Gujarat High Court
D. Jewel vs Commissioner Of Customs, Surat on 14 February, 2019
Author: Harsha Devani
Bench: Harsha Devani, A. P. Thaker
C/TAXAP/1303/2018 IA ORDER
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
CIVIL APPLICATION (FOR ORDERS) NO. 1 of 2018
In R/TAX APPEAL NO. 1303 of 2018
================================================================
D. JEWEL Versus COMMISSIONER OF CUSTOMS, SURAT ================================================================ Appearance:
MR PARESH M DAVE for the APPLICANT MR VIRAL K. SHAH for the RESPONDENT ================================================================ CORAM: HONOURABLE MS.JUSTICE HARSHA DEVANI and HONOURABLE DR.JUSTICE A. P. THAKER Date : 14/02/2019 IA ORDER (PER : HONOURABLE MS.JUSTICE HARSHA DEVANI)
1. Rule. Mr. Viral Shah, learned senior standing counsel waives service of notice of rule on behalf of the respondent.
2. By this application, the applicant seeks release of the confiscated gold bars and diamonds/precious stones/moti (pearls) valued at Rs.2,70,12,710/- and also confiscated gold and studded jewellery valued at Rs.3,20,96,437 belonging to M/s Choksi Vachhraj Makanji & Co. on such terms and conditions, as may be deemed fit by this court. The applicant Page 1 of 6 C/TAXAP/1303/2018 IA ORDER also seeks stay of recovery of penalties imposed on M/s D. Jewel and M/s Choksi Vachhraj Makanji & Co. during the pendency of the tax appeal.
3. By an order dated 22.11.2018, the appeal has been admitted by framing substantial questions of law.
4. The applicants M/s D. Jewel and M/s Choksi Vachhraj Makanji & Co. are the original appellants who have challenged the order dated 11.10.2018 passed by the Customs, Excise and Service Tax Appellate Tribunal in Appeal No.C/10113 to 10200/2018, whereby the appeals filed by the applicants against the Order-in-Original dated 4.11.2016 passed by the adjudicating authority have been dismissed. By the Order-in-
Original, gold bars and diamonds/ precious stones/moti valued at Rs.2,70,12,710/- were ordered to be confiscated in terms of sub-sections (d), (e), (j) and (o) of section 111 of the Customs Act, 1962 and allowed option of redeeming the same on payment of fine of Rs.1,35,06,355/- i.e. equal to fifty percent of the value in terms of section 125 of the Customs Act, 1962 and also ordered confiscation of gold and studded jewellery valued at Rs.3,20,96,437/- in terms of section 113(d) of the Customs Act, 1962 and allowed option of redeeming such goods on payment of fine of Rs.1,60,48,219/- i.e. equal to fifty percent of the value in terms of section 125 of the Customs Act, 1962.
5. Mr. Paresh Dave, learned counsel for the applicants invited attention to the provisions of sub-sections (d), (e), (j) and (o) of section 111 of the Customs Act, 1962 as well as section Page 2 of 6 C/TAXAP/1303/2018 IA ORDER 113(d) of that Act, to submit that the present case does not fall within the ambit of any of the said provisions. Referring to the impugned order passed by the Tribunal it was pointed out that in the appeal preferred by the revenue seeking absolute confiscation of the goods in question, the Tribunal has placed reliance upon its decision in the case of CCE & ST, Surat-III v. Shri Dharmesh Pansuriya dated 15.09.2017 wherein in an identical case, it had held that the discretion used by the adjudicating authority for not ordering absolute confiscation of the gold cannot be interfered with by the Tribunal. Following the said case, which according to the Tribunal was identical to the present case, the Tribunal did not deem it necessary to interfere. The attention of the court was invited to the order dated 15.09.2017 passed by the Tribunal in the case of Dharmesh Pansuriya (supra) wherein the Tribunal has held thus:
"However, on the issue of considering the quantum of redemption fine imposed by the adjudicating authority, we find substance in the contention of the Revenue inasmuch as, wiping out of profit cannot always be the yardstick invariably in all the circumstances in fixing the quantum of fine; also in the present case, there has been no data to support the finding that the margin of profit from such illicit transaction of removal of goods from the authorized SEZ operation to the local market would be 3 to 4% in the Respondent's case. Considering the facts and circumstances of the case, including that the Respondent had already paid the amount of duty involved along with interest and penalty and to meet the ends of justice, it would be appropriate, if the redemption fine is fixed at Rs.40.00 lakhs."
