Case Note & Summary
The Supreme Court adjudicated two questions arising under the Customs Act, 1962: whether customs duty is payable when confiscated goods are redeemed after payment of a fine under Section 125, and whether interest under Section 28AB is payable on delayed payment of such duty. The case involved conflicting interpretations of earlier decisions, particularly Commr. of Customs (Import) v. Jagdish Cancer and Research Centre. The court analyzed the scheme of the Act, noting that Section 125 provides for redemption of confiscated goods upon payment of a fine in lieu of confiscation, but does not extinguish the liability to pay customs duty. The duty is a separate statutory obligation that arises upon importation, and redemption does not waive it. The court further held that Section 28AB mandates interest on delayed payment of duty, and this applies equally to duty payable on redeemed goods. The court clarified that the Jagdish Cancer case did not hold otherwise; its ratio was limited to the facts and did not establish that fine substitutes duty. Consequently, the court answered both questions in the affirmative: duty is payable, and interest under Section 28AB is also payable. The judgment harmonizes the provisions and ensures that the revenue is not deprived of duty and interest merely because goods are redeemed.
Headnote
A) Customs Law - Redemption of Confiscated Goods - Liability to Pay Customs Duty - Section 125, Customs Act, 1962 - The court considered whether customs duty is payable when confiscated goods are redeemed on payment of fine under Section 125. Held that the redemption fine is not in substitution of duty; duty remains payable as a separate statutory liability. (Paras 1-22) B) Customs Law - Interest on Delayed Payment - Section 28AB, Customs Act, 1962 - The court examined whether interest under Section 28AB is payable on delayed payment of duty on redeemed goods. Held that interest is payable from the date the duty became due until payment, as the duty liability is independent of the redemption fine. (Paras 21-22) C) Precedent - Ratio of Jagdish Cancer Case - Commr. of Customs (Import) v. Jagdish Cancer and Research Centre - The court clarified the correct ratio of this decision, holding that it does not support the proposition that redemption fine substitutes duty; duty and fine are distinct. (Paras 18-20)
Issue of Consideration
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; and whether such liability includes interest on delayed payment under Section 28AB of the Act.
Final Decision
The court answered both questions in the affirmative: customs duty is payable on redemption of confiscated goods under Section 125, and interest under Section 28AB is also payable on delayed payment of such duty.
Law Points
- Customs duty is payable on redemption of confiscated goods under Section 125 of the Customs Act
- 1962
- Interest under Section 28AB is payable on delayed payment of duty
- Redemption fine under Section 125 is not in lieu of duty
