Undeclared gold in baggage is liable to confiscation, but penalty enhancement in revision needs prior notice and redemption fine must be considered.

Concealed and undeclared dutiable goods in baggage were liable to confiscation and penalty under the Customs Act because they fell within the mischief of Section 111, even though gold was not shown to be a prohibited import; the confiscation and liability to penalty were upheld in principle. The revisional authority, however, could not enhance the penalty under Section 112 without issuing a specific show-cause notice, so the enhancement was reduced to the original penalty. On redemption fine, the Court held that where goods are not prohibited but are liable to confiscation by the manner of import, Section 125(1) requires consideration of fine in lieu of absolute confiscation, and the matter was remitted for that limited purpose.

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Issues: (i) Whether undeclared gold biscuits concealed in baggage were liable to confiscation and penalty under the Customs Act, 1962 even though gold was not shown to be a prohibited or restricted import; (ii) Whether the revisional authority could enhance the penalty under Section 112 without issuing a specific show-cause notice; (iii) Whether, in the facts of the case, the authorities were bound to consider redemption fine in lieu of confiscation under Section 125.

Issue (i): Whether undeclared gold biscuits concealed in baggage were liable to confiscation and penalty under the Customs Act, 1962 even though gold was not shown to be a prohibited or restricted import.

Analysis: The goods were found concealed in baggage and were not declared in the baggage declaration. The Court held that the case fell within the mischief of Section 111(l) because dutiable goods not included in the declaration are liable to confiscation. It further held that importability of gold as such did not prevent confiscation where the goods were intentionally concealed and brought in without declaration to evade duty.

Conclusion: The confiscation of the gold and the imposition of penalty under the Customs Act were justified.

Issue (ii): Whether the revisional authority could enhance the penalty under Section 112 without issuing a specific show-cause notice.

Analysis: The adjudicating authority had imposed a penalty which was reduced in appeal. In revision, the penalty was enhanced beyond the original adjudication. The Court held that such enhancement could not be made in the absence of a specific show-cause notice to the petitioner, since the revisional authority could at most have restored the original penalty but not increased it further.

Conclusion: The enhancement of penalty was unsustainable and was reduced to the original amount imposed by the adjudicating authority.

Issue (iii): Whether, in the facts of the case, the authorities were bound to consider redemption fine in lieu of confiscation under Section 125.

Analysis: The Court interpreted Section 125(1) as dividing confiscation cases into two classes. Where the import is prohibited, redemption fine is discretionary. In all other cases, including goods otherwise importable but rendered liable to confiscation by the manner of import, the adjudicating authority must give an option to pay fine in lieu of confiscation. Since gold was not shown to be prohibited and the authorities had ordered absolute confiscation without any such option, the matter required reconsideration.

Conclusion: The issue of redemption fine had to be decided and the matter was remitted to the revisional authority for that limited purpose.

Final Conclusion: The Court upheld confiscation and liability to penalty in principle, but interfered to the extent of reducing the penalty and directing reconsideration of redemption fine in lieu of absolute confiscation.

Ratio Decidendi: Concealed and undeclared dutiable goods are liable to confiscation and penalty under Sections 111 and 112 of the Customs Act, 1962, but where the goods are not shown to be prohibited, Section 125(1) requires consideration of redemption fine in lieu of absolute confiscation, and penalty cannot be enhanced in revision without prior notice.

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