Import prohibition and confiscation link absent, so customs penalty could not be sustained for freely importable goods.

Penalty under Section 112 of the Customs Act, 1962 was not sustainable where the imported goods were found to be freely importable and not liable to confiscation. The adjudicating authority held that the tariff classification attracted a free import policy, and the proposed reclassification did not create any import restriction. It also found that Section 3 of the Indian Wireless Telegraphy Act, 1933 concerns possession of wireless telegraphy apparatus and does not by itself create an import prohibition under Section 11 of the Customs Act. As the goods were not liable to confiscation under Section 111(d), the foundation for penalty failed and the dropping of penalty was upheld.

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Issues: Whether penalty under Section 112 of the Customs Act, 1962 was leviable when the imported goods were held to be freely importable and not liable to confiscation.

Analysis: The adjudicating authority found that the goods were appropriately classifiable under the tariff heading attracting a free import policy and that the proposed reclassification did not create any new import restriction. It further held that Section 3 of the Indian Wireless Telegraphy Act, 1933 deals with possession of wireless telegraphy apparatus and not prohibition on import, and therefore no import prohibition could be read into Section 11 of the Customs Act, 1962 on that basis. Since the goods were already cleared and were not liable to confiscation under Section 111(d) of the Customs Act, 1962, the foundation for imposing penalty did not survive.

Conclusion: Penalty under Section 112 of the Customs Act, 1962 was not leviable and the dropping of penalty was upheld.

Final Conclusion: The appeal failed because the imported goods were held to be freely importable and not liable to confiscation, and consequently no penalty could be sustained.

Ratio Decidendi: Where imported goods are not subject to a valid import prohibition and are not liable to confiscation, penalty under the customs penal provision cannot be imposed.

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