CESTAT Holds Assessee must Pay Redemption Fine for Seized Goods Missing from their custody [Read Order]

The respondents in this matter, M/s Akay Cones Pvt Ltd. and M/s Intrade Impex Pvt Ltd., who are owned and controlled by Sh. H.M. Prabhakar, were engaging in widespread customs duty evasion, according to information that was provided to the Directorate of Revenue Intelligence. Following their seizure during the investigation, the goods were given to the respondent for safekeeping under a superdaginama.

Later, the department and the respondents jointly inspected the products under the High Court's command. Only 683 of the 2366 rolls of fabric that were taken from M/s Akay Cones and given to them were discovered to be available, and the other rolls vanished while they were in their care.

The Commissioner only confiscated the rolls of fabrics that were discovered during the joint inspection and imposed a redemption fine in lieu of confiscating them. However, he did not impose a redemption fine for all of the rolls of fabrics that were lost while in the respondent's custody and were not discovered during the joint inspection, despite the fact that they were seized and discovered missing during respondent custody. This is the short point of contention in this case.

The Tribunal noted that the Commissioner did not seize the items on the grounds that they were unavailable. The items may be released or confiscated if they are found to be in possession. The Commissioner acknowledges that the items may have been seized. He did not merely seize the items because they were misplaced while in the respondent's care. This is not an instance in which the things were not available for seizure or were not seized at all.

The two member bench of Dr. Rachna Gupta (Judicial Member) and P.V. Subba Rao (Technical Member) observed that the Commissioner determined that the confiscated commodities were subject to confiscation. After the goods were seized, they were given to the respondents for safekeeping prior to the adjudication process. The commodities disappeared from their custody. The mere fact that the respondents altered the commodities, stole them, or allowed them to disappear from their possession does not absolve them of responsibility for confiscation.

While allowing the appeal, the Tribunal viewed that “If the goods are confiscated, they vest in the Central Government and the officer adjudging the confiscation shall take possession of the confiscated goods as per section 126 of the Act. Had the goods been not diverted or lost through the negligence while in the custody of respondents they would have been confiscated and they would have been vested in the Central Government. In our considered view, since the goods were lost by the respondents, they need to be pay a redemption fine in lieu of the goods.”

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