Redemption fine not leviable on re-exported confiscated goods, and importer penalty reduced on proportionality grounds.

When confiscated goods are permitted to be re-exported, redemption fine under Section 125 of the Customs Act, 1962 is not leviable, because conditional redemption tied to compulsory re-export is not supported by the statute. The tribunal therefore set aside the redemption fine in favour of the assessee. It also found the penalty on the importer excessive on the facts, noting the existence of a pre-shipment inspection certificate and that the mismatch with the declaration arose from the supplier's conduct. The penalty was accordingly reduced, with the monetary burden on confiscation substantially moderated.

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Issues: (i) Whether redemption fine is leviable when confiscated goods are permitted to be re-exported. (ii) Whether the penalty imposed on the importer required reduction.

Issue (i): Whether redemption fine is leviable when confiscated goods are permitted to be re-exported.

Analysis: The goods were ordered to be re-exported, and the importer did not dispute the re-export. The tribunal relied on the view that Section 125 of the Customs Act, 1962 does not authorise imposition of redemption fine where the goods are allowed for re-export, and that conditional redemption linked with compulsory re-export is not supported by the statute.

Conclusion: Redemption fine was not imposable and the amount was set aside in favour of the assessee.

Issue (ii): Whether the penalty imposed on the importer required reduction.

Analysis: In the facts of the case, the tribunal found the penalty to be excessive, taking into account that the importer had obtained a pre-shipment inspection certificate and the goods were found not to match the declaration because of the supplier's conduct. The quantum of penalty was therefore considered for moderation.

Conclusion: The penalty was reduced in favour of the assessee.

Final Conclusion: The confiscation-related monetary burden was substantially diluted by setting aside the redemption fine and reducing the penalty.

Ratio Decidendi: When confiscated goods are permitted to be re-exported, redemption fine under Section 125 of the Customs Act, 1962 is not leviable, and penalty must be confined to a just and proportionate amount on the facts found.

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