2025 (9) TMI 1291 - HC - Customs

Single Rolex considered personal use, not commercial quantity; petitioner allowed redemption on payment of fine and charges

Mahesh Malkani Versus Commissioner of Customs.

HC held that a single Rolex wristwatch does not constitute commercial quantity and may be for personal use. The petitioner was permitted to redeem the ... Detention of one Rolex watch (wrist watch) - detention on the allegation of non-declaration - commercial quantity or not - confiscation - redemption fine - penalty - HELD THAT:- Clearly, this Court is of the view that one Rolex watch cannot be held to be a commercial quantity and there is no reason as to why the same cannot be kept for personal use. However, considering the fact that the option of redemption was given to the Petitioner, the Petitioner shall now pay the redemption fine by 31st October, 2025 and redeem the detained article in accordance with the impugned order. The adjudicating authority is cautioned to ensure that in future, such errors do not occur in the orders which are passed by the adjudicating authority - In the facts of this case, warehousing charges shall be liable to be paid by the Petitioner, as applicable on the date of detention. The petition is disposed of. ISSUES PRESENTED AND CONSIDERED 1. Whether a single wrist watch detained on arrival constitutes 'commercial quantity' for the purposes of confiscation under Sections 111(d), 111(j), 111(l) & 111(m) of the Customs Act, 1962. 2. Whether the adjudicating authority's grant of an option to redeem confiscated goods for re-export under Section 125(3) of the Customs Act, 1962, coupled with fixation of redemption fine and a time-limit, is sustainable where the detention arose from alleged non-declaration. 3. Whether an error in the reasoning of an adjudicating order (specifically treating goods as commercial quantity) justifies judicial correction/modification while upholding operative relief already granted (redemption subject to conditions and payment). 4. Applicability of warehousing charges from date of detention where redemption is permitted after delay. 5. Whether the adjudicating authority's future practice requires correction/caution where procedural or reasoning errors are apparent in orders. ISSUE-WISE DETAILED ANALYSIS Issue 1 - Commercial quantity: Legal framework The Customs Act, 1962 permits confiscation where goods are imported in contravention of provisions and may treat goods as commercial quantity for enforcement purposes; provisions relied on in the impugned order include Sections 111(d), 111(j), 111(l) & 111(m) (grounds for confiscation). Issue 1 - Interpretation and reasoning The Court examined the factual circumstance that only a single wrist watch (Rolex) was worn by the arriving passenger and found no basis to categorise a single watch as commercial quantity or incapable of personal use. The Court concluded that the adjudicator's statement that the goods were 'clearly in commercial quantity' was erroneous on the facts. Issue 1 - Precedent treatment No prior authorities were cited or relied upon in the judgment; the Court's determination is based on application of statutory concepts to the facts. Issue 1 - Ratio vs. Obiter The Court's finding that a single wrist watch cannot be treated as commercial quantity for confiscation purposes is a ratio on the facts before the Court and directly informs the disposal of the petition. Issue 1 - Conclusion The Court holds that the detained single wrist watch does not amount to commercial quantity and that the adjudicator's reasoning to the contrary was erroneous. Issue 2 - Redemption under Section 125(3): Legal framework Section 125(3) permits redemption of confiscated goods on payment of a redemption fine and subject to conditions, including timelines for re-export; the impugned order had granted redemption for re-export on payment of a specified fine and allowed redemption within 120 days. Issue 2 - Interpretation and reasoning The Court observed that the adjudicating authority had granted an option of redemption for re-export, coupled with a redemption fine. Although the 120-day redemption period in the impugned order had lapsed, the Court exercised corrective jurisdiction to permit payment of the redemption fine and redemption in accordance with the impugned order by a new specified date (31 October 2025), subject to compliance with legal formalities and regulatory clearances. Issue 2 - Precedent treatment No precedents were invoked; the Court relied on the statutory power to allow redemption and on equitable exercise of judicial authority to permit compliance where an offered remedy remained unexercised due to prescribed time having lapsed. Issue 2 - Ratio vs. Obiter The Court's direction to permit redemption by a fresh deadline is dispositive of the relief in this petition and therefore ratio as applied to these facts; observations about the conditions for redemption rest on the statutory scheme and are directly operative. Issue 2 - Conclusion The Court permits redemption in accordance with the impugned order on payment of the stated redemption fine by 31 October 2025, subject to completion of legal formalities and regulatory clearances, notwithstanding the earlier 120-day period having lapsed. Issue 3 - Judicial correction of erroneous reasoning while upholding operative relief: Legal framework Court's supervisory jurisdiction permits correction of errors in reasoning in administrative orders where such errors affect findings of law or fact; relief may be moulded to reflect correct application of law to facts. Issue 3 - Interpretation and reasoning The Court identified an internal inconsistency and factual error in paragraph 8.4 of the impugned order (treating the single watch as commercial quantity while allowing redemption). The Court corrected the error by holding the factual characterisation (commercial quantity) to be incorrect but preserved the operative grant of redemption by giving the petitioner an opportunity to pay the redemption fine within a newly prescribed timeline. Issue 3 - Precedent treatment No precedents cited; the approach follows established principles that courts may rectify material inconsistencies or errors in administrative orders while granting appropriate relief. Issue 3 - Ratio vs. Obiter The Court's correction of the adjudicator's factual/legal mischaracterisation and consequent direction to allow redemption is ratio in this proceeding; the admonition to the adjudicating authority about future errors is obiter guidance for administrative practice. Issue 3 - Conclusion The Court corrected the erroneous finding that the goods were commercial quantity, allowed redemption to be effected by the specified fresh date, and thereby reconciled the error without disturbing the operative relief already offered. Issue 4 - Warehousing charges: Legal framework and interpretation The Court held that warehousing charges are payable by the person from whom goods were detained, as applicable from the date of detention, where redemption is permitted after delay; this is a consequence of storage pending disposal or redemption. Issue 4 - Ratio vs. Obiter The direction that warehousing charges shall be payable by the detained person is a consequential, operative part of the disposal and forms part of the Court's ratio in the outcome of the petition. Issue 4 - Conclusion Warehousing charges, as applicable on the date of detention, shall be paid by the detained person in conjunction with the redemption process. Issue 5 - Administrative caution: Interpretation and reasoning The Court observed procedural and reasoning deficiencies in the adjudicating order and cautioned the adjudicating authority to guard against recurrence of such errors in future orders. This is preventive guidance to ensure accuracy and consistency in administrative decision-making. Issue 5 - Ratio vs. Obiter The caution and directive to the adjudicating authority is obiter guidance aimed at administrative improvement and does not form an operative legal mandate beyond advising proper future practice. Issue 5 - Conclusion The adjudicating authority is cautioned to avoid errors in orders; the observation serves as administrative guidance and does not alter the statutory framework applied to the merits of the matter.