Customs, Excise and Gold Tribunal - Delhi
Molok Boloky vs Commissioner Of Customs on 19 August, 2004
Equivalent citations: 2005(101)ECC464, 2005(192)ELT294(TRI-DEL)
ORDER V.K. Agrawal, Member (T)
1. Mrs. Molok Boloky has filed this Appeal against confiscation of diamonds seized from her possession and imposition of penalty.
2. Shri C. Hari Shankar, Ld. Advocate, mentioned that the Appellants was off-loaded from an Iranian Airway flight on 13.10.2002 and the diamonds were found in a pickle jar in the checked in baggage of the Appellants; that the Commissioner, in the impugned Order, has relied on Paras 2.2, 2.31 and 4.4.15 of the EXIM Policy 2002-2007 and on Para 4.81 of the Handbook of Procedure; that the Commissioner has also mentioned about contravention by the Appellants of the Export Baggage Rules, 1978 which the Appellant has not been able to trace; that a specific submission to this effect was made before the Commissioner, with a request to make available the said Rules; that the Commissioner has confirmed the violation of the said Export Baggage Rules, 1978 without disclosing them to the Appellant. He, further, mentioned that the Commissioner has held as under:
(i) Para 4.4.15 of the EXIM Policy permits carriage of gems/jewellery by foreign bound passengers as per the conditions in Handbook of Procedure, Para 4.81 of the said Handbook permits such carriage only from EOU/SEZ units or firms in the Domestic Tariff Area, Individuals are not entitled to the benefit of this facility.
(ii) Para 2.31 of the EXIM Policy & Clause 3(2)(c) of the Foreign Trade (Exemption From Application of Rules in certain cases) Order, 1933 relaxed these requirements in the case of bona fide personal baggage of foreign going passengers. The impugned diamond are not bona fide personal baggage.
(iii) Para 2.12 of the EXIM Policy prohibits import/export without any IEC number unless specifically exempted. The Appellant, being not Indian, cannot claim exemption from the requirement of obtaining an IEC number on the basis of Para 2.2 of the Handbook of Procedures.
(iv) The plea that diamonds are not prohibited or dutiable goods is not acceptable as Section 111(d) of the Customs Act includes any restriction on import/export of the goods.
(v) The grant of payment of fine in lieu of confiscation under Section 125 of the Customs Act is discretionary and present case is not a fit case for granting redemption.
3. The learned Advocate submitted that the confiscation of the seized diamonds is ab initio illegal; that the Supreme Court in CC v. Prayag Exporters Pvt. Ltd., has upheld the view of the Tribunal in Prayag Exporters Pvt. Ltd. v. CC, Mumbai, 2000 (121) ELT 819 (Tri) that Clause (d) of Section 113 of the Customs Act does not apply in the case of overvaluation of the goods tendered for export. The Supreme Court has held that "admittedly, goods in question are not prohibited for export and no export duty is leviable on the said goods." He contended that the same reasoning applies in the case of the Appellant as neither diamonds are dutiable nor prohibited for export and accordingly they could not be confiscated under Section 113 (d) of the Customs Act. He also referred to the decision in the case of Anita International v. CC, 1993 (65) ELT 201 (Cal). He also contended that the decision of the Supreme Court in the case of Om Prakash Bhatia v. CC, Delhi, ) is not applicable to the facts of the present matter since in the said decision, provisions of Section 18 of the Foreign Exchange Regulation Act were considered as imposing prohibitions which is not invoked in the present case; that in the present matter only prohibition invoked is IEC Code having not been obtained by the Appellants; that it has been held in the following cases that non-possession of an IEC number does not render the import/export illegal and that confiscation on this ground is not justified (1) Laser Sight (India) P. Ltd. v. CCE, 1999 (110) ELT 935 (2) CC v. Shipping & Trading Association P. Ltd., 2001 (128) ELT 250 (3) Dr. Mahesh Kedia v. CC, 2002 (141) ELT 736
4. He also contended that if the Commissioner's finding that every restriction is a prohibition is accepted, the second part of Section 125 of the Customs Act, which provides an option to redeem the goods other than prohibited goods, would be rendered otiose and ineffective; since there would be no "other goods" as all goods which are confiscated would be ex-facie prohibited for violation of some or the other condition/restriction; that such a wide meaning cannot, therefore, be assigned to the word 'prohibited' either in Section 125 or Section 113 of the Customs Act. Finally, the learned Advocate submitted that even if the diamonds are liable to confiscation, they could not be confiscated absolutely, in view of Section 125 of the Customs Act; that it has been held in a catena of judgments, that the goods which were imported/exported by misdeclaration, etc. but which are not prohibited for import/export, could not be absolutely confiscated and that ground of redemption fine is mandatory - CC v. Uma Shankar Verma, 2000 (120) ELT 322 (Cal) and Hargovind Das K. Joshi, ; that the Commissioner has not addressed himself sufficiently to the issue of grant of redemption fine as he merely holds that the issue is discretionary and in the present matter he is not inclined to exercise such discretion in favour of the Appellant; that there is no further discussion or reasoning given by the Commissioner; that further penalty imposed is on very high side and is excessive.
