Customs clearance after compliant relabelling cannot be blocked by insisting on unpaid fine and penalty absent a stay.

Where an appellate authority had permitted rectification of a BIS labelling defect under customs supervision and declined to sustain redemption fine and penalty, customs officials could not insist on payment of those amounts as a condition for clearance. Requiring prepayment would effectively amount to staying the appellate order, even though no stay had been obtained. The Bombay High Court directed implementation of the appellate order and permitted clearance of the goods after compliance with the prescribed labelling requirement.

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Issues: Whether the importer was entitled to clearance of the goods after undertaking BIS-compliant labelling under customs supervision, without being compelled to pay the redemption fine and penalty imposed in the original order.

Analysis: The appellate order had already found that the importer could validly carry out the required labelling so that the goods could be cleared for domestic consumption under customs supervision. It further recorded that, in view of the disclosures made, the imposition of fine and penalty under the Customs Act was not warranted. Requiring payment of the redemption fine and penalty at that stage would effectively amount to staying the appellate order, although no appeal against that order had yet been filed by the Revenue.

Conclusion: The importer was entitled to clear the goods after completing the labelling exercise under customs supervision, and could not be compelled to pay the redemption fine and penalty as a precondition for clearance.

Final Conclusion: The petition succeeded to the extent that the customs authorities were directed to implement the appellate order and permit clearance after compliance with the prescribed labelling requirement.

Ratio Decidendi: Where the appellate authority has permitted rectification of a compliance defect and ordered clearance under supervision, the customs authorities cannot insist on prepayment of fine and penalty that the appellate authority has declined to sustain, absent any stay of the appellate order.

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