Wrongful detention and confiscation of imported goods led to refund of assessed value, with interest cut to 12%

Illegally detained and confiscated imported goods entitled the importer to monetary restitution measured at the time the goods ought to have been cleared for home consumption. The SC presumed a rational importer would not import goods unless their Indian market value exceeded the CIF value plus duty, and noted the revenue did not contend comparable goods were then available cheaper; hence the authority was obliged to restore the money value of the goods wrongfully withheld. The Court declined the claimed 21% interest as excessive and, since a departmental order had already held the import legal and correctly described, directed refund of the assessed value with reasonable interest. The applications were allowed, directing payment of the goods' value with 12% interest from 01-02-1989 until payment.

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Issues:
1. Confiscation of imported goods under customs law.
2. Liability of customs authorities for wrongful confiscation and disposal of goods.
3. Entitlement to refund of the value of confiscated goods with interest.

Issue 1: Confiscation of imported goods under customs law
The applicant, a company, imported Photographic Colour Films in 1989, facing classification and exemption issues. Customs authorities issued a show cause notice for confiscation due to misdeclaration. The Collector ordered confiscation but allowed redemption on payment of a fine. The goods were to be released but were not due to legal challenges. The Delhi High Court also restrained the applicant from dealing with the goods. The appeal against confiscation was dismissed by CEGAT, leading to two civil appeals filed by the applicant.

Issue 2: Liability of customs authorities for wrongful confiscation and disposal of goods
The Supreme Court set aside the confiscation orders, ruling that the goods were not misdeclared and eligible for import. The Court held the confiscation illegal and allowed the appeals. The applicant sought the return of the goods or their value with interest, arguing that the authorities wrongfully prevented clearance and sold the goods during the appeals. The respondent contended that the goods were perishable and needed air-conditioned storage, justifying their sale.

Issue 3: Entitlement to refund of the value of confiscated goods with interest
The Court held that due to the illegal confiscation, the goods should have been returned to the owner. As the goods were sold, the respondent was directed to refund the value of the goods with interest. The respondent's argument that the duty and storage charges exceeded the sale proceeds was rejected. The Court emphasized the respondent's obligation to refund the full value of the goods, considering market value and duty payable. Interest at 12% from the date of the Collector's order was awarded, totaling Rs. 33.04 lacs. The Court dismissed the respondent's contention to file a separate action in tort, emphasizing the applicant's entitlement to the refund. The respondent was directed to pay the specified amount with interest, with no order as to costs.

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