TMI Blog2016 (10) TMI 334X X X X Extracts X X X X X X X X Extracts X X X X ..... cific provision to impose duty, if the goods are confiscated. The liability to pay customs duty arises only when fine is imposed in lieu of confiscation. Though such an order can be passed, if the petitioner does not pay fine in lieu of confiscation, the remedy of the respondent is only to confiscate the goods. In such an event, there is no provision to recover the customs duty and other charges. The decision in the case of Fortis Hospital Ltd. v. Commr. of Custom [2015 (4) TMI 348 - SUPREME COURT] apply. The equipment could be confiscated as the petitioner is not availing the option of payment of redemption fine - demand of customs duty when the equipment is confiscated is not permissible by law - petition allowed - decided in favor of petitioner. - WP (C). No. 22571 of 2013 (V) - - - Dated:- 16-8-2016 - A. M. Shaffique, J. For the Petitioner : Sri. A. N. Rajan Babu For the Respondent : Sri. N. Nagaresh JUDGMENT This writ petition is filed by a Hospital which is run by Sree Narayana Trust Medical Mission challenging Ext.P8 and seeking for a declaration that the respondents 2 to 6 have no authority to demand and recover ₹ 16 lakhs towards redempti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... when the equipment imported by the petitioner is confiscated and when the petitioner has not chosen the option to redeem the equipment, there is no reason to impose a further obligation to pay duty. The contention is that under Sec.125 of the Act, the authority can pass only alternative orders. Either confiscation with penalty under Section 111(o) and 112(a) of the Customs Act or confiscation under Section 111(o) with an option to pay fine with payment of duty in respect of goods in lieu of confiscation. The contention is that there is no provision enabling the authorities to pass an order of confiscation along with an order of penalty, payment of fine and duty. It is stated that the petitioner has paid the entire penalty under Section 112 and the petitioner is not liable to pay duty under Section 125(2) as they are not availing option for redemption. It is stated that when an order of confiscation has been passed under Section 126, the goods vests with the Central Government and therefore the imposition of customs duty and redemption fine is bad in law. 5. Counter affidavit is filed on behalf of the respondents. In the Counter affidavit, they supported the stand taken by the au ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to pay duty as contemplated under Section 125(2) of the Customs Act. 7. Section 125 of the Customs Act reads as under: 125. Option to pay fine in lieu of confiscation.- (1) Whenever confiscation of any goods is authorised by this Act, the officer adjudging it may, in the case of any goods, the importation or exportation whereof is prohibited under this Act or under any other law for the time being in force, and shall, in the case of any other goods, give to the owner of the goods or, where such owner is not known, the person from whose possession or custody such goods have been seized, an option to pay in lieu of confiscation such fine as the said officer thinks fit: Provided that, without prejudice to the provisions of the proviso to sub-section (2) of section 115, such fine shall not exceed the market price of the goods confiscted, less in the case of imported goods the duty chargeable thereon. (2) Where any fine in lieu of confiscation of goods is imposed under sub-section (1), the owner of such goods or the person referred to in sub-section (1), shall, in addition, be liable to any duty and charges, payable in respect of such goods. 8. Section 125(1) p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... confiscating any goods or imposing any penalty shall be made unless a notice is given in writing stating the grounds on which it is proposed to confiscate the goods or to impose a penalty. Section 125 is the special procedure by which an option is given to the owner or the person from whom the possession or custody is taken, to redeem the goods in lieu of confiscation. In the case on hand, there is an exercise of jurisdiction under Section 125 of the Act and therefore, sub Section (2) of Section 125 clearly applies. The words in sub section (2) are where any fine in lieu of confiscation of goods is imposed under sub Section (1) . The meaning is very clear that when such a fine has been imposed in lieu of confiscation, the owner of the goods or the person referred in sub Section (1), shall be liable to pay any duty and charges. Perusal of Ext.P7 oder would show that such an option was given to the petitioner or rather the order clearly indicated payment of a fine in lieu of confiscation. Therefore, there is nothing wrong in passing an order directing the petitioner to pay duty and other charges. However, the question is, when the owner of the goods or the person from whom the goods ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 124 of the Act. Once such a show-cause notice was issued and as can be seen from the proposed action which was contemplated in this provision (as has been taken note of above), it was also confined to confiscation of the imported machinery and imposition of penalty. Nothing was stated about the payment of duty. However, in spite of the fact that the show-cause notice was limited to confiscation of the goods and imposition of penalty, the final order which was passed included the direction to pay the customs duty as well. It is clear that when such an action was not contemplated, which even otherwise could not be done while exercising the powers under Section 124 of the Act, in the final order there could not have been direction to pay the duty. 11. Notwithstanding the aforesaid position, as pointed out above, the Department is taking shelter under the provisions of sub-section (2) of Section 125 of the Act. However, on a plain reading of the said provision, we are of the view that such a provision would not apply in case where option to pay fine in lieu of confiscation is not exercised by the importer. Trigger point is the exercise of a positive option to pay the fine and re ..... X X X X Extracts X X X X X X X X Extracts X X X X
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