5.1 It was pointed out that in that case, the value of goods Page 3 of 6 C/TAXAP/1303/2018 IA ORDER was Rs.6.75 crore whereas the redemption fine fixed by the Tribunal was Rs.40 lakhs which would come to approximately 6% of the value of the confiscated goods, to submit that the redemption fine of 50% imposed in this case is not reasonable and is not in consonance with precedents. It was further pointed out that in the Tax Appeal No.62 of 2018 preferred by the revenue against the order of the Tribunal in the case of Dharmesh Pansuriya, this court has noted that the assessee had deposited Rs.40 lakh by way of redemption fine imposed by the Tribunal. Considering the fact that the gold had been seized way back on 11.6.2014 and was lying with the department since then, the court directed release of the seized gold in favour of the respondent upon his providing bank guarantee for sum of Rs.1 crore to be kept alive till final disposal of the appeal. It was submitted that the applicants have a very good case on merits, and that keeping in mind the case of Dharmesh Pansuriya, the court may order release of the seized goods on such terms and conditions as may be deemed fit.
6. On the other hand Mr. Viral K Shah, learned senior standing counsel for the respondents submitted that in case of Dharmesh Pansuriya, it was the revenue which was in appeal, despite which the court had directed the assessee to furnish a bank guarantee in addition to the redemption fine imposed by the Tribunal; therefore, if at all the court is inclined to direct release of the confiscated goods, this factor may be kept in mind.
7. The applicants seek release of the confiscated goods Page 4 of 6 C/TAXAP/1303/2018 IA ORDER subject to the reasonable conditions as well as stay of penalty. From the impugned order of the Tribunal, it is apparent that the case of Dharmesh Pansuriya is identical to the case of the appellants, despite which the adjudicating authority has imposed redemption fine of only Rs.40 lakhs which is approximately 6% of the value of confiscated goods, which has been upheld by the Tribunal, whereas in the present case, a redemption fine of 50% of the value of goods has been imposed. This court while permitting release of confiscated goods in the case of Dharmesh Pansuriya, had directed him to furnish a bank guarantee for a sum of Rs.1 crore.
8. In the present case, the total value of the confiscated goods is less than the value of confiscated goods in the case of Dharmesh Pansuriya. However, since in this case it is the applicants who are in appeal, at this stage they cannot claim complete parity with the case of Dharmesh Pansuriya. Besides, the case of Dharmesh Pansuriya has not attained finality as the appeal of the revenue has been admitted by this court. However, considering the fact that this court has found that a prima facie case has been made out and has admitted the appeal on substantial questions of law, this court is of the view that the confiscated goods are required to be released on appropriate terms and conditions.
9. In the opinion of this court, the interest of justice would be met if at this stage the applicants are directed to pay redemption fine of 10% of the value of the confiscated goods and 1% of the amount of penalty and further furnish bank guarantees of Rs.50 lakhs each, which shall be kept alive till Page 5 of 6 C/TAXAP/1303/2018 IA ORDER the final disposal of the appeal.
10. In the light of the above discussion, the application succeeds and is, accordingly, allowed to the following extent:
By way of interim relief, it is directed that upon paying redemption fine to the extent of 10% of the value of the confiscated goods and penalty to the extent of 1% of the value of the confiscated goods, and furnishing bank guarantees of Rs.50 lakh by each of the applicants, to be kept alive till the final disposal of the appeal, before the Commissioner of Customs, Surat, the authority is directed to release in favour of the applicants all the confiscated goods at the earliest, in any case not later than two weeks from making the deposits and furnishing the bank guarantees referred to above. Upon payment of one percent of the value of the confiscated goods, the penalties imposed on the applicants shall remain stayed till the final disposal of the appeals.
11. Rule is made absolute accordingly.
(HARSHA DEVANI, J) (A. P. THAKER, J) B.U. PARMAR Page 6 of 6