Lawful import cannot be confiscated under Section 111(d) for a later breach of exemption conditions

Where imported machines were lawfully brought in, confiscation could not be sustained under Section 111(d) of the Customs Act on the basis of a later breach of exemption notification or import policy conditions. That clause applies only where the import itself is unlawful, while a post-import breach, if established, may attract the provision dealing with subsequent contravention. The confiscation order was therefore set aside because it proceeded under the wrong statutory clause.

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Issues: Whether confiscation of imported machines under Section 111(d) of the Customs Act was sustainable when the import itself was not found to be unauthorised, but the machines were alleged to have been sold in breach of the conditions of the exemption notification and the import policy.

Analysis: The confiscation order proceeded on the footing that the machines were sold contrary to Notification No. 159/86 and were not used by the registered exporter as required by the relevant conditions. On the facts found, such a post-import breach, if established, could attract confiscation under clause (o) of Section 111 of the Customs Act. However, the order under challenge was made under clause (d) of Section 111. That provision applies where the import itself is unlawful, and not to a case where an otherwise lawful import later becomes vulnerable because of a subsequent act or omission.

Conclusion: Confiscation under Section 111(d) was not sustainable, and the impugned order was set aside.

Final Conclusion: The appeal succeeded because the confiscation was invoked under the wrong statutory clause, even though the alleged breach, if proved, could only have been relevant under a different provision.

Ratio Decidendi: Where an import is lawful at the time it is made, confiscation cannot be sustained under Section 111(d) of the Customs Act for a subsequent breach of exemption or policy conditions; at most, the case may fall under the provision dealing with post-import contravention.

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