JUDGMENT

S.B. Sinha, J. —

1.Leave granted.

2.Appellant No.2 is a proprietory concern of the First Appellant which is importer of various items of goods including Lithopone. Appellant No.1 placed an order for import of 21.5 MT of Lithopone 28-30% (pigment), with Texpo International, Hong Kong. The said item is used in manufacture of paint. It is a freely importable item. When the goods arrived at the port, a bill of entry for 21.5 MT of Lithopone was filed. The requisite custom duty after assessment was paid. However, on physical verification, out of the imported items 400 bags of 25 kg. each contained in a yellow coloured substance suspected to be ‘Tetracycline HCL BP 93’, a chemical used for making medicines was found wherefor an import licence was required to obtained.

3.A search and seizure was carried out and on examination, it was found that 189 poly bags out of 860 poly bags contained a white coloured chemical and the remaining 671 poly bags contained a yellow coloured chemical. The estimated value of the mis-declared item was estimated at Rs.1,02,97,166/-.

4.A notice under Section 124 of the Customs Act, 1962 (for short, ‘the Act’) was issued on appellants on 8.3.2000 asking them