Import penalty barred absent mala fides where goods became canalised after contract; confiscation fine remained discretionary.

Imports of cloves arranged under contracts made when the goods were still freely importable under OGL were not subject to penalty merely because the goods became canalised before shipment was completed, absent any material showing mala fides or intent to evade import control requirements. The note states that the penalty was therefore deleted. On confiscation fine, the amount is described as a matter of judicial discretion to be fixed on relevant facts, including profit margin, and no rigid formula for uniform reduction was accepted. The fine was maintained and no reduction was granted.

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Issues: (i) Whether penalty was leviable on import of cloves made under contracts concluded when the goods were still permissible for import under OGL, though they became canalised by the time of actual import; (ii) Whether the fine imposed on the imported goods required reduction.

Issue (i): Whether penalty was leviable on import of cloves made under contracts concluded when the goods were still permissible for import under OGL, though they became canalised by the time of actual import.

Analysis: The imports were arranged pursuant to contracts entered into before the goods were canalised, and there was no material to show mala fides or an intent to evade import control requirements. In such circumstances, the penal consequence could not be justified merely because the policy changed before shipment was completed.

Conclusion: Penalty was not warranted and was set aside.

Issue (ii): Whether the fine imposed on the imported goods required reduction.

Analysis: The levy of fine in confiscation matters depends upon judicial discretion and must take account of relevant considerations such as the profit margin. Marginal variation in percentage from case to case does not by itself make the fine arbitrary or perverse, and there was no legal basis to impose a rigid formula for uniform reduction.

Conclusion: The fine was confirmed and no reduction was granted.

Final Conclusion: The appeals succeeded only to the extent that the penalties were deleted, while the fines imposed on the imports were maintained.

Ratio Decidendi: Where import contracts are concluded while the goods are still freely importable and there is no mala fide conduct, penalty is not justified merely because the import policy changes before actual import; the quantum of fine remains a discretionary matter to be assessed on the facts, including profit margin.

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