Confiscation and mutilation of imported goods can coexist, but penalty requires a separate factual basis such as mala fide.

Imported plastic scrap found to contain a substantial portion of serviceable goods remained liable to confiscation, because a direction for mutilation before home consumption did not negate confiscation and mutilation could coexist with it; the confiscation order was restored. Penalty was not sustained, as the extent of serviceable goods, the redemption fine already imposed, the consignment value, and the absence of mala fide showed no sufficient factual basis for additional penal action. The result was a partial allowance of the appeal, with confiscation upheld and penalty set aside.

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Issues: (i) Whether confiscation of imported plastic scrap was sustainable when the goods were found to contain a substantial portion of serviceable goods and were directed to be mutilated before home consumption. (ii) Whether penalty was warranted on the facts of the case.

Issue (i): Whether confiscation of imported plastic scrap was sustainable when the goods were found to contain a substantial portion of serviceable goods and were directed to be mutilated before home consumption.

Analysis: The finding that the consignment was partly serviceable was not disturbed. The direction for mutilation did not negate liability to confiscation, since mutilation could coexist with confiscation and was not shown to have been sought by the importer. The appellate authority's view that confiscation was unjustified merely because mutilation had been ordered was not accepted.

Conclusion: Confiscation was upheld and the order setting it aside was reversed, in favour of Revenue.

Issue (ii): Whether penalty was warranted on the facts of the case.

Analysis: The consignment value, the extent of serviceable goods, the redemption fine already imposed, and the absence of mala fide together showed no sufficient basis for penalty.

Conclusion: Penalty was not justified, in favour of the importer.

Final Conclusion: The confiscation order was restored, while the penalty component was not sustained, resulting in a partial allowance of the appeal.

Ratio Decidendi: Goods found liable to confiscation under the Customs law may still be ordered to be mutilated, and the absence of a request for mutilation by the importer does not by itself defeat confiscation; penalty requires a separate factual basis such as mala fide.

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