Customs, Excise and Gold Tribunal - Mumbai
Wong Heng Khoon vs Collector Of Customs (P) on 19 April, 1993
Equivalent citations: 1994(50)ECR632(TRI.-MUMBAI)
ORDER R. Jayaraman, Member (T)
1. This is an appeal against the Order-in-Original No. SD/INT/AIU/127/91 APA/99/S/14-5-150/91 AA dated 24.12.1991.
In the aforesaid order, passed by the Additional Collector of Customs, he has ordered absolute confiscation of 165 gold bars and 4 gold bricks weighing 23239 gms valued at Rs. 51.13 lakhs (approximately) at International price and imposed a penalty of Rs. 5 lakhs on the appellant.
2. The facts, which are not disputed by both the sides can be summed up as below:
(i) Acting on a specific information that the appellant who was a passenger travelling in the Cathay Pacific flight from Dubai to Malaysia and occupying seat No. 234 was carrying a large quantity of gold, the officers of the Air Intelligence Unit of Bombay Sahar Airport Customs, boarded the aircraft on arrival from Dubai. They questioned the appellant, who was occupying the seat No. 234. On questioning, the appellant gave out name, produced his Malaysian passport and Air ticket showing routing as Penang-Kulalumpur-Dubai-Bangkok-Penang. The appellant admitted that he possessed 23 kgs of gold in his brief case, which he had not declared to the Pilot of the Aircraft. Thereupon the appellant was off-loaded from the Aircraft along with the brief case carried by him and as a result of search of the brief case, the afjacesaid-gold was seized. The appellant also produced documents from Dubai bullion dealers issued'in the name of the appellant and the company he was associated with in respect of the gold recovered from his possession.
(ii) The cargo manifest however did not show that gold was being taken as some bottom cargo from Dubai to Penang. There is no declaration of gold in the manifest filed by the Airlines to the Customs Department.
(iii) In the very first statement, given by the appellant he has indicated that he is a Malaysian doing goldsmith business at Singapore in the name and style of Tuichenoy Project at Penang. He travelled to Dubai for procuring gold bars for making jewellery at Malaysia and selling the ornaments in Dubai for making profit. He took with him 3133.80 gms of gold jewellery of 22 carats on 27.3.1991. However, he declared 36.5 kgs in the Export declaration submitted to Malaysian Customs in order to save income tax. The jewellery which he carried to Dubai was made out of gold purchased by him from the Standard Chartered & The Chownkaid banks, both of which are. in Penang. After reaching Dubai, he sold the jewellery to the gold dealers in Dubai (details of sale to each also given by him in the statement) and acquired the gold bars and 4 gold bricks (details of acquisition from each dealer in Dubai also given in the statement) in respect of which vouchers were produced by him. He also stated that he informed the Air-hostess about gold being carried by him. However, he did not inform her that one of the certificates issued from Mada Jewellers, Dubai for 23 kgs of gold in his name was a false one and he got it issued in order to facilitate the clearance at Dubai Customs and Malaysian Customs and denied that the any part of the gold was meant for landing at Bombay.
(iv) The Air hostess, in her statement, confirmed that the appellant had told her that he was carrying some gold but she took it to be gold jewellery of his daily use. The Captain Pilot confirmed that no declaration of gold was made to him by any passenger for inclusion in the manifest.
(v) In the light of the above factual position, it has been alleged by the Department that the gold has been imported into India by the appellant without a Reserve Bank permit and the same was not figuring in the Import manifest as transit cargo meant for Penang and hence adjudication proceedings were initiated by the Additional Collector, resulting in the passing of the impugned order.
(iv) It is also confirmed that prosecution proceedings initiated against the appellant have been withdrawn by the Department, based on the instructions from the Ministry.
3. In the context of the aforesaid factual position, which is not disputed by either side, we have heard the arguments from both the sides. The main tenets of the arguments from Miss Damania can be briefly summed up as below:
(i) The appellant, a goldsmith running a business in gold jewellery, normally travels from Penang to Dubai and returns from Dubai to Penang by direct flights of Malaysian Airlines, without any stop-over in between. Because of Gulf war conditions, Malaysian flights were cancelled during that period. Hence he had to take Cathay Pacific flight, which had a stop-over at Bombay enroute to Penang. He was only an intransit passenger sitting in the Aircraft. He did not make any attempt to get down, not did he contact anyone in India to pass on part of the gold or the whole of it. No such evidences also exist.
