Confiscation means lawfully seize of illegal import of prohibited goods into India and seize of conveyance in Indian Customs water for concealing of exported goods or carrying smuggling of any goods. Confiscations of goods or conveyance are two ways by which a Customs officer can exercise his statutory power as provided under Customs Act.1962. The action of seizure precedes confiscation and any goods cannot be confiscated directly without exercising action of seizure.
Provision of Seizure:
Section 110 of the Customs Act, 1962 has prescribed the provision of seizure of goods, documents and things. Sub-section (1) of Section 110 of the Customs Act, empowers if the proper officer has reason to believe that any goods are liable to confiscation under this Act, he may seize such goods. Where it is not practicable to seize any such goods, the proper officer may serve on the owner of the goods an order that he shall not remove, part with, or otherwise deal with the goods except with the previous permission of such officer.
In case of perishable or hazardous nature of any goods, an inventory of such goods shall be prepared by the proper officer after have been seized by him. The photograph of such goods shall be arranged in the present of Magistrate and certification shall be arranged from Magistrate.
110(2) of the Customs Act, has prescribed that where goods are seized a notice under section 124 of the Customs Act, shall be issued to owner of goods within six months otherwise the goods shall be returned to the person from whose possession they were seized. Provided that the said period can be extended by the Commissioner of Customs.
Provisional release of goods:
Section 110A of the Customs Act,1962 has prescribed that any goods seized under section 110 may pending the order of the adjudicating authority be released to the owner on taking a bond from him in the proper form with such security and conditions as the adjudicating authority may require.
Case law:
In the case of Principal Commissioner of Customs (Import), ICD v. Santhosh Handloom-reported in 2016(337) E.L.T.44 (Delhi High Court), held that the only provision under Customs Act for seizure of goods is Section 110. This section also provides for vacation of seizure on non issuance of show cause notice within six months unless extended period by the Commissioner of Customs for another six months. The proceedings relating to confiscation of goods being of penal in nature, show cause notice is required to be served only on the owner of goods or on person specially authorised by owner for this. On expiry of six months from the date of seizure, the owner of the goods would be entitled as of right to restoration of the seized goods. This case relied on –Harbans Lal v. Collector- 1993(67) E.L.T.20 (S.C.).
In the case of S. B. International v. Asst. Director DRI- reported in 2018 (361) E.L.T. 305 (Del.) It is held that in terms of section 110(1) of the Customs Act, the proper officer has the power to seize goods provided he has “ reason to believe” that the goods are liable confiscation. The words “reason to believe” are material and the Customs Act does not contemplate seizure of goods only on mere suspicion.
Provision of Confiscation:
Section 111, Section 113 to Section 121 of the Customs Act, 1962 deals with the confiscation of goods and conveyance. (Section 112 of the Customs Act, 1962 deals with the imposition of penalties).
Confiscation of improperly imported goods:
Section 111 of the Customs Act, 1962 has prescribed the following goods brought from a place outside India shall be liable to confiscation:
(a) any goods imported by sea or air which are unloaded or attempted to be unloaded at any place other than a customs port or customs airport for the unloading of such goods;
(b) any goods imported by land or inland water through any route other than a route specified in a notification issued for the import of such goods;
(c) any dutiable or prohibited goods brought into any bay, gulf, creek, or tidal river for the purpose of being landed at a place other than a customs port;
(d) any goods which are imported or attempted to be imported or are brought within the Indian customs waters for the purpose of being imported, contrary to any prohibition imposed by or under this Act or any other law for the time being in force;
(e) any dutiable or prohibited goods found concealed in any manner in any conveyance;
(f) any dutiable or prohibited goods required to be mentioned under the regulations in an import manifest or import report which are not so mentioned;
(g) any dutiable or prohibited goods which are unloaded from a conveyance in contravention of the provisions of section 32 ( without mentioned in IGM) , other than goods inadvertently unloaded but included in the record kept ( Customs notified area) under sub-section (2) of section 45;
(h) any dutiable or prohibited goods unloaded or attempted to be unloaded ( without permission of Customs officer / supervision of customs officer) in contravention of the provisions of section 33 or section 34;
(i) any dutiable or prohibited goods found concealed in any manner in any package either before or after the unloading thereof;
(j) any dutiable or prohibited goods removed or attempted to be removed from a customs area or a warehouse without the permission of the proper officer or contrary to the terms of such permission;
(k) any dutiable or prohibited goods imported by land in respect of which the order permitting clearance of the goods required to be produced under section 109 is not produced or which do not correspond in any material particular with the specification contained therein;
(l) any dutiable or prohibited goods which are not included or are in excess of those included in the entry made under this Act, or in the case of baggage in the declaration made under section 77;
(m) any goods imported into customs station are intended for transshipment but without submission of a bill of transshipment to the proper officer in the prescribed form( sub-section(1) of section 54 of Customs Act,1962;
(n) any dutiable or prohibited goods transited with or without transshipment or attempted to be so transited (without payment of duty )in contravention of the provisions of Chapter VIII;
(o) any goods exempted, subject to any condition, from duty or any prohibition in respect of the import thereof under this Act or any other law for the time being in force, in respect of which the condition is not observed unless the non-observance of the condition was sanctioned by the proper officer;
(p) any notified goods in relation to which any provisions of Chapter IVA or of any rule made under this Act for carrying out the purposes of that Chapter have been contravened.