5. Countering the arguments, Shri O.P. Arora, learned Senior Departmental Representative, submitted that the Appellant was off-loaded from Iran Airways flight No. IR-810 on 18-10-2002 on the basis of a specific information; that 7 bundles were found inside the five kgs mango pickle container said to have been given to her by a person near the entrance of departure at Airport; that these 7 boundles contained 4175.42 carats of diamonds valued Rs. more than 1.98 crores; that in her statement, Molok Boloky deposed that she met a person in Bhendi bazaar area on one day prior to her departure near Anjuman where she stayed; that enquiries revealed that she had not stayed there; that she had subsequently claimed the ownership of the impugned diamonds; that she had not revealed the source for acquiring/purchasing the diamonds; that the nature of the goods is such that it cannot be claimed to be bona fide baggage of a passenger and the provisions of Sections 50 and 51 are attracted which require presentation of a shipping bill by the exporter and clearance of goods for exportation by the Customs; that the exporter has to comply with the provisions of the Foreign Trade (Development & Regulations) Act and the provisions of the Customs Act; that no import or export shall be made without an Importer-Exporter Code number as per EXIM Policy; that thus IEC number is a mandatory requirement; that the exporter of the goods is prohibited without IEC number and in view of the judgment of the Supreme Court in Om Prakash Bhatia, supra; that it has been held by the Supreme Court in Om Prakash Bhatia's case that "if there is any prohibition of import or export of goods under the Act or any other law for the time being in force, it would be considered to be prohibited goods.... This would mean that if the conditions prescribed for import or export of goods are not complied with it would be considered to be prohibited goods." The learned Senior Departmental Representative further submitted that as no procedure for, export of diamonds in question has been complied with, the export of goods is prohibited. Reliance has been placed on the decision in the case of S.G. Rajadhyakshya v. Leela Daulatram Uttam Chandani, 1991 (51) ELT 3 (Bom). Finally the learned Senior Departmental Representative mentioned that a retracted statement could be relied upon as held by the Supreme Court in the case of Surjeet Singh Chhabra v. Union of India, . Reliance has also been placed on the decision in Anil Das v. CC, New Delhi, 2002 (141) ELT 135 (Tri).
6. We have considered the submissions of both the sides. The facts which are not in dispute are that while going out of the country, diamond weighing 4175.42 carats were found concealed in mango pickle container. We agree with the learned Senior Departmental Representative that such a quantity of diamonds worth more than Rs. 1.61 crores cannot be regarded as a bona fide baggage being taken out of the country. We also observe that even as baggage, no declaration had been made as required under the provisions of Section 77 of the Customs Act. In case of Export of goods from India, the provisions contained in the Customs Act and other Acts such as Foreign Trade (Development and Regulation) Act, provision, of Export-Import Policy, etc. are required to be observed and complied with. Section 7 under the Foreign Trade Act provides in very specific terms that "No person shall make any import or export except under an Importer Exporter Code Number granted by the Director General or the officer authorized by the Director General or the officer authorized by the Director General in this behalf, in accordance with the procedure specified in this behalf by the Director General." No Importer-exporter Code Number has been procured by the Appellant from the said Director General or authorized officer nor any material has been brought on record to show that she was not required to get such a code number. There is no substance in the submissions of the learned Advocate that in the case of baggage permanent IEC number is used as the said provision neither applies to the Appellant, she being having an Iranian Passport is not an Indian and the diamonds in question are not bona fide baggage. Further, in case of export of goods, Section 50 of the Customs Act requires the exporter to file a Shipping bill which should, contain a declaration as to the truth of its content and the goods can be exported only after the proper officer makes an order permitting clearance and loading of the goods for exportation under Section 51 of the Act. None of these provisions have also been complied with. Section 113(d) of the Customs Act provides for confiscation of any goods attempted to be exported or brought within the limit of any Customs area for the purpose of being exported, contrary to any prohibition imposed by or under this Act or any other law for the time being in force. Further Section 113(e) provides for confiscation of any dutiable or prohibited goods found concealed in a package which is brought within the limit of a Customs area for the purpose of exportation.
