CESTAT Mumbai: Goods Already Re-Exported Cannot Be Confiscated; Absolute Confiscation Order Set Aside
Pranav B Prem
The Mumbai Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has set aside an order directing the absolute confiscation of goods that had already been re-exported, holding that confiscation cannot be ordered when the goods are no longer physically available. The Tribunal emphasised that once goods are re-exported, they cannot be confiscated again, except in cases where the goods were cleared under bond, which was not applicable in the present case.
The case arose from an appeal filed by M/s Chemspark India Pvt. Ltd., which had imported 1,600 kilograms of Zinc Pyrithione and 5,000 kilograms of Sodium Coco Ampho Diacetate from China. During assessment, customs authorities noted that Zinc Pyrithione falls under the scope of the Insecticides Act, 1968, and therefore requires prior registration with the Central Insecticides Board under Section 9 before it can be imported into India. Since the importer had not obtained this mandatory registration, the consignment was objected to and placed under bonded warehouse while the importer sought permission.
The importer thereafter requested extension of time to obtain the necessary registration. When the registration still could not be secured, the importer formally requested permission to re-export the consignment back to the overseas supplier. The Adjudicating Authority considered the request and, while ordering confiscation under Section 111(m) of the Customs Act, permitted the re-export of the goods under Section 125 upon payment of a redemption fine of ₹1,00,000 and penalty of ₹25,000. The importer paid the amounts and the goods were re-exported on 7 October 2019, as reflected through the Let Export Order.
Despite the re-export being completed well before any further proceedings, the Revenue filed an appeal before the Commissioner (Appeals). Without taking note of the fact that the goods were no longer available in India, the Commissioner (Appeals) set aside the Adjudicating Authority’s order and instead directed absolute confiscation of the goods on the premise that they were “prohibited goods” under Section 111(d) of the Customs Act. This prompted the importer to approach the CESTAT.
The Tribunal observed that the Commissioner (Appeals) committed a serious error in ordering confiscation when the goods had already been re-exported prior to the filing of the Revenue’s appeal. It noted that settled legal principles hold that confiscation cannot be ordered when the goods are no longer available, except where the goods have been released under bond or guarantee, which was not the situation in the present case. The Tribunal observed that the Commissioner (Appeals) failed to take into account the documentary evidence of re-export, as well as the importer’s communication informing the department that the goods had already left the country. It further held that absolute confiscation in such circumstances is plainly unsustainable in law.
Allowing the appeal, the Tribunal restored the adjudication order that had permitted re-export and held that there was no justification for ordering absolute confiscation once the consignment had already been taken out of India. The impugned order was accordingly set aside, and the appeal was allowed in favour of the importer.
Appearance
Appearances for Appellant: Shri Sandip Batwal, Advocate
Appearances for Respondent: Shri L.B. D'Costa, Authorised Representative
Cause Title: M/s Chemspark India Pvt. Ltd. vs. Commissioner of Customs, Nhava Sheva-I
Case No: Custom Appeal No. 86827 of 2021
Coram: Shri. Ajay Sharma (Member Judicial)
