Option to pay fine in lieu of confiscation
Section 125 of the Customs Act, 1962 deals with 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 o The Act came into force on 01 Feb 1963.
(1) 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 1[or, 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:
2[Provided that where the proceedings are deemed to be concluded under the proviso to sub-section (2) of section 28 or under clause (i) of sub-section (6) of that section in respect of the goods which are not prohibited or restricted, 3[no such fine shall be imposed]:
Provided further that], without prejudice to the provisions of the proviso to sub-section (2) of section 115, such fine shall not exceed the market price of the goods confiscated, less in the case of imported goods the duty chargeable thereon.
4[(2) Where any fine in lieu of confiscation of goods is imposed under sub-section (1), the owner of such goods or the person referred to in sub-section (1), shall, in addition, be liable to any duty and charges payable in respect of such goods.]
5[(3) Where the fine imposed under sub-section (1) is not paid within a period of one hundred and twenty days from the date of option given thereunder, such option shall become void, unless an appeal against such order is pending.
Explanation.--For removal of doubts, it is hereby declared that in cases where an order under sub-section (1) has been passed before the date on which the Finance Bill, 2018 receives the assent of the President and no appeal is pending against such order as on that date, the option under said sub-section may be exercised within a period of one hundred and twenty days from the date on which such assent is received.]
Section 125, The Customs Act, 1962 (Act 52 of 1962).
Cross-references
Extracted from the operative text of the enactments themselves. Every destination below exists in our corpus.
This section refers to
Related judgements & precedents
These are some judgments that construed this section, and hold precedence value. They hold authority on how to read, interpret and use this section.
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Fortis Hospital Ltd. v. Commissioner of Customs, Import
Court's Decision & Legal Precedent
Judgment order-8.pdf 24.03.2015 (Sikri & Nariman JJ.; body date matches Judgment label; VERIFY notes citation dates). Customs Act s.125(2) duty liability in addition to redemption fine arises only when the importer positively exercises the option to pay fine and redeem; mere ‘may redeem’ language without exercise does not trigger duty under s.125(2). SCN under s.124 limited to confiscation/penalty cannot smuggle in a duty demand.
On this section: s.125(2) — duty in addition to redemption fine arises only on positive exercise of the redemption option; unexercised option does not auto-trigger duty.
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U.K. Enterprises v. Commissioner of Customs and Central Excise
Court's Decision & Legal Precedent
Judgment order-2.pdf 2007-11-22 DATE VERIFIED (Ashok Bhan & V.S. Sirpurkar JJ.). Customs Act s.125 redemption fine cannot exceed market price of confiscated goods less duty; s.114A penalty cannot exceed the duty determined. Tribunal enhancement of redemption fine without market-price determination is scrutinised against the s.125 proviso.
On this section: s.125 option to pay fine in lieu of confiscation — fine capped by market price less duty; paired teaching with s.114A penalty ceiling.
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Commissioner of Customs vs Atul Automation Pvt. LTD
Court's Decision & Legal Precedent
A harmonious reading of the Foreign Trade Act, 1992 (particularly Sections 11(8)-(9) and 3(3)) with Section 125 of the Customs Act, 1962 establishes that restricted goods imported without authorization can be redeemed on payment of market value as redemption charges, rather than being confiscated. There exists a fundamental distinction between prohibited items (which cannot be imported under any circumstances) and restricted items (which can be imported only with authorization). When restricted items are imported without the required authorization, they do not acquire the character of prohibited items; instead, they remain redeemable goods subject to payment of market value as redemption charges. The discretionary power vested in customs authorities under Section 125 of the Customs Act must be exercised in harmony with the Foreign Trade Act and the Foreign Trade Policy framed thereunder.
On this section: Section 125 vests discretion in authority to levy fine in lieu of confiscation. Section 112(a) provides for penalty for contravention of Customs Act. Section 114AA provides for penalty on Directors. Court held Section 125 must be read harmoniously with Foreign Trade Act to permit redemption of restricted goods.