(ii) On the contrary, the undisputed position is that he declared his possession of gold, at the first instance when Indian Customs Officers boarded the Aircraft and asked him about this. Even prior to boarding the flight at Dubai, he has informed the Air hostess about his carrying gold in brief case. This fact is also confirmed by the Air hostess. She cannot presume on her own that the gold was the appellant's personal jewellery. Moreover, there is no dispute that he is a goldsmith having a business concern, dealing in gold and jewellery at Penang. Even his passport indicates his profession as goldsmith. He has produced the vouchers issued by the dealers at Dubai and accounted for the total quantity carried by him. Merely because a certificate for 23 kgs obtained from one of the dealer-s in Dubai for purposes of clearance through Dubai Customs and Malaysian Customs was not authentic, it cannot discredit his version that the gold was not meant fonlanding at Bombay, nor it can be held that he is a smuggler transporting gold from one country to another as a profession. The credentials of transport of gold are well established by his profession and also by the purchase vouchers produced by him at the very point of interception. Hence, the facts overwhelmingly support the case of the appellant as a bona fide intransit passenger, who was on his way back from Dubai to Penang after disposing of gold jewellery manufactured by him at Penang and carrying gold bars from Dubai dealers for manufacture of ornaments at Penang.
(iii) Even as an intransit passenger landing at Bombay, if he had made a true declaration of the gold and had sought for export along with him, when he left India, such a request would have been permissible under the law. Here, he has not got down from the flight but was in the Aircraft for his further journey to Penang, when the Customs Officers boarded the flight. On their questioning, he clearly revealed that he was carrying gold.
(iv) Even before departure from Dubai, he had told the Air-hostess about his carrying gold. Hence non-declaration of the gold as some bottom cargo cannot be cited against the appellant for ordering absolute confiscation and imposition of a huge penalty of Rs. 5 lakhs.
(v) The Appellant would have declared to the Pilot or got it manifested, had the Air-hostess advised him to do so. Hence, no mala fides can be attributed.
(vi) Moreover, gold is carried by the Appellant in his hand luggage as baggage. Hence, there is no legal requirement of manifesting it.
(vii) She cited the following case laws in her support to urge the contention that unless the goods come and mingle with the land mass of the country, it cannot be held that there had been an attempt to smuggle the goods.
(a) 1981 ELT 153 : 1981 ECR 1 D (Madras)--K.R. Ahmedshah v. CC, Madras
(b) 1981 ELT 298 (Cal) : 1981 ECR 270 D (Calcutta)--Shetwleuxrai Onkarntall v. Assistant Collector of Customs
(c) 1981 ELT 667 (Delhi)--Triloksingh
4. After hearing Miss Damania, the Bench put to her as to whether the Supreme Court decision in the case of State of Maharashtra v. Mayor Hang George may not answer some of the questions posed in her arguments and she has fairly admitted that those issues have been considered by the Supreme Court in the above decision but there are certain distinguishing factors in this case. In this case, the appellant has declared the possession of gold in his baggage at the first instance, whereas in the case decided by the Apex Court, the intransit passenger tried to disown the gold and did not make a declaration even on question by the Customs Officer. In that case, his business was to carry gold on his person from Zurich to various destinations and he was a regular smuggler. But, here, in this case, the appellant has gone on a bona fide business trip to Dubai for disposing of the ornaments made at Penang and for bringing gold from Dubai for further manufacture. Moreover, that case decided by the Apex Court was with regard to prosecution launched under the Foreign Exchange Regulation Act, but this is a case relating to alleged import of gold sought to be adjudicated under the provisions of Section 111(d) of the Customs Act, where the term 'import' has to be construed in accordance with the ratio of the decisions cited by her.
