Arbitrary customs discretion over similar importers cannot stand when differential treatment lacks a lawful basis.

A customs authority's discretion must be exercised on a judicial basis and not in a discriminatory or arbitrary manner. Where two importers were substantially similarly placed, the authority could not justify confiscation and penalty against one importer by relying on an unverified oral warning said to have been given to another importer, without disclosing a lawful basis or supporting material for the differential treatment. The confiscation and penalty were therefore vitiated by arbitrariness and discrimination, and the amount paid was directed to be refunded.

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Issues: Whether the customs authorities acted arbitrarily and discriminatorily in confiscating the imported goods and imposing penalty on the petitioner under the customs law.

Analysis: The petitioner's goods were treated differently from similar consignments imported by another dealer in Pondicherry. The supposed basis for distinction was an alleged oral warning given to that dealer, but there was no reliable basis to assume that such warning had been communicated to other importers. The facts showed that the two importers were substantially similarly placed, and the customs authorities had not disclosed any adequate reason or material showing a lawful basis for imposing a heavy penalty on the petitioner while another similarly situated importer was let off with a warning. In such circumstances, the discretion exercised by the customs authority had to be judicial and not arbitrary.

Conclusion: The confiscation and penalty order was vitiated by discriminatory and arbitrary treatment and could not stand.

Final Conclusion: The writ petition was allowed and the penalty amount, if paid, was directed to be refunded.

Ratio Decidendi: Where a quasi-judicial customs authority treats similarly situated importers differently without a demonstrated and lawful basis, the exercise of discretion is arbitrary and liable to be quashed.

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