The Supreme Court on Tuesday ( July 23 ) held that importers must pay customs duty along with fines and other charges even after confiscated goods are redeemed after payment of fine under Section 125 of the Customs Act, 1962.
The Two-Judge Bench of the Supreme Court examined two key questions:1. Whether there is an obligation to pay customs duty when confiscated goods are redeemed after a fine under Section 125 of the Customs Act? and 2. Whether the liability includes paying interest on delayed payments under Section 28AB of the Act?
The bench of Supreme Court Justices PS Narasimha and Aravind Kumar, concluded that the owner of goods is liable to pay customs duty even after redeeming confiscated goods upon paying a fine under Section 125. The Court clarified that the duty and charges under Section 125 become due when the owner opts to pay a fine for redemption and the Department accepts it. This duty liability under Section 125(2) is separate from the assessment of duty determined under Section 28, and the interest on delayed payments is also applicable under Section 28AB.
In their judgement, the bench referenced the case of Union of India v. M/s Security and Finance (P) Ltd ( 1976 ), where the court upheld the department’s decision to levy duty on the redemption of confiscated goods in addition to the fine. The current ruling reaffirms that interest on delayed duty payments applies once Section 28 is invoked for duty assessment.
The Court emphasised that when confiscation proceedings are initiated under Section 124, the duty and charges under Section 125(2) are payable only when the owner chooses to redeem the goods by paying a fine, and this option is accepted by the Department. The obligation to pay interest on delayed duty arises under Section 28AB once the duty determination process under Section 28 is applicable.
The counsels involved in the case included Charanya Lakshmikumaran, Apeksha Mehta, Neha Choudhary, Umang Motiyani, Jyoti Pal, Ayush Agrawal, Falguni Gupta and M. P. Devanath for the appellants, and N Venkataraman, V C Bharathi, Amritha Chandramoulli, S A Haseeb, Kritagya Kait, Udai Khanna, and Mukesh Kumar Maroria for the respondents.
In summarising the implications of the ruling, the Court noted that importers must pay both the fine and other charges for redeeming confiscated goods, and upon acceptance of the fine by the department, they must also pay the due duty and any interest on delayed payments.
The Court distinguished its earlier judgement in Comof Customs ( Import ) v. Jagdish Cancer and Research Centre (2001), clarifying that there is no bar on duty assessment under Section 28 when liability arises under Section 125(2).
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