Confiscated imported goods not redeemed: duty not leviable, while penalty may still stand if circumstances justify reduction.
Where imported goods are confiscated and not redeemed, duty is not leviable because the statutory consequence under Section 125 of the Customs Act is that the goods vest in the Central Government; a Section 25 notification cannot override that position. Where the goods were not used within the prescribed period and no satisfactory explanation was offered for not using the available write-off procedure, penalty was nevertheless justified. The absence of intent to evade duty or mala fide supported reduction of the penalty quantum, but not its deletion. The duty demand was therefore not sustainable, while the penalty survived in reduced form.
Issues: Whether duty was leviable on imported goods that had been confiscated and not redeemed, and whether penalty was sustainable, though reduced.
Issue (i): Whether duty was leviable on imported goods that had been confiscated and not redeemed.
Analysis: Liability to duty on confiscated goods is governed by Section 125 of the Customs Act, 1962. Where goods are redeemed on payment of fine, sub-section (2) makes the owner liable to pay duty and other charges. On confiscation without redemption, the goods vest in the Central Government, and a notification issued under Section 25 of the Customs Act, 1962 cannot override the statutory consequence flowing from Section 125.
Conclusion: Duty was not leviable on the confiscated goods that were not redeemed.
Issue (ii): Whether penalty was sustainable, though reduced.
Analysis: The goods were not used within the prescribed period and no satisfactory explanation was offered for not seeking the available write-off procedure. On that basis, penalty was warranted, but the absence of any intention to evade duty or mala fide justified reduction of the quantum.
Conclusion: Penalty was upheld, but reduced to Rs. 3,000/-.
Final Conclusion: The duty demand was set aside, while the penalty survived only in reduced form, resulting in a partial allowance of the appeal.
Ratio Decidendi: In the case of confiscated goods not redeemed by payment of fine, duty is not leviable under Section 125 of the Customs Act, 1962, and a notification under Section 25 cannot override that statutory position.
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