5. Shri Arun Tandon, the ld. SDR has stated that he is not disputing the factual position as stated by the other side. He also referred to the relevant findings of the Additional Collector, the provisions of Section 13 of the Foreign Exchange Regulation Act (corresponding to the erstwhile Section 8 of FERA considered by the Apex Court). As per definition of the 'Import' even under the Customs Act, 'Import' means bringing into India from a place outside India. Because of this position, there is a separate chapter relating to goods in transit (vide Chapter VIII) in the Customs Act. It has been held by the Apex Court in the case of Mayor Hans George that any item of merchandise cannot be treated as a bona fide baggage and hence has to be treated as Cargo. In terms of Regulation 4 of the Import Manifest (Aircraft) Regulations, 1976, gold as same bottom cargo are to be specifically declared in the manifest. Hence technically and legally, the gold, even if it is held to be in transit, has attracted the mischief of 'Import' and if such gold intransit is not manifested as per the provisions of Section 13 of Foreign Exchange Regulation Act as bottom cargo, it should be legally held to have violated the prohibitions under Section 11 of the Customs Act, since the prohibition under FERA is also deemed to be a prohibition under Section 11 of the Customs Act. Finally he gave a written submission, reportedly given under the instructions of his Department, based on a communication received from Ministry of External Affairs and left the matter to be decided by the Bench, in accordance with law.
6. After hearing both the sides, we first take up the question as a point of law, whether in this case, the gold is liable to confiscation and whether the appellant is liable to penalty. We have persued the case laws cited by the earned Counsel for the appellant. In the case of K.R. Ahmedshaw 1981 ELT 153 (Mad) : 1981 ECR 1 D (Madras) it is held by the Madras High Court that unless the goods are brought into the country for use, enjoyment, consumption, sale or distribution, they cannot be said to have been imported. But in that case, the passenger had disembarked and made a true declaration for the items of gold and studded jewellery and had sought for re-export, which was permissible for reexport under the Baggage Rules and also in terms of Section 80 of the Customs Act. It was not a case of a passenger claiming to be in possession of gold as same bottom cargo intransit. Hence the view expressed in that context by the Madras High Court seems to be distinguishable. In the case of Shewbax Rai OnKarmal, 1981 ECR 270 D (Cal) the question considered by the Calcutta High Court was with reference to the rate of duty applicable to bonded goods, whether it is the rate prevalent on the date of import or the rate prevalent on their release from Bonded Warehouse, and that decision was in the context of Section 15(1)(b) of the Customs Act. In the case of Trilok Singh decided by the Delhi High Court, it is the case of a passenger, who had landed at Delhi and was on his way to Katmandu. He had requested for detention of his baggage by the Customs for taking to Nepal, when he left the country. This offer was made on the passenger entering the customs hall. Hence in that context, the view was taken. Hence, we are of the view that the case laws cited by the earned Counsel may not stand attracted here. But one factor common, noticed in both the cases of K.R. Ahmed-shaw and Trilok Singh, the courts have appreciated the factual position that the goods are not meant for going into the country and viewed the term 'import' in that context. But here in this case the appellant was in transit in the flight from Dubai to Penang with a stop-over at Bombay. The issue dealt with by the Apex Court in the case of Mayor Hans George is more or less identical excepting to the extent of differences in certain aspects of factual position (as indicated by the earned Counsel which we will deal with subsequently). The questions answered by the Majority Judgment of the Apex Court in the above case are the following:
(i) Requisite permission from the Reserve Bank of India for bringing gold into India is necessary, unless it is declared in the manifest of the Aircraft as same bottom or transhipment cargo.
(ii) Knowledge of the existence or content of law by an individual is not essential and the effective operation of an Indian law is not dependent on its publication outside India. Hence a transit passenger carrying gold would be guilty of bringing gold into India.
(iii) Bringing of gold includes any gold, not removed from the ship or aircraft, which has landed from a place outside India. Hence a transit passenger carrying gold would be guilty of bringing gold into India.
(iv) There is no scope for presumption of mens rea in construing the statute, where the law does not specify "knowingly". The very act of bringing gold would attract penal liability.
(v) Gold carried in large quantities cannot be called personal baggage and they are required to be manifested. If they are not manifested and if no R.B.I, permit is obtained, such gold cannot be brought into India even in transit.
