Correct customs declaration defeats confiscation and penalty when exemption benefit is later denied

Correct declaration of imported goods and a bona fide claim for exemption under a notification did not, by itself, establish any customs contravention. Where the importer had disclosed the goods accurately and left the exemption claim for departmental scrutiny, later denial of notification benefit could not justify confiscation or penalty. The absence of any incorrect declaration or other proven violation meant the penal consequences were unsustainable, and confiscation and penalty were set aside in favour of the assessee.

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Issues: Whether confiscation of imported goods and imposition of penalty could be sustained when the importer correctly declared the goods and claimed exemption under a notification, but the benefit of the notification was later denied.

Analysis: The goods were declared correctly and the claim for exemption was placed before the Customs authorities. Once the claim was for the Department to examine, a subsequent denial of the notification benefit, by itself, did not establish any contravention by the importer. Where the factual declaration is correct, the mere rejection of the exemption claim does not justify confiscation or penalty.

Conclusion: Confiscation and penalty were not sustainable and were set aside in favour of the assessee.

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