The holding above is the ratio decidendi as extracted from the judgment by eCourts India, reproduced unaltered — it is a rendering of the court's reasoning, not a substitute for its words. Read the order itself before relying on it.
Judgments citing this section
These may be obiter dicta or a precedent, for you to study. These are the judgments where this section is quoted.
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… However, once again at the stage of recovery of duty or penalty under other provision of the Customs Act, 1962 or redemption fine under Section 125 of the Customs Act, 1962, they are authorized. 219. Mostly, at the time of clearance of imported goods or export goods for the purpose of assessment under Section 17 of the Custom Act,1962, it is the Superintendent/Appraisers of Customs from Group 'B' Executive - Gazetted Officers who act as "proper officers". …
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… Introduction : "The following two questions arose for our consideration; 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[1]( page-1-0)? ii) Whether, the liability to pay such duty will include the liability to pay interest on delayed payment under Section 28AB of the Act? Adjudication of these questions brought to light certain seemingly contradictory decisions on this question, and this requires us to reflect …
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… Since the goods are already released to the party, they are ordered to pay redemption fine of Rs.10,00,000/- (Rupees Ten Lakhs only) under Section 125 of the Customs Act, 1962 in lieu of confiscation thereof." The Order dated 29.12.2015 proceeded to impose penalty as under:- > "(e) I impose a penalty of Rs.15,00,000/- (Rupees Fifteen Lakhs only) on M/s. Indusind Media & Communication Ltd., Mumbai under Section 112(a) of the Customs Act, 1962. (f) I impose …
Questions about Section 125
What have the courts held on Section 125 of the Customs Act?
Fortis Hospital Ltd. v. Commissioner of Customs, Import (24 Mar 2015) is the leading judgment on this section among those set out below: s.125(2) — duty in addition to redemption fine arises only on positive exercise of the redemption option; unexercised option does not auto-trigger duty. Another 2 judgments on this section are set out below, all of them from the Supreme Court. They run from 2007 to 2019.
How do I find court cases under Section 125 of the Customs Act?
In judgments and charge sheets this section is written several ways, and each form finds a different set of orders. These search the full text of every order eCourtsIndia holds, best matches first: Customs Act 1962 125, section 125 Customs Act 1962, section 125 of the Customs Act. Each opens the full list of orders on eCourtsIndia, where it can be narrowed by court, year and outcome. 3 reported judgments on this section are set out on this page, beginning with Fortis Hospital Ltd. v. Commissioner of Customs, Import (24 Mar 2015).
What should I read with Section 125 of the Customs Act, and has it changed?
Its own text turns on section 28 (Recovery of duties not levied or not paid or short-levied or short-paid or erroneously refunded), section 115 (Confiscation of conveyances), so none of them can safely be read on its own. 4 other provisions in this corpus refer back to it.
When did Section 125 of the Customs Act come into force?
Section 125 of the Customs Act, cited as Customs Act 1962 125, came into force on 01 Feb 1963, having been enacted on 13 Dec 1962. It is in force as at the date shown on this page.
Other sections of this Act
- 28. Recovery of duties not levied or not paid or short-levied or short-paid or erroneously refunded2145 words
- 2. Definitions1638 words
- 129A. Appeals to the Appellate Tribunal1170 words
- 27. Claim for refund of duty1060 words
- 127C. Procedure on receipt of an application under section 127B1056 words
- 138C. Admissibility of micro films, facsimile copies of documents and computer print outs as documents and as evidence872 words
Source and method. Compiled from the enactments of Parliament and of the State legislatures as published on India Code, and republished together with commentary and other original matter under section 52(1)(q)(ii) of the Copyright Act, 1957. Structured, cross-referenced and maintained by eCourtsIndia. Text as in force on 15 Oct 2026. This page is not a substitute for legal advice.