I think the most optimal solution would be one that would have these results;
Be an effective and fair punishment regarding the crime
Would allow the Navy/Police to flex their power and actually have a new responsibility
Would not discourage the act of smuggling
Would be reflective of the seriousness of the cargo (AKA case-by-case basis)
Is fun, effective and punctuating; even the Smuggler will be cool with it
Can be seen as very basic or very complicated depending on the range of interest and understandability
Proportional, measurable, realistic and comparative when placed against all the different houses
Although, all of that is pretty obvious and really doesn't need to be stated, I mean, there are some solutions that were posted here that don't quite meet those standards! Of course, such working ideas like this are hard to come by.