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TMI Blog2006 (6) TMI 117X X X X Extracts X X X X X X X X Extracts X X X X ..... nbsp; Whether the customs Authorities have the power to recover duty of customs on confiscated goods even when the option of redemption is not exercised? 2. The facts relevant for the present appeal are that the Bombay Hospital Trust (hereinafter referred to as 'the assessee') is a Public Charitable Trust registered under the Bombay Public Trust Act, 1950. The assessee runs a hospital known as Bombay Hospital which inter alia provides medical relief to outdoor and indoor patients. The assessee conducts medical education courses and also medical research through the Bombay Hospital Medical Research Centre. 3. During the period from 1988 to 1994, the assessee had imported various medical equipments/spares/accessories (hereinafter referred t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5. By an order-in-original dated 27th June, 2002, the Commissioner of Customs, Air Cargo Complex, Bombay upheld the contention of the Revenue that the assessee had violated the conditions set out in the notification No. 64/88 and accordingly confiscated the hospital equipments referred to in the aforesaid two show-cause notices under Section 111(o) of the Customs Act, 1962 with an option to the assessee to redeem the said hospital equipments on payment of fine of Rs. 20,00,000/- and penalty of Rs. 2,00,000/-. By the said order, the Commissioner of Customs directed payment of customs duty amounting to Rs. 11,52,06,608/- (Rs. 11,12,69,866/- + Rs. 39,36,742/-) payable on the above hospital equipments. 6. On appeal filed by the assessee, a Di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not arise at all. The submission is that the duty liability under Section 125(2) is dependent upon the payment of fine in lieu of confiscation and where the option is not exercised and the fine in lieu of confiscation is not payable then the duty is also not payable. Secondly, Mr. Bharucha submitted that having held that the golden rule of literal interpretation should be strictly followed while construing a taxing statute, this Court in the case of Wockhardt Hospital & Heart Institute has failed to follow the said golden rule. According to Mr. Bharucha, plain reading of Section 125(2) is that where confiscated goods are allowed to be redeemed by imposing fine in lieu of confiscation under Section 125(1), then the duty and charges payable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n does not arise. Therefore, Section 125(2) provides that where the goods are allowed to be redeemed by imposition of fine in lieu of confiscation, then on such imposition of fine in lieu of confiscation, the duty and charges payable on such goods have paid. The duty liability to be discharged under Section 125(2) is on imposition of fine in lieu of confiscation and not on the payment of fine in lieu of confiscation. Therefore, whether the fine in lieu of confiscation is paid or has become payable or not, on imposition of fine in lieu of confiscation, the duty and charges payable on the confiscated goods have to be paid as per Section 125(2). The word 'in addition to' in Section 125(2) is relatable to the imposition of fine in lieu of confi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e goods cleared without payment of duty under Section 47 are liable to be confiscated under Section 111(o) of the Customs Act. In such cases, the duty becomes payable on confiscation because the benefit of exemption from payment of duty is lost on account of the violation of the post importation conditions set out in the exemption notification. Therefore, Section 125(2) provides that where the confiscated goods are allowed to be redeemed by imposing fine in lieu of confiscation, then on imposition of fine in lieu of confiscation the duty and charges payable on such goods have to be paid. 10. In cases, where the goods are confiscated before clearance, the duty and charges become payable when clearance of the goods for home consumption are s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as, the duty liability under Section 125(2) is on the owner of the goods. This distinction is made by the legislature because once the goods are cleared under Section 47, there is every possibility that the goods may change hands. To obviate any difficulty in recovering duty payable on such goods, the legislature has provided that, where the goods are confiscated with an option to redeem the goods by imposing fine in lieu of confiscation, then on imposition of fine in lieu of confiscation the duty and charges payable have to be paid by the owner of such goods. 13. Thus, we do not find any merit in the argument of the petitioner that the judgment delivered in the case of Wockhardt Hospital needs reconsideration. Since the issues raised in t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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