Redemption remains mandatory for lawfully imported goods breached by post-import restrictions; separate penalty cannot be imposed on a proprietary concern.

Goods imported under a valid licence but later dealt with in breach of post-import restrictions may still be confiscated, yet they are not treated as prohibited goods for Section 125 unless the legal prohibition continues to attach in the relevant sense. In that situation, redemption on payment of fine remains mandatory rather than absolute confiscation. Contravention of Chapter IV-A restrictions can attract penalty under Section 112 where the facts bring the case within that provision, instead of the residuary penalty route. A proprietary concern has no separate legal identity from its sole proprietor, so separate penalties on both are not justified.

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Issues: (i) whether the seized synthetic fabrics were prohibited goods so as to justify confiscation without an option of redemption under Section 125 of the Customs Act; (ii) whether penalty under Section 112 of the Customs Act was exigible for contravention of Chapter IV-A of the Customs Act; and (iii) whether separate penalties could be imposed on the sole proprietor and his proprietary concern.

Issue (i): whether the seized synthetic fabrics were prohibited goods so as to justify confiscation without an option of redemption under Section 125 of the Customs Act.

Analysis: The goods had been imported under valid REP licences and were found to have been lawfully imported. The contravention lay in non-compliance with the post-import obligations under Chapter IV-A, which rendered the goods liable to confiscation under Section 111(p). However, for the purpose of Section 125, goods imported under a valid licence and not subject to any continuing import prohibition are not treated as prohibited goods merely because later regulatory restrictions were breached.

Conclusion: The goods were liable to confiscation, but an option to redeem them on payment of fine was mandatory. The absolute confiscation was not sustainable.

Issue (ii): whether penalty under Section 112 of the Customs Act was exigible for contravention of Chapter IV-A of the Customs Act.

Analysis: Section 112 applies where an act or omission renders goods liable to confiscation and the case falls within one of the categories of penalty specified in that section. The majority held that the Chapter IV-A restrictions constituted a prohibition in the relevant sense, and the failure to comply with them made the owner liable to penalty under Section 112. The facts were held to attract the penalty provision rather than the residuary Section 117.

Conclusion: Penalty under Section 112 on Shri H.D. Ganatra was justified and confirmed.

Issue (iii): whether separate penalties could be imposed on the sole proprietor and his proprietary concern.

Analysis: A proprietary concern has no separate legal existence from its sole proprietor. Separate penalties on both were therefore not justified on the facts of the case.

Conclusion: The penalty imposed on the proprietary firm was set aside.

Final Conclusion: The adjudication was modified by directing redemption of the confiscated goods on payment of fine, confirming the proprietor's penalty under Section 112, and setting aside the separate penalty on the proprietary concern.

Ratio Decidendi: Goods lawfully imported under a valid licence but later dealt with in breach of statutory post-import restrictions may still be confiscable, redemption under Section 125 being mandatory unless the goods are prohibited in the relevant legal sense; a proprietary concern cannot be separately penalised from its sole proprietor.

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