Restricted imports cannot be made freely importable by value enhancement; redemption fine and penalty may still survive without a valid licence

Restricted imported goods could not be converted into freely importable goods by artificially enhancing their declared value; the declared value remained the proper basis for the restriction, and the customs enhancement was set aside with restoration of the original value. However, import without the required valid licence continued to attract confiscation-related consequences, so the redemption fine and penalty were sustained. The note also records that any duty or other amount already deposited was to be verified for consequential refund, if admissible, in accordance with law.

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Issues: (i) Whether the declared value of the restricted imported goods could be artificially enhanced so as to convert them into freely importable goods; (ii) Whether the redemption fine and penalty imposed for import of restricted goods without a valid licence were liable to be set aside.

Issue (i): Whether the declared value of the restricted imported goods could be artificially enhanced so as to convert them into freely importable goods.

Analysis: The goods were restricted by the applicable DGFT notification on the basis of value. The declared value was accepted as the basis of restriction, and the subsequent enhancement by Customs to a higher value was used to treat the goods as freely importable. Such artificial adoption of a higher value did not alter the intrinsic character of the goods or cure the absence of a valid licence. A restricted import could not be transformed into an unrestricted import merely by valuation enhancement, and the rejection of the declared value was not sustainable.

Conclusion: The enhancement of value was set aside and the declared value was restored.

Issue (ii): Whether the redemption fine and penalty imposed for import of restricted goods without a valid licence were liable to be set aside.

Analysis: Once the goods remained restricted and the import was made without fulfilment of the licence condition, there was no ground to interfere with the consequential confiscation-related levies. The absence of a valid licence justified the imposition of redemption fine and penalty. The order also directed verification of challans for any duty or other amounts already deposited to enable consequential refund, if admissible, in accordance with law.

Conclusion: The redemption fine and penalty were confirmed.

Final Conclusion: The appeal succeeded only on the question of valuation, while the confiscation-related monetary liabilities were sustained.

Ratio Decidendi: A restricted import cannot be converted into a freely importable one by artificially enhancing its value, but where the import is made without the required licence, redemption fine and penalty may still be sustained.

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