Imports of beans, peas and pulses exceeding notification caps constitute prohibited goods liable to absolute confiscation under Section 125(1)

SC held that imports of beans, peas and pulses exceeding specified quantities constituted prohibited goods, not merely restricted goods, as they violated notification caps designed to protect domestic agricultural markets. The Court set aside HC orders directing release of confiscated goods, ruling that such orders rendered appeals redundant and ignored national economic interests. Goods were held liable to absolute confiscation under Section 125(1) of Customs Act, 1962, with discretionary option for re-export upon payment of redemption fine. The Court emphasized that importers' personal interests could not override farmers' welfare and national agricultural market economy protection.

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Issues Involved:

1. Legality and validity of the orders passed by the High Court.
2. Whether the goods in question are of 'prohibited goods' categoryRs.
3. Whether the goods in question are liable to absolute confiscationRs.
4. Invocation of equity by the importers.
5. Prayer for keeping issues open for statutory appeal.

Detailed Analysis:

1. Legality and Validity of the Orders Passed by the High Court:

The High Court's orders dated 15.10.2020 (with modification on 09.12.2020) and 05.01.2021 were challenged. The High Court had directed the release of goods based on the orders-in-original dated 28.08.2020, despite the fact that the Commissioner had exercised his powers under Section 129D(2) of the Customs Act to review these orders. The Supreme Court found that the High Court erred in entertaining the writ petitions and issuing directions for the release of goods, as it rendered the appeals before the Commissioner (Appeals) redundant. The High Court's observations about the propriety of the Commissioner's orders and the grounds stated therein were also found to be premature, as the matter was left for the Appellate Authority's decision. The Supreme Court set aside the High Court's orders, emphasizing that the High Court's directions for release of goods contradicted its own observation that the matter was to be decided in appeal.

2. Whether the Goods in Question are of 'Prohibited Goods' CategoryRs.

The Supreme Court held that the goods in question, imported contrary to the notifications dated 29.03.2019 and the trade notice dated 16.04.2019, and without the requisite license, are deemed to be prohibited goods under Section 11 of the Customs Act by virtue of Section 3(3) of the FTDR Act. The Court rejected the importers' argument that the goods were 'restricted' and not 'prohibited'. The Court clarified that any import beyond the specified quantity in the notifications is clearly prohibited. The decisions in Sheikh Mohd. Omer, Om Prakash Bhatia, and Brooks International were cited to support the interpretation that restrictions on import amount to prohibition.

3. Whether the Goods in Question are Liable to Absolute ConfiscationRs.

The Supreme Court examined Section 125 of the Customs Act, which provides discretion to the Adjudicating Authority to allow redemption of prohibited goods on payment of fine. The Court found that the Adjudicating Authority had not properly exercised this discretion and had assumed that redemption fine must be given. The Appellate Authority's decision to order absolute confiscation was upheld, as it was found to be in line with the principles of discretion and the facts of the case. The Court emphasized that the discretion must be exercised judiciously, considering the impact on national economy and the interests of farmers. The goods were held liable to absolute confiscation, with an option for re-export on payment of redemption fine and other statutory obligations.

4. Invocation of Equity by the Importers:

The Supreme Court rejected the importers' plea for equity, stating that the imports were not bona fide and were made for personal gains, as held in Agricas. The Court emphasized that equity cannot be invoked in the absence of bona fide. The importers' arguments about the dynamic nature of demand and supply and the feasibility of re-export were also dismissed.

5. Prayer for Keeping Issues Open for Statutory Appeal:

The Supreme Court denied the importers' request to keep the option of further statutory appeal open. The Court noted that the importer M/s. Raj Grow Impex had chosen to file a writ petition instead of a statutory appeal, and any further appeal would be futile. Similarly, for M/s. Harihar Collections, the Court found that the enhanced penalty was justified given the release of goods and the damage caused.

Conclusions and Directions:

- The appeals were allowed.
- The High Court's orders dated 15.10.2020 (with modification on 09.12.2020) and 05.01.2021 were set aside.
- The orders-in-appeal dated 24.12.2020 were approved, and the orders-in-original dated 28.08.2020 were quashed.
- The goods were held liable to absolute confiscation, with an option for re-export on payment of redemption fine and other statutory obligations.
- The importers were directed to pay costs of Rs. 2,00,000/- each to the Appellants.

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