Customs valuation rules improperly applied to confiscated goods, discriminatory treatment between importers criticized

CESTAT Mumbai held that customs valuation procedures under the Customs Valuation Rules 2007 were improperly applied to confiscated goods. The tribunal found no valid basis for re-valuation of declared goods, particularly second-hand items, and criticized discriminatory treatment between importers. For goods absolutely confiscated due to import prohibition and intellectual property breaches, the tribunal permitted re-export without additional penalties under section 125. Undeclared goods were held liable for confiscation under section 111(l) but allowed redemption upon fine payment. The tribunal modified the original order, allowing appeals partially while maintaining confiscation provisions where legally justified.

---

---

Issues Involved
1. Absolute confiscation of goods subject to prohibition on import without recourse to option for re-export.
2. Imposition of penalty u/s 112, 114AA, or 117 of Customs Act, 1962.
3. Legality of destruction of confiscated goods.
4. Recourse to section 111(f) of Customs Act, 1962.
5. Valuation of goods and rejection of declared value.
6. Re-export of prohibited and restricted goods.
7. Confiscation of goods violating intellectual property rights.
8. Imposition of penalties on individuals and entities involved.

Summary

1. Absolute Confiscation of Goods
The appellants challenged the absolute confiscation of goods without the option for re-export and the imposition of penalties u/s 112, 114AA, or 117 of the Customs Act, 1962. The goods were not entered for import as prescribed by section 46 of the Customs Act, 1962, and included counterfeit items or items requiring authorization from the Directorate General of Foreign Trade, compliance with BIS standards, or permission under the Drugs and Cosmetics Act, 1940.

2. Imposition of Penalty
Penalties were imposed on various individuals and entities, including the proprietors of the importing entities and those involved in facilitating the imports, for acts of omission or commission rendering the goods liable to confiscation u/s 111 of the Customs Act, 1962, and for furnishing false declarations to customs authorities.

3. Destruction of Confiscated Goods
The Tribunal found that the Customs Act, 1962 does not authorize the destruction of goods and that such an act would be a violation of law and misappropriation of public property. The order for destruction was deemed beyond legal competence and was set aside.

4. Recourse to Section 111(f)
Section 111(f) was invoked for goods not included in the declaration prescribed by section 30 of the Customs Act, 1962. However, the absence of statutory notice and lack of documentary evidence invalidated this recourse.

5. Valuation of Goods
The valuation of goods was contested, with the Tribunal noting that the declared value of goods should be reassessed under section 14 of the Customs Act, 1962. The adjudicating authority's blanket rejection of declared values was found to be unjustified and lacking in legal basis.

6. Re-export of Prohibited and Restricted Goods
The Tribunal allowed the re-export of prohibited and restricted goods, citing previous decisions that upheld the right to re-export such goods. The goods were not to be cleared for home consumption, and no duty liability would arise for re-exported goods.

7. Confiscation of Goods Violating Intellectual Property Rights
The confiscation of goods deemed to be in breach of intellectual property rights was challenged due to non-compliance with rule 8 of the Intellectual Property Rights (Imported Goods) Enforcement Rules, 2007. The Tribunal found the confiscation to be in jeopardy and allowed for re-export.

8. Imposition of Penalties
The Tribunal set aside the penalties imposed on various individuals, noting the lack of evidence of their involvement in the importation of the undeclared goods. The penalties were found to be unjustified and not supported by law.

Conclusion
The appeal was allowed to the extent that the goods ordered to be absolutely confiscated were permitted to be re-exported, and the penalties imposed on individuals were set aside. The Tribunal emphasized adherence to the legal process for valuation and confiscation under the Customs Act, 1962.

---