Second-hand machinery imports: incomplete disclosure did not justify confiscation or penalty where policy permitted import and duty exemption applied.

Non-disclosure of the imported machinery's second-hand condition did not sustain confiscation or penalty where the import policy otherwise permitted second-hand goods for actual users and 100% export-oriented units. Although the import declaration was incomplete, the goods were released without duty under the applicable exemption notification, indicating that the lapse had been condoned. On those facts, the omission was not treated as a misdeclaration made with intent to evade duty, so the legal basis for confiscation and penalty failed. The confiscation and penalty were therefore set aside in favour of the importer.

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Issues: Whether confiscation of imported machinery and the penalty imposed for non-disclosure of its second-hand condition could survive when the import of second-hand goods was otherwise permitted and duty exemption was granted.

Analysis: The import documents did not disclose that the machinery was old and used, and the declaration was therefore incomplete. However, the prevailing import policy permitted second-hand goods to be imported by actual users as well as by 100% export-oriented units. The goods were also released without payment of duty under the relevant exemption notification, showing that the lapse in disclosure had been condoned. In these circumstances, the omission could not be treated as a misdeclaration with intent to evade duty, and the basis for confiscation and penalty did not survive.

Conclusion: The confiscation and penalty were unsustainable and were set aside in favour of the appellant.

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