7. In the light of the answers given to the above issues by the Apex Court in the above case, we can not hold a view that what was done by the appellant as a transit passenger would not attract in mischief of Section 13 of the Foreign Exchange Regulation Act. Even though the judgment of the Apex Court is in the context of provision of FERA, prohibition of bringing into India gold envisaged under Section 13 of FERA is deemed to be a prohibition under Section 11 of the Customs Act and hence the decision of the Apex Court would be attracted, for dealing with a case of bringing gold in commercial quantities into India by a transit passenger, without manifesting it as same bottom cargo.
8. We also, looked at the provisions of the Customs Act independently. 'Import' as per Section 2(23) of the Customs Act means bringing into India from a place outside India. 'India' as per Section 2(27) includes territorial waters of India. Hence when prohibited goods have been brought into territorial waters of India, without proper manifesting the goods as same bottom cargo, they would attract the provision of Section 111 (d) and 111 (f) and the person, who does this act of bringing such prohibited goods, renders himself liable to penalty. Moreover, as per Regulation 4(1) of the Import Manifest (Aircraft) Regulations, 1976, the cargo manifest is to be delivered in separate sheets in respect of the following categories of cargo--namely (i) cargo to be landed (ii) unaccompanied baggage (iii) goods to be transhipped (iv) same bottom or retention cargo. Under Regulation 4(2) ibid, notwithstanding anything contained sub Regulation (1) above the cargo declaration in respect of (i) arms (ii) ammunitions (iii) explosives (iv) narcotics (v) dangerous drugs (vi) gold or (vii) silver, irrespective of whether for landing, for transhipment or for being carried as same bottom cargo shall be furnished in separate sheets and shall be set out in the order of the ports of landing. If the aircraft does not carry any such cargo, a 'nil' declaration shall be furnished. (Vide text of the above Regulation, published at page 2.78 of R.K. Jain's Customs Law Manual 1991-93, 7th edition). Hence from the above it is clear that certain categories of cargo are required to be specifically brought to the notice of Customs by mentioning it separately in the manifest, irrespective of the place of landing. Gold is one such item. Going through the above list of items where special treatment has been extended, we find that the items are of such a nature that they should be kept under the watchful eye of Customs and other enforcement agencies (where called for), when the Aircraft is stationed in any Airport in India. Arms, ammunitions and explosives are put in the list of special category for obvious reasons. It is not as though only Indian Customs laws give them special treatment. Any peace loving country would like to keep a watchful eye on this cargo, even if it is not meant for landing in that country. Likewise, narcotics and dangerous drugs, which are to be accorded a special watch by Customs, would be universally applicable, even in regard to the laws of other countries. Lastly, gold and silver being valuable and highly vulnerable to clandestine transport and even otherwise, for prevention of any risk to their secure transport, are required to be manifested and are to be kept under the watchful eyes of the local law enforcement agencies. Viewed in this context, the requirement of manifesting such categories of cargo separately irrespective of their destination cannot be dismissed lightly. Hence, where the admitted position is that gold valued over 51 lakhs (1MV) total weighing more than 23 kgs have not been manifested and no prior permission for its bringing into India has been obtained such gold rightly attracts the provisions of Section 111(d) of the Customs Act.
9. With this position of law as emerging from our discussions, we looked into the facts of the present case. In the interest of Justice, any law to be applied has to be in the context of the facts of the case and cannot be divorced from that. In this case, we find that there are many mitigating factors in favour of the appellant to hold that the violation committed, though falling within the purview of Section 111(d) or lll(f) calls for maximum leniency. There is no dispute that the appellant, a gold smith by profession and running a jewellery shop in Penang, carried the jewellery manufactured at Penang to Dubai and after disposal of the jewellery to dealers in Dubai, procured the gold bars from the dealers in Dubai and was on his return journey to Penang. Had there been a direct flight, possibly, he would not have landed in the present flight. There is a stopover at Bombay and the appellant was sitting in the Aircraft. There is no evidence not even an intelligence to show that he was having contacts in India or was waiting for someone in Bombay to come to him at the Aircraft to pass over part or full quantity of gold brought by him. On questioning by the Customs officers at the Aircraft, he has declared his possession of gold and produced vouchers from Dubai dealers and revealed the entire position including his procuring a certificate for 23 kgs to pass through Dubai and Malaysian Customs and also his act of misdeclaration in the export declaration before Malaysian Customs for saving income tax. His statement to the effect that he told the Air-hostess about possession of gold also gets confirmed by her. However, her presumption that it might be relating to his personal jewellery seems to be her own. She could have found out the quantity, value and taken him to the Captain of the Aircraft. All the same, when the appellant could give a misdeclaration in the export form for saving income tax and obtain a certificate in his name for 23 kgs from Dubai dealer for passing through Dubai and Malaysian Customs, he cannot be permitted to plead that he is totally innocent of not manifesting the precious cargo carried by him as same bottom cargo. He ought to have either booked the consignment or precious cargo under a consignment note or gone to the Captain for getting it included in the manifest. All the same, we are fairly satisfied that having regard to the undisputed facts narrated above, the gold is meant for his business purposes at Penang for conversion into ornaments and not for landing at Bombay or to be passed on to someone in Bombay.