Case Law:
In the case of Kuber Casting Private Limited v. Commissioner of Commissioner of Customs, Amritsar- reported in 2016 (339) E.L.T.264 ( Tribunal-Chandigarh), the Tribunal observed that a part of the consignment was found re-rollable scrap but the appellant has placed on order for supply of heavy melting scrap and the certificate of origin also certifies the same. The appellant has actually used the said goods as heavy melting scrap. Without any contrary evidence on record, the Tribunal held that goods are not liable for confiscation on this ground. Further the charge of misdeclaration of weight the Tribunal held that the goods are rightly held liable for confiscation by the lower authorities. As the goods impugned are not restricted goods, therefore, they can be released on payment of redemption fine and penalty, the Tribunal held that the redemption fine and penalty imposed on the appellant highly excessive and the goods cannot be held for confiscation on the charge of misdeclaration of description, the Tribunal reduced the redemption fine to Rs.20,000/- from Rs.1,60,000/- and penalty to Rs.10,000/- from Rs.1,10,000/-.
Confiscation of improperly exported goods:
Section 113 of the Customs Act, has prescribed that the powers to the authorities for confiscation of improperly exported goods. The following export goods shall be liable to confiscation:
(a) any goods attempted to be exported by sea or air from any place other than a customs port or a customs airport appointed for the loading of such goods;
(b) any goods attempted to be exported by land or inland water through any route other than route specified in a notification issued under clause(c) of section 7 for the export of such goods;
(c) any goods brought near the land frontier or the cost of India or near any bay, gulf, creek or tidal river for the purpose of being exported from a place other than a land customs station or a customs port appointed for the loading of such goods;
(d) any goods attempted to be exported or brought within the limits of any customs area for the purpose of being exported, contrary to any prohibition imposed by or under this Act or any other law for the time being in force;
(e) any goods found concealed in a package which is brought within the limits of a customs area for the purpose of exportation;
(f) any goods which are loaded or attempted to be loaded in other than approved places and without supervision of customs officer in contravention of the provision of section 33 or section 34;
(g) any goods loaded or attempted to be loaded on any conveyance, or water-borne, or attempted to be water-borne for being loaded on any vessel, the eventual destination of which is a place outside India, without the permission of the proper officer;
(h) any goods which are not included or are in excess of those included in the entry made under this Act, or in the case of baggage in the declaration made under section 77;
(i) any goods entered for exportation which do not correspond in respect of value or in any material particular with the entry made under this Act or in the case baggage with the declaration made under section 77;
(j) any goods entered for exportation under claim for drawback which do not correspond in any material particular with any information furnished by the exporter or manufacturer under this Act in relation to the fixation of rate of drawback under section 75;
(k) any goods on which import duty has not been paid and which are entered for exportation under a claim for drawback under section 74;
(l) any goods cleared for exportation which are not loaded for exportation on account of any wilful act, negligence or default of the exporter, his agent or employee, or which after having been loaded for exportation are unloaded without the permission of the proper officer;
(m) any specified goods in relation to which any provisions of Chapter IVB or of any rule made under this Act for carrying out the purposes of that Chapter have been contravened.
