2025 (11) TMI 1374 - AT - Customs

Appeal Allowed: Confiscation Set Aside Since Goods Already Re-Exported Before Revenue Appeal, No Goods Available For Seizure

M/s Chemspark India Pvt Ltd. Versus Commissioner of Customs, Nhava Sheva-I, Raigad

CESTAT Mumbai allowed the appeal of the importer against the order of absolute confiscation. It held that the goods in question had already been ... Redemption of prohibited goods wjich is absolutely confiscated - Confiscation of goods which were already re-exported - Appellant failed to get the CIB permit within the permitted time and repeatedly sought extensions of warehousing period from time to time - HELD THAT:- The appellant has placed on record ‘Let Export Order’ (LEO) dated 7.10.2019 evidencing that the impugned goods were, in fact, reexported. Whereas the Review Order by the Commissioner of Customs was dated 17.12.2019 which resulted in filing of the appeal by revenue on 16.1.2020 before the Commissioner (Appeals). The appellant duly informed the department vide letter dated 29.1.2020 about the re-export of the goods under shipping bill dated 7.10.2019. Despite this, the learned Commissioner passed the impugned order without taking into account that the re-export of the goods in issue had already taken place prior to the filing of the appeal by Revenue. Once the goods have been re-exported certainly they were not available for confiscation. As per settled position of law that where the goods are no longer available for confiscation, such confiscation cannot be ordered, except where they have been cleared under bond etc. which is not the case herein. This being so, the order for absolute confiscation of goods, is not sustainable in law and is accordingly set aside. The impugned order passed by learned Commissioner for absolutely confiscating the goods is unwarranted and liable to be set aside - Appeal allowed. ISSUES PRESENTED AND CONSIDERED 1. Whether goods covered by statutory prohibition/registration requirements are liable to absolute confiscation under section 111(d) of the Customs Act when imported without the required statutory permission. 2. Whether redemption of prohibited goods for the limited purpose of re-export under section 125 is permissible and, if effected, whether subsequent proceedings by Revenue can result in absolute confiscation. 3. Whether confiscation can be ordered when the impugned goods are no longer available in the jurisdiction (having been re-exported) and no bond/clearing under bond is shown. ISSUE-WISE DETAILED ANALYSIS Issue 1 - Liability to absolute confiscation under section 111(d) for goods imported without required statutory permission Legal framework: Section 111(d) of the Customs Act deals with confiscation of prohibited goods. Statutory regimes that require prior registration/permission (here, a registration requirement under the relevant statute) render importation without such permission suspect of illegality and attract confiscation provisions unless other statutory relief applies. Interpretation and reasoning: The Tribunal accepted that the impugned goods fell within the statutory schedule requiring prior registration/permit, and that such requirement exposes unauthorized imports to confiscation liability. The Adjudicating Authority had initially held the goods liable for confiscation under the Customs Act, reflecting a correct legal premise that the absence of required statutory permission exposes the import to confiscation consequences. Precedent treatment: The Court applied the settled statutory principle that prohibited/unregistered goods are amenable to confiscation; no attempt was made to overrule or distinguish existing precedent on this core proposition. Ratio vs. Obiter: The proposition that unpermitted import of goods covered by registration requirements can attract confiscation under section 111(d) is treated as ratio where applied to the facts; however, the ultimate relief was affected by subsequent events (re-export), limiting the practical operation of that ratio in the present case. Conclusions: On the merits, unauthorized importation of goods covered by mandatory registration does render the goods prima facie liable to confiscation under section 111(d). This legal conclusion remains intact but is subject to factual constraints addressed below. Issue 2 - Validity and effect of redemption for re-export under section 125 and interaction with later Revenue appeal for confiscation Legal framework: Section 125 permits redemption of confiscable goods in specified circumstances, including for the limited purpose of re-exportation, subject to payment of redemption fine and compliance with conditions imposed by the authority. Redemption converts the immediate confiscatory process into a controlled release for a designated objective. Interpretation and reasoning: The Adjudicating Authority exercised statutory power to grant redemption of the goods for re-export after ordering confiscation under section 111(m), imposing a redemption fine and a penalty under section 112(a). The Tribunal noted that the appellant accepted the redemption regime and re-exported the goods under a Let Export Order (LEO) dated prior to the filing of Revenue's appeal to the Commissioner. The Court reasoned that redemption for re-export, properly effected and acted upon by the importer, removed the goods from availability for confiscation. Precedent treatment: The Tribunal relied upon established legal principle that redemption under section 125, when complied with, yields tangible effect (e.g., re-export) and cannot be later undone by confiscation if the goods have already been lawfully removed from customs control, absent exceptional circumstances (such as clearance under bond). The judgment follows, rather than departs from, settled authority on the binding effect of redemption and the limits on subsequent confiscatory action. Ratio vs. Obiter: The holding that redemption for re-export, followed by actual re-export before Revenue's appeal, operates to preclude later confiscation is treated as ratio applied to the factual matrix of this case. Conclusions: Redemption under section 125 for the purpose of re-export, when effectuated and complied with (including payment of prescribed sums), removes the goods from customs control and prevents subsequent absolute confiscation in ordinary circumstances. Therefore, where redemption is properly effected and the goods are re-exported, a later Revenue appeal seeking absolute confiscation is unsustainable. Issue 3 - Power to order confiscation where goods are no longer available (re-exported) and exceptions Legal framework: Confiscation is a remedial/equitable enforcement measure contingent upon availability of the goods. A foundational principle in customs jurisprudence is that confiscation cannot be ordered when goods are no longer available for seizure, except in limited situations (for example, where goods were cleared under bond or similar device that preserves jurisdiction over them). Interpretation and reasoning: The Tribunal emphasized chronology: the goods were re-exported under a LEO dated 7.10.2019; Revenue's Review Order was dated 17.12.2019 and Revenue's appeal was filed on 16.1.2020. The importer notified the department of the re-export on 29.1.2020. Given that the goods had physically left the customs jurisdiction prior to Revenue's appeal and no evidence of clearance under bond or comparable arrangement was shown, the Tribunal concluded the goods were not available for confiscation when the Commissioner passed the impugned order. The Court held that basic principles of enforceability bar an absolute confiscation order in such circumstances. Precedent treatment: The Tribunal applied the established rule that confiscation requires availability of the goods; it did not purport to expand exceptions beyond the well-recognized situation where goods were cleared under bond. No contrary precedent was followed or overruled. Ratio vs. Obiter: The conclusion that confiscation cannot be ordered where the goods are no longer available (absent bond clearance) is treated as a central ratio determining the outcome. Conclusions: Confiscation ordered after the physical removal of goods from jurisdiction (by lawful re-export following redemption) is unsustainable. Because no evidence was produced that the goods had been cleared under bond or that an exception applied, the impugned absolute confiscation order was set aside. Cross-reference and application to outcome The Court reconciled the three issues by recognizing that while unauthorized importation of unregistered/prohibited goods can attract confiscation (Issue 1), the Adjudicating Authority's grant of redemption for re-export and the actual re-export prior to Revenue's prosecutorial step removed the goods from customs custody (Issue 2 and 3). Consequentially, the later order of absolute confiscation could not be sustained because the essential precondition of availability of goods for confiscation was absent. Final disposition (ratio applied) Because the goods were re-exported prior to Revenue's appellate action and no exceptional legal basis to confiscate thereafter was shown, the Tribunal set aside the order of absolute confiscation and restored the effect of the Adjudicating Authority's order permitting redemption and re-export. The Tribunal declined to interfere with the Adjudicating Authority's original order beyond setting aside the subsequent order of absolute confiscation.