In this matter, the diamonds in question were concealed in a container containing pickles and were brought within the limits of customs area for the' purpose of being exported. The learned Advocate has relied upon the decision of Tribunal and the Supreme Court in the case of Prayag Exporters Pvt. Ltd., supra, in support of his contention that non-mentioning of IEC Number does not mean that the export of the goods was prohibited and accordingly provisions of Section 113(d) would not be applicable. Interpretation of the term "prohibited goods" came up for consideration of the Apex Court recently in the case of Om Prakash Bhatia v. CC, Delhi, . The Supreme Court observed that Section 113 (d) of the Act "empowers the Authority to confiscate any goods attempted to be exported contrary to any 'prohibition' imposed by or under the Act or any other law for the time being in force." The Court has then referred to the definition of the "prohibited goods" as given in Section 2(23) of the Customs Act which reads as under:
"prohibited goods" means any goods the import or export of which is subject to any prohibition under this Act or any other law for the time being in force but does ' not include any such goods in respect of which the conditions subject to which the goods are permitted to be imported; or exported have been complied with".
7. The Supreme Court has held as under:
"From the aforesaid definition, it can be stated that (a) if there is any prohibition of import or export of goods under the Act or any other law for the time being in force, it would be considered to be prohibited goods; and (b) this would not include any such goods in respect of which the conditions subject to which the goods are imported or exported, have been complied with. This would mean that if the conditions prescribed for import or export of goods are not complied with, it would be considered to be prohibited goods. This would also be clear from Section 11 which empowers the Central Government to prohibit either 'absolutely' or 'subject to such conditions' to be fulfilled before or after clearance, as may be specified in the notification, the import or export of the goods of any specified description. The notification can be issued for the purposes specified in Sub-section (2). Hence, prohibition of importation or exportation could be subject to certain prescribed conditions to be fulfilled before or after clearance of goods. If conditions are not fulfilled, it may amount to prohibited goods."
8. In view of the judgment of the Supreme Court as the conditions prescribed for export of goods have not been complied with diamonds in question are prohibited goods and accordingly provisions of Sub-sections (d) & (e) of Section 113 of the Customs Act are attracted. The fact that in Bhatia's case Section 18 of the FERA was considered does not mean that the ratio of the judgment is not applicable to the facts of the present matter. The decision relied upon by the learned Advocate in support of his contention that non-possession of an IEC Number does not render the import illegal are not applicable to the facts of the present matter. For example in Laser Sight case, the goods were imported legally and all formalities were carried out by the importer except getting IEC Number whereas in the present matter the diamonds had been attempted to be exported without complying with any of the conditions specified in the statutes. In Shipping And Trading Associates case the licence and permission was obtained subsequently to the import of goods. In Mahesh Kedia (Dr.) case the Appellant had contended that in view of Public Notice No. 17/CRE-2000 dated 3.6.2000, he was not required to obtain any separate IEC number as he fell under the category of "persons/institutions/hospitals importing or exporting goods for their personal use not connected with trade, manufacture or agriculture" and the Tribunal found that there was no dispute about the fact that the goods were not meant for trading, manufacturing or agricultural purposes, but was imported by the Appellant who is a doctor, to enhance the performance of Endoscope for the treatment of his patients. Thus the facts in all the relied upon cases are different and also were decided before the judgment of the Supreme Court in Om Prakash Bhatia's case. We, therefore, hold that the diamonds in question have been rightly confiscated by the Adjudicating Authority.
9. We also do not agree with the submissions of the learned Advocate that if every restriction is considered to be prohibition, the second part of Section 125 of the Customs Act would be rendered Otiose and ineffective. Section 125 of the Act provides that 'Whenever confiscation of any goods is authorized, the officer Adjudicating it may, (i) in the case of any prohibited goods and shall (ii) in the case of any other goods, give to the owner an option to pay in lieu of confiscation fine. There are "other goods" of which confiscation is provided under the various provisions of the Customs Act without their being prohibited goods. For instance Section 113(j), 113(k), 113(1) & Section 119, the goods are liable for confiscation irrespective of the facts whether these goods are prohibited or not. As the goods involved in the present matter are prohibited, these can be confiscated absolutely without giving an option to the Appellant to pay fine in lieu of confiscation. Taking into consideration all the facts and circumstances of the matter, we do not find any reason to interfere with the impugned Order regarding absolute confiscation of the diamonds in question. We, however, agree with the learned Advocate that the penalty imposed on the Appellant is on higher side which we reduce to Rs. Five Lakhs. But for this modification, Appeal is rejected.