Case Law:
In the case of MD Raju Hussain v. Commissioner of Customs (Preventive), Guwahati – reported in 2016 (331) E.L.T. 595 (Tri. Kolkata) held that the Agarwood was seized and confiscated by the Revenue on allegation of its attempted export by the appellant. The Tribunal held that the said goods which are neither , notified, nor specified, not seized in customs area. The export prohibition is applicable only when goods are brought to customs area for export. The alleged illegal acquisitions and movement in India of these goods may be violation of any other law but not of Customs Act. The applicant is not having any valid visa on his passport or ticket to go abroad. There is no evidence on record to indicate that the as appellant is indulging in illegal export of the said goods on his earlier two visits abroad. The activities of the appellant may be suspicious but not enough to hold charge of attempted export. In the absence of positive evidence, mere interaction / preparation cannot be considered as attempted export. The Tribunal set aside the seizure and confiscation.
Confiscation of Conveyances:
Section 115 of the Customs Act, 1962 has prescribed the following conveyances shall be liable to confiscation:
(a) any vessel which is or has been within the Indian customs waters, any aircraft which is or has been in India, or any vehicle which is or has been in a customs area, while constructed adapted, altered or fitted in any manner for the purpose of concealing goods;
(b) any conveyance from which the whole or any part of the goods is thrown overboard, staved or destroyed so as to prevent seizure by an officer of customs;
(c) any conveyance which having been required to stop or land under section 106 fails to do so, except for good and sufficient cause;
(d) any conveyance from which any warehoused goods cleared for exportation, or any other goods cleared for exportation under a claim for drawback, are unloaded, without the permission of the proper officer;
(e) any conveyance carrying imported goods which has entered India and is afterwards found with the whole or substantial portion of such goods missing , unless the master of the vessel or aircraft is able to account for the loss of or deficiency in the goods.
Confiscation of packages and their contents:
Section 118 of the Customs Act, 1962 prescribed confiscation of packages of imported goods on account of their contents-
(a) Where any goods imported in a package are liable to confiscation, the package and any other goods imported in that package shall also be liable to confiscation;
(b) Where any goods are brought in a package within the limits of a customs area for the purposes of exportation and are liable to confiscation, the package and any other goods contained therein shall also be liable to confiscation.
Confiscation of goods used for concealing smuggled goods:
Section 119 of the Customs Act, 1962 has prescribed that any goods used for concealing smuggled goods shall also liable to confiscation.
Confiscation of smuggled goods:
Section 120 of the Customs Act, 1962 has prescribed that confiscation of smuggled goods even there is any change in their form. If the smuggled goods are mixed with other goods by which separation of smuggled goods is not possible, the whole of the goods is liable for confiscation. If the owner of the goods proves that he had no knowledge or reason to believe that they included any smuggled goods, only such part of the goods the value of which is equal to the value of the smuggled goods shall be liable to confiscation.
Confiscation of sale proceeds of smuggled goods:
Section 121 of the Customs Act, 1962 has prescribed that where any smuggled goods are sold by a person having knowledge or reason to believe that the goods are smuggled goods, the sale-proceeds thereof shall be liable to confiscation.
Provision of penalties in respect of improper importation of goods:
Section 112 of the Customs Act, has prescribed the penalty for improper importation of goods stated that the person involved in omission or commission under the Customs Act, who in relation to any goods which would render such goods liable to confiscation under section 111, or abets the doing or omission of such an act, or who acquires possession of or is in any way concerned in carrying, removing, depositing, harbouring, keeping , concealing , selling or purchasing , or in any other manner dealing with any goods which he knows or has reason to believe are liable to confiscation under section 111 and shall liable to penalties as follows :
(i) in the case of goods in respect of which any prohibition is in force under this Act or any other law for the time being in force, to a penalty not exceeding the value of the goods or five thousand rupees, whichever is the greater;
(ii) in the case of dutiable goods, other than prohibited goods, the person shall be liable to a penalty not exceeding ten percent of the duty sought to be evaded or five thousand rupees, whichever is higher;
(iii) in the case of goods or baggage in respect of which misdeclaration of value has been done, to a penalty not exceeding the difference between the declared value and the value thereof or five thousand rupees, which is the greater.
(iv) in the case of goods falling both under clause (i) and (iii) to a penalty not exceeding the value of the goods or the difference between the declared value and the value thereof or five thousand rupees, whichever is the highest;
(v) in the case of goods falling both under clauses (ii) and (iii), to a penalty not exceeding the duty sought to be evaded on such good or the difference between the declared value and the value thereof or five thousand rupees, whichever is the highest.
