Provisional customs clearance on bond cannot later support confiscation or penalty once bond conditions are timely fulfilled.

Where imported goods are provisionally cleared for home consumption on execution of a bond under Section 143(1) of the Customs Act and the bond conditions are fulfilled within time, Section 143(2) requires cancellation of the bond and prevents later penalty action. The Court stated that although penalty under Section 112 is not confined to physically available goods, the department cannot commence confiscation or penalty proceedings after the bonded obligation has been duly complied with and no steps were taken to enforce the bond. In that situation, proceedings under Sections 111 and 112 on the basis of the earlier provisional clearance are not maintainable.

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Issues: Whether, after the importer had cleared the goods for home consumption on execution of bonds under Section 143(1) and had complied with the bond conditions within the stipulated time, the Customs authorities could commence proceedings for confiscation under Section 111(d) and penalty under Section 112 of the Customs Act, 1962.

Analysis: Section 2(25) of the Customs Act, 1962 defines imported goods in a manner that excludes goods cleared for home consumption. Section 47 permits such clearance, and Section 143(1) enables provisional clearance on execution of a bond where immediate clearance cannot wait. Under Section 143(2), if the bonded requirement is fulfilled within time, the bond must be cancelled and the importer is protected from penalty. The power to impose penalty under Section 112 is not dependent on the physical availability of the goods, because it extends to goods that are liable to confiscation. However, once the bond conditions were complied with within the stipulated period and the Department took no steps to enforce the bonds, the statutory consequence under Section 143(2) followed. In that situation, proceedings for confiscation and penalty could not be initiated merely on the basis of the earlier provisional clearances.

Conclusion: The Assistant Collector had no jurisdiction to commence proceedings under Sections 111 and 112 after compliance with the bond conditions, and the impugned show-cause notice was invalid.

Ratio Decidendi: Where goods are provisionally cleared on execution of a bond under Section 143(1) of the Customs Act, 1962 and the bond conditions are duly fulfilled within time, Section 143(2) bars penalty proceedings and the Customs authorities cannot thereafter initiate confiscation or penalty proceedings in respect of those goods.

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