notified route.

Analysis: The goods were held to be covered by the DFRC scheme and were not prohibited goods. In that view, duty could be sustained because the notified route requirement was not followed, but penalty was considered unnecessary. The appellate order was otherwise found to be free from legal infirmity, and the revenue challenge did not justify interference on the merits of confiscation, except that the penalty deserved to be set aside.

Conclusion: Confiscation and duty were sustained, but penalty was waived.

Final Conclusion: The duty demand was upheld on the basis that the import did not conform to the notified route, but the penal consequence was removed since the goods were not prohibited and the breach was treated as not warranting penalty.

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