Provision of penalties in respect of improper exportation of goods:
Section 114 of the Customs Act,1962 has prescribed that the person involved in commission or omission in relation to any goods, which renders such goods liable to confiscation under section 113 or abets the same, shall be liable to penalties in different types of cases as follows:-
(i) in the case of goods in respect of which any prohibition is in force under this Act or any other law for the time being in force, to a penalty not exceeding the value of the goods or five thousand rupees, whichever is the greater;
(ii) in the case of dutiable goods, other than prohibited goods, to a penalty not exceeding the duty sought to be evaded on such goods or five thousand rupees, whichever is the greater.
(iii) in the case of goods under claim for drawback to a penalty not exceeding the amount of drawback or five thousand rupees, which is the greater.
Adjudication of Confiscation and Penalties:
Section 122 of the Customs Act, 1962 prescribed that the adjudication power of Customs officers to adjudicate for confiscation or penalty with monetary limit as given below:
(a) Principal Commissioner of Customs or Commissioner of Customs or a joint Commissioner of Customs , can adjudicate value of the case is without limit,
(b) Assistant Commissioner of Customs or Deputy Commissioner of Customs , can adjudicate value of the case is limited to Rs.5,00,000/-,
(c) A Gazetted officer of Customs lower in rank of an Assistant Commissioner of Customs, can adjudicate case value of Rs.50,000/-
Adjudication Procedure:
Section 122A of the Customs Act, has prescribed that the adjudication authority shall, in any proceeding under this Act, give an opportunity of being heard to a party in a proceeding, if the party so desires. The adjudicating authority may, if sufficient cause is shown at any stage of proceeding , grant time, from time to time, to the parties or any of them and adjourn the hearing for reasons to be recorded in writing;
Provided that no such adjournment shall be granted more than three times to a party during the proceeding.
Section 123 of the Customs Act, has prescribed for burden of proof in certain cases, where any goods to which this section applies are seized under this Act in the reasonable belief that they are smuggled goods, the burden of proving that they are not smuggled goods shall be-
(a) in a case where such seizure is made from the possession of any person,
(i) on the person from whose possession the goods were seized ; and
(ii) if any person , other than the person from whose possession the goods were seized , claims to be the owner thereof, also on such other persons;
(b) in any other case, on the person, if any , who claims to be the owner of the goods so seized.
The cited section shall apply to gold and manufacturers thereof, watches and any other class of goods which the Central Government may be notification in the Official Gazette specify.
Case Law:
In the case of Commissioner of Customs, Central Excise & Service Tax, Siliguri v. Ratan Kumar Sethia- 2016 (335) ELT. 355 (Tri-Kolkata), the Tribunal held that the calculators of foreign original are liable to confiscation in view of Section 123 of the Act. As there is no absolute prohibition on importation of these goods, therefore, these calculations cannot be confiscated absolutely. The importer is to be given an option to redeem the same on imposition of appropriate redemption fine under Section 125 of the Act.1962 by the Adjudicating Authority.
Section 124 of the Customs Act, has prescribed the issue of show cause notice before confiscation of goods. No order confiscation any goods or imposing any penalty on any person shall be made unless the owner of the goods or such person-
(a) is given a notice in writing with the prior approval of the officer of Customs not below the rank of an Assistant Commissioner of Customs, informing him of the grounds on which it is proposed to confiscate the goods or to impose a penalty;
(b) is given an opportunity of making a representation in writing within such reasonable time as may be specified in the notice against the grounds of confiscation or imposition of penalty mentioned therein; and
(c) is given a reasonable opportunity of being heard in the matter.
The notice referred to in clause (a) and the representation referred in clause (b) may at the request of the person concerned be oral.
Section 125 of the Customs Act, has prescribed the option to pay fine in lieu of confiscation, 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, 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 such fine shall not exceed the market price of the goods confiscated, less in the case of imported goods the duty chargeable thereon.
Where any fine in lieu of confiscation of goods is imposed, the owner of such goods or the person shall, in addition, be liable to any duty and charges payable in respect of such goods.
Section 126 of the Customs Act, prescribed any goods are confiscated under this Act, such goods shall thereupon vest in the Central Government. The officer adjudging confiscation shall take and hold possession of the confiscated goods.
Section 127 of the Customs Act, has prescribed the award of confiscation or penalty by an officer of Customs shall not be prevented the infliction of any punishment to which the person affected thereby is liable under the provisions of this Act or under any other law.
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