Redemption fine and DEPB recovery fail where confiscated goods are unavailable and section 28 does not cover the credit dispute.
Redemption fine under section 125 of the Customs Act presupposes that confiscated goods are available for physical redemption; where the goods are unavailable and no bond or bank guarantee secured their production, confiscation may stand but redemption fine cannot be insisted upon. Recovery of differential DEPB credit was also held outside section 28, which applies to duty short-paid, not paid, or erroneously refunded, and no actual utilisation of the alleged excess credit was shown. Confiscation and penalty for misdeclaration were unsustainable because the shipping bills disclosed both descriptions and suppression or deliberate misdescription was not established.
Issues: (i) Whether redemption fine could be imposed when the confiscated export goods were not available for physical redemption. (ii) Whether recovery of the differential DEPB credit under section 28, and confiscation and penalty for alleged misdeclaration, were sustainable.
Issue (i): Whether redemption fine could be imposed when the confiscated export goods were not available for physical redemption.
Analysis: Redemption under section 125 of the Customs Act, 1962 presupposes custody of the confiscated goods and the practical ability to restore possession on payment of fine. Where the goods are not available and no bond or bank guarantee had been furnished to secure their production, an option to redeem is legally ineffective. In such circumstances, confiscation may stand but redemption fine cannot be insisted upon.
Conclusion: The refusal to impose redemption fine was correct and the Revenue's challenge failed.
Issue (ii): Whether recovery of the differential DEPB credit under section 28, and confiscation and penalty for alleged misdeclaration, were sustainable.
Analysis: Section 28 of the Customs Act, 1962 authorises recovery of duty short-paid, not paid, or erroneously refunded, whereas the dispute here concerned DEPB credit entitlement and not duty or refund. No material was shown that the alleged excess credit had actually been utilised so as to attract recovery under section 28. On misdeclaration, the shipping bills disclosed both descriptions and the goods were not concealed as synthetic dye; the presence of two descriptions did not establish suppression or deliberate misdescription warranting confiscation under section 113 or penalty under section 114.
Conclusion: Recovery under section 28, confiscation, and penalty were unsustainable and were set aside.
Final Conclusion: The Revenue appeal was dismissed, while the exporter obtained relief against the recovery, confiscation-related consequences, and penalty.
Ratio Decidendi: Redemption fine cannot be ordered for confiscated goods that are not physically available for redemption, and section 28 cannot be used to recover differential DEPB credit absent proof of actual duty-related utilisation or other statutory basis.
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AI Drafter ✕
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