Customs duty payable even after confiscated goods redeemed after payment of fine – SC
In a recent judgment, Hon’ble Supreme Court had held that the owner of goods has a liability to pay customs duty, even after confiscated goods are redeemed after payment of fine under Section 125 of the Customs Act, 1962.
ABCAUS Case Law Citation:
ABCAUS 4161 (2024) (07) SC
In the instant case, the following questions fell for consideration of the Hon’ble Supreme Court;
(i) Whether there is a liability to pay customs duty when the confiscated goods are redeemed after payment of fine under Section 125 of the Customs Act, 1962?
(ii) Whether, the liability to pay such duty will include the liability to pay interest on delayed payment under Section 28AB of the Act?
(iii) What is the true and correct ratio of the decision in Jagdish Cancer case by the Court?
The Hon’ble Supreme Court held that when confiscation proceedings are initiated under Section 124 of the Act, the obligation to pay duty and other charges under Section 125 will arise only when the owner of goods exercises the option to pay fine for redemption of goods and the Department accepts it.
It was further held that liability to pay customs duty in such confiscation proceedings under Section 125(2) is distinct from the assessment and determination of duty, which can rise only under Section 28. The duty liability arising under Section 125(2) must be assessed under Section 28.
Thus, once Section 28 applies for determination of duty, interest on delayed payment of duty under Section 28AB follows. It was also clarified that Jagdish Cancer case is not an authority for the proposition that when the liability to pay customs duty arises under Section 125(2), the calculation, determination or the assessment of such duty cannot be made under Section 28.
It was further held that the text of Section 125(2) clearly provides that, where any fine in lieu of confiscation of goods is imposed under sub-Section (1), the owner of such goods shall be ‘liable to any duty and charges payable with respect to such goods’. The sub-section provides that the liability to any duty and charges, that are payable, shall be paid in addition to the fine. Section 28 would come In the instant appeal, the assessee had challenged the order of CIT(A) in confirming operation for assessing and determining the duty and other charges payable with respect to goods redeemed under Section 125(2). Once Section 28 applies for determination of duty obligation arising under Section 125(2), the interest on delayed payment of duty arises under Section 28AB. The said provision obligates payment of interest in addition to the duty
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