1991 (4) TMI 141 - HC - Customs

Confiscation of goods used for concealing smuggled goods - Mutilation of goods - Duty chargeable thereon

Summary

Issues:
1. Confiscation of imported goods under Customs Act
2. Challenge to the impugned order
3. Interpretation of relevant legal provisions
4. Application of Section 24 of the Customs Act

Analysis:

1. The petitioner challenged the order of confiscation of imported goods under Section 111(d) of the Customs Act, 1962, and Section 3(1) of the Import and Export (Control) Act, 1947. The petitioner contended that the buttons/snap fasteners found mixed with the imported scrap were actually scrap and met the specifications for grade "Honey" scrap. The petitioner argued that the Customs Authorities should have released the uncontested portion of the scrap and that the option given for mutilation of the buttons/snap fasteners should have precluded the imposition of a redemption fine and penalty.

2. The petitioner relied on various legal precedents to support the contention that there was no alternative remedy available. The Court noted that interference under Article 226 of the Constitution was warranted in this case due to errors in the impugned order. The Respondent No. 1 had not considered crucial factors, such as the discrepancy in the quantity of buttons/snap fasteners and the certificate from the foreign seller regarding the condition of the items.

3. The respondents argued that the import of metal buttons/snap fasteners required a license as per the ITC Policy of 1990-93, and the mis-declaration of these items as scrap justified confiscation. However, the Court found that the impugned order was based on erroneous assumptions and failed to address key aspects, such as the petitioner's offer for mutilation of the items. The Court emphasized that the Customs Authorities could not both mutilate the items into scrap and treat them as separate items for imposing fines and penalties.

4. Section 24 of the Customs Act was analyzed, which allows for the denaturing or mutilation of imported goods to render them unfit for certain purposes. The Court highlighted that if goods were mutilated, they should be chargeable to duty based on their mutilated form. As the buttons/snap fasteners were not in good condition and were intended for scrap use after mutilation, the duty should be charged accordingly. The Court set aside the impugned order and directed the re-adjudication of the matter by the Respondent No. 1, considering the observations made in the judgment.