Re-Export Option Lapses If Redemption Fine Paid After 120 Days: Gujarat High Court

The Gujarat High Court on 6 February, held that the 120-day timeline for payment of redemption fine under Section 125(3) of the Customs Act, 1962 is mandatory, and failure to pay within this period renders the re-export option void.

A Bench comprising Justice A.S. Supehia and Justice Pranav Trivedi dismissed the writ petition filed by Goodwill Industries, while directing the refund of Rs. 12 lakh redemption fine and retaining the Rs. 8 lakh penalty imposed by the Adjudicating Authority.

The Court observed that:

“This quintessential feature envisaged in Section 125(3) of filing an appeal and pendency of appeal is missing in the present case. The petitioner has paid the fine almost after a period of one year which is beyond the period of 120 days. Hence, we do not find any fault with the respondent authorities to allow re-export of the goods.”

Section 125(3) of the Customs Act states that if the redemption fine under Section 125(1) isn't paid within 120 days of the option being given, “such option becomes void unless an appeal against such order is pending”.

The matter arose on 16 February 2021, when Goodwill Industries imported Mixed Glycol. The supplier, however, loaded Kerosene into the consignment in the customs yard without refunding payment, despite the petitioner refusing to take possession. This prompted an investigation by the Directorate of Revenue Intelligence.

Customs withheld the goods, and the CRCL test report of 2021 confirmed the consignment contained Kerosene, not Mixed Glycol. The Adjudicating Authority imposed a penalty of Rs. 8 lakh under Section 112(a)(i) of the Customs Act, 1962 and allowed an option to redeem the goods for re-export by paying a redemption fine of Rs. 12 lakh under Section 125.

Goodwill Industries settled Rs. 32.80 lakh demurrage charges with the Shipping Line and later paid the redemption fine and penalty, but the payments were delayed by more than one year. No appeal was filed within 90 days of the order as required under Section 128 of the Customs Act. It then sought permission for re-export, but Customs did not respond, prompting the present writ petition.

The petitioner-company argued that since both fine and penalty were eventually paid, re-export should be permitted. The respondents contended that the re-export option under Section 125(3) had lapsed because the payment was delayed and no appeal was pending.

The Court distinguished reliance placed on a co-ordinate Bench decision in Exotic Associates, emphasising the “unambiguous” directions of the adjudicating authority while granting re-export. It noted that the lapse occurred due to delay in payment beyond 120 days and absence of appeal, and therefore Customs was justified in retaining the penalty while refunding the redemption fine.

Accordingly, the Court dismissed the appeal.

For Petitioner: Advocate Hardik P Modh

For Respondent: Senior Standing Counsel Maunil Yajnik, Hardika Vyas