Confiscation under Section 111(d) applies even when prohibited goods are re-exported after import violation

CESTAT Chennai held that confiscation under Section 111(d) of Customs Act 1962 applies even when goods are re-exported. The tribunal ruled that 8 diesel engines and one industrial engine imported in contravention of EPR 1986 were prohibited goods liable for confiscation. Confiscation precedes redemption under Section 125, and re-export permission is a separate administrative process. The tribunal rejected arguments that no redemption fine or penalty under Section 112(a) should be imposed on re-exported goods, holding that re-export does not cure the statutory breach already committed. The appeal was dismissed and impugned order upheld.

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Issues Involved:
1. Confiscation of goods u/s 111(d) of the Customs Act, 1962.
2. Imposition of redemption fine on re-exported goods.
3. Imposition of penalty u/s 112(a) when goods are re-exported.

Summary:

Confiscation of Goods u/s 111(d) of the Customs Act, 1962:
The appellant imported eight diesel engines and one industrial engine, which were found non-compliant with the Environmental Protection Rules, 1986. The adjudicating authority confiscated the imported engines u/s 111(d) of the Customs Act, 1962, as they were considered 'prohibited goods' due to the lack of requisite certificates. The Supreme Court in M/s Om Prakash Bhatia Vs. Commissioner of Customs, New Delhi [(2003) 6 SCC 161] clarified that goods not meeting import conditions are 'prohibited goods' and liable for confiscation. The Tribunal held that confiscation is mandatory for goods imported in breach of statutory provisions, and the permission for re-export is an administrative decision post-confiscation.

Imposition of Redemption Fine on Re-exported Goods:
The appellant argued that no redemption fine should be imposed on re-exported goods, relying on various judgments. However, the Tribunal noted that once goods are confiscated, the title vests with the government, and the importer can only reclaim them by paying a redemption fine. The Tribunal emphasized that releasing prohibited goods without a fine is not a valid option and would encourage improper imports. The Tribunal upheld the imposition of redemption fine, referencing the Larger Bench decision in Hemant Bhai R. Patel Vs Commissioner Of Customs [2003 (153) ELT 226 (Tri-LB)] which allows redemption fine even when re-export is permitted.

Imposition of Penalty u/s 112(a) When Goods are Re-exported:
The Tribunal stated that a penalty is imposed for breaching statutory duty, and re-export does not nullify the breach. The Tribunal held that penalties serve as a deterrent and should not be waived simply because the goods are re-exported. The Tribunal upheld the penalty imposed by the adjudicating authority, citing the principle that appellate bodies should not interfere with discretionary orders unless there is evidence of mala fides or extreme arbitrariness.

Judgments:
The Tribunal examined various judgments cited by the appellant but found them not applicable to the current case. The Tribunal followed the Larger Bench decision in Hemant Bhai R. Patel, which is binding and supports the imposition of redemption fine and penalty even when re-export is permitted.

Conclusion:
The Tribunal upheld the impugned order, confirming the confiscation of goods, imposition of redemption fine, and penalty. The appeal filed by the appellant was rejected and disposed of accordingly.

(Pronounced in open court on 07.06.2024)

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