OGL goods and absence of knowledge defeated confiscation, penalty, and duty demand against the clearing intermediary.

Goods covered by OGL were held not liable to confiscation under Sections 111(d) and 111(o) of the Customs Act, so the connected redemption fine could not survive. Penalty under Section 112(b) was also set aside because the purchaser/clearing intermediary lacked proof of knowledge, or reason to believe, that the goods were liable to confiscation; merely arranging clearance after checking export obligations was insufficient on these facts. Duty liability under the DEEC import arrangement was held recoverable from the actual importers, not from the present appellants, and the demand fastened on them was not maintained.

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Issues: (i) Whether confiscation of the imported glycerine under Sections 111(d) and 111(o) of the Customs Act, 1962 and the connected redemption fine were sustainable. (ii) Whether penalty under Section 112(b) of the Customs Act, 1962 was sustainable against the purchaser/clearing intermediary. (iii) Whether the duty demand and liability under the DEEC import arrangement could be fastened on the present appellants.

Issue (i): Whether confiscation of the imported glycerine under Sections 111(d) and 111(o) of the Customs Act, 1962 and the connected redemption fine were sustainable.

Analysis: The goods were found to be covered by OGL, and the finding accepted that the appellant had made an innocent purchase. Once the goods were not liable to confiscation under Section 111(d), the composite confiscation and the redemption fine could not survive. The order also did not sustain separate and independent confiscation consequences in a manner that could support the fine.

Conclusion: The confiscation under Sections 111(d) and 111(o) of the Customs Act, 1962 and the redemption fine were set aside.

Issue (ii): Whether penalty under Section 112(b) of the Customs Act, 1962 was sustainable against the purchaser/clearing intermediary.

Analysis: Penalty under Section 112(b) requires dealing with goods known, or reasonably believed, to be liable to confiscation. Since the goods were under OGL and the finding recorded that there was no evidence that the appellant knew of any non-use of glycerine in the exported goods, the essential element of knowledge or reason to believe was absent. The conduct of arranging indents and clearance after verifying export obligations was held insufficient to attract the penal provision on these facts.

Conclusion: The penalty under Section 112(b) of the Customs Act, 1962 was not sustainable.

Issue (iii): Whether the duty demand and liability under the DEEC import arrangement could be fastened on the present appellants.

Analysis: The duty liability was held to be recoverable from the actual importers, not from the present appellants, and the order fastening the demand on them could not be maintained in the disposal of the appeals.

Conclusion: The duty demand was not upheld against the present appellants.

Final Conclusion: The impugned order was set aside insofar as it related to the present appellants, and the appeals were allowed.

Ratio Decidendi: Goods covered by OGL cannot be treated as liable to confiscation, and penalty under Section 112(b) of the Customs Act, 1962 cannot be imposed absent proof that the person knew or had reason to believe that the goods were liable to confiscation.

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