Confiscation limited to undeclared goods; redemption fine cannot cover unavailable goods, and duty on unredeemed confiscated goods was disallowed.

Confiscation under customs law was confined to the undeclared goods, not the entire consignment, and redemption fine could not be imposed on goods already cleared and unavailable for confiscation. Duty could not be demanded on goods that were confiscated but not redeemed, so the demand had to be restricted to the sustainable portion. The penalty under section 114A was reduced as excessive on the facts, while the penalty under section 112(a) for pre-28-9-1996 imports was maintained and the personal penalty on the managing director was reduced. The stated principle is that redemption fine cannot be levied on goods not available for confiscation, and confiscation must match the specific misdeclared goods.

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Issues: (i) Whether confiscation and redemption fine could extend to the entire consignment and to goods not available for confiscation, or only to the undeclared goods; (ii) whether duty could be demanded on goods confiscated but not redeemed; (iii) whether the penalties imposed under the Customs Act were liable to modification.

Issue (i): Whether confiscation and redemption fine could extend to the entire consignment and to goods not available for confiscation, or only to the undeclared goods.

Analysis: The undeclared goods alone were found liable to confiscation, and the value of the misdeclared portion, not the full declared value of the consignment, was the relevant basis. Goods already cleared long back and not available for confiscation could not sustain a redemption fine under the confiscation framework.

Conclusion: Confiscation was confined to the undeclared goods only, the redemption fine was reduced, and confiscation with redemption fine in respect of goods not available for confiscation was set aside.

Issue (ii): Whether duty could be demanded on goods confiscated but not redeemed.

Analysis: Where goods were confiscated but not redeemed, duty could not be fastened on that portion as if redemption had taken place. The duty liability had to be confined to the sustainable portion of the demand.

Conclusion: The direction to recover duty on goods confiscated but not redeemed was set aside to that extent and consequential refund was directed.

Issue (iii): Whether the penalties imposed under the Customs Act were liable to modification.

Analysis: The mandatory penalty under section 114A was considered excessive on the facts and was reduced. The penalty for the pre-28-9-1996 imports under section 112(a) was maintained. The personal penalty on the managing director was also found high and was reduced.

Conclusion: The penalty under section 114A was reduced, the penalty under section 112(a) on the importer was confirmed, and the personal penalty was reduced.

Final Conclusion: The appeal succeeded in part by restricting confiscation to the undeclared goods, deleting the confiscation and fine for unavailable goods, disallowing duty on confiscated but unredeemed goods, and reducing the monetary penalties, while sustaining the remaining liability.

Ratio Decidendi: Redemption fine cannot be imposed on goods not available for confiscation, and confiscation must be confined to the specific goods found liable to misdeclaration.

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