10. In the case dealt with by the Apex Court, the facts which were confirmed and concluded by the Apex Court, were that the accused was an experienced smuggler and he disowned the gold and gold was recovered from a personal search. This is evident from the words of Hon'ble Justice Subba Rao J--thus Though the facts established in the case stamp the respondent as an experienced smuggler of gold....
However, in the present appeal before us, we are fairly satisfied that the appellant being a goldsmith, having gone from Malaysia to Dubai with gold ornaments and was returning with gold bars for manufacturing them into ornaments at Penang and he was in transit in India, without getting out of the Aircraft. Though we find that his excuse for not manifesting the gold and his professed ignorance of the Indian Customs law, is not convincing, we are to hold the view that in the context of the undisputed factual position and in the absence of any evidence or even a positive intelligence against the appellant having any previous record, this omission could not be construed as a modus for smuggling gold into India, justifying absolute confiscation of gold and imposition of a heavy penalty.
11. With this position emerging, on our analysing the case laws and on appreciation of the factual position, we looked into the written note given by the learned SDR, under instructions from the Department. In this note, the plea made is extracted as below:
Ministry of External Affairs desires that in view of the excellent relations with Malaysia, the technical violation of law by Shri Wong Hong Khoon should not be allowed to develop into an international incident, which may impede our bilateral relations. It is submitted that release of the gold in question may be considered, otherwise permissible.
12. Having regard to the findings, which we have arrived at as above and keeping in view the above request from the Department itself, we feel that the gold confiscated absolutely should be allowed to be exported to the appellant at Penang. However, we are unable to give a finding of total innocence on the part of the appellant about the requirement of manifesting the gold, especially in the context of his own admission that he declared excess export value of jewellery before Malaysian Customs to save on income-tax and obtained a certificate for 23 kgs of gold in his own name from a Dubai dealer for passing through Dubai & Malaysian Customs. These admissions, viewed in the context of his omission to inform the person-in-charge of the Aircraft for manifesting the cargo in transit could not enable us t6 absolve him as innocent of Indian Customs law and hence calls for imposition of a token fine & penalty on the appellant.
13. Accordingly we order that the gold ordered confiscation be allowed to be re deemed on payment of fine of Rs. 10,000/- (Rupees ten thousand only) with a condition that the said gold on redemption, should be exported out of the country, within two months of date of receipt of this order. The penalty imposed on the appellant is reduced to Rs, 5,000/- (Rupees five thousand only).
14. Before parting with this case, it would be necessary to keep on record certain observations of ours, for ensuring continuance of excellent relations with friendly countries. Items like arms, ammunitions, explosives, narcotics, danger ous drugs, in some countries valuables like gold & silver) fall in the special category of goods, which the customs would like to keep a watchful eye on their transit through that country. That is why, special provisions are made not only in the Indian Customs Act but also in the laws of other countries providing precautions for such goods in transit or for transhipment. Under Sections 53 & 54 c the Customs Act, even permission for transit or transhipment of goods mam fested, without payment of duty, is subject to the prohibitions contained in Section 11 of the Customs Act. Hence, even transit of certain categories of carred can be refused under the notification issued under Section 11. We, therefore, and hope that the friendly countries would appreciate this position and ensure that their citizens comply with requirements of Customs law of the country for transiting or transhipping such goods through the friendly countries.