Rajasthan High Court - Jaipur
Commissioner Of Customs (Preventive) vs Mehboob S/O Late Sh. Jhandu @ Yusuf on 22 February, 2022
Bench: Akil Kureshi, Sudesh Bansal
HIGH COURT OF JUDICATURE FOR RAJASTHAN
BENCH AT JAIPUR
D.B. Civil Writ Petition No. 5640/2019
Commissioner Of Customs (Preventive), Jodhpur, Head Quarters
At New Central Revenue Building, Statue Circle, C-Scheme,
Jaipur 302005 In The State Of Rajasthan
----Petitioner
Versus
Mehboob S/o Late Sh. Jhandu @ Yusuf, R/o House No.61 (Old
No.199), Mohalla Khailkala Khara Kuan, Post Kairana, Muzaffar
Nagar In The State Of Uttar Pradesh
----Respondent
For Petitioner(s) : Mr. Siddharth Ranka with Mr. Muzaffar Iqbal and Ms. Tarandeep Kaur For Respondent(s) : Ms. Anubha Singh through VC HON'BLE THE CHIEF JUSTICE MR. AKIL KURESHI HON'BLE MR. JUSTICE SUDESH BANSAL Judgment 22/02/2022 This petition is filed by the Union of India to challenge an order dated 05.12.2018 passed by the revisional authority by which the said authority offered redemption fine of Rs.6,00,000/- to the respondent in lieu of the confiscation of the seized gold. He also reduced the personal penalties. This order was challenged on the limited ground that the gold which was being smuggled was a prohibited item and therefore redemption fine was not available.
We notice that the adjudicating authority had provided for absolute confiscation of the seized gold on the ground that in terms of Section 125 of the Customs Act, 1962 ('Act' for short), the same was prohibited goods. The revisional authority however (Downloaded on 28/02/2022 at 08:51:23 PM) (2 of 6) [CW-5640/2019] held otherwise and offered redemption fine upon which this petition has been filed.
Learned counsel for the petitioner submitted that there was a systematic attempt at smuggling gold. Absolute confiscation of the seized gold therefore was well within the power of the adjudicating authority in terms of Section 125 of the Act. The revisional authority has committed an error in offering redemption fine.
Section 125 of the Act pertains to option to pay fine in lieu of confiscation and reads as under:-
"125. Option to pay fine in lieu of confiscation.--
(1) Whenever confiscation of any goods is authorised by this Act, the officer adjudging it may, in the case of any goods, the importation or exportation whereof is prohibited under this Act or under any other law for the time being in force, and shall, in the case of any other goods, give to the owner of the goods 4 [or, where such owner is not known, the person from whose possession or custody such goods have been seized,] an option to pay in lieu of confiscation such fine as the said officer thinks fit:
[Provided that where the proceedings are deemed to be concluded under the proviso to sub-section (2) of section 28 or under clause (i) of sub-section (6) of that section in respect of the goods which are not prohibited or restricted (no such fine shall be imposed) PROVIDED FURTHER that without prejudice to the provisions of the proviso to sub-section (2) of section 115, such fine shall not exceed the market price of the goods confiscated, less in the case of imported goods the duty chargeable thereon.
(2) Where any fine in lieu of confiscation of goods is imposed under sub-section (1), the owner of such goods or the person referred to in sub-section (1), shall, in addition, be liable to any duty and charges payable in respect of such goods.] (3) Where the fine imposed under sub-section (1) is not paid within a period of one hundred and twenty days from the date of option given thereunder, such option shall become void, unless an appeal against such order is pending.(Downloaded on 28/02/2022 at 08:51:23 PM)
(3 of 6) [CW-5640/2019] Explanation.--For removal of doubts, it is hereby declared that in cases where an order under sub-
section (1) has been passed before the date on which the Finance Bill, 2018 receives the assent of the President and no appeal is pending against such order as on that date, the option under said sub-section may be exercised within a period of one hundred and twenty days from the date on which such assent is received.] Sub-section (1) of Section 125 thus provides that whenever confiscation of any goods is authorized by the Act, the officer adjudging it, the importation or exportation of goods which is prohibited may and shall in other cases offer an option to pay fine in lieu of confiscation. It is in this context that the counsel for the department has argued that the case falls under the first part of sub-section (1) of Section 125.
In a recent judgment dated 17.02.2022 Division Bench of this Court has considered a very similar issue. It was a case in which the assessee had attempted to smuggle gold by concealing it in his handbag and not declaring the same upon arrival at the international airport. The authorities had provided absolute confiscation of gold and also imposed penalties. In the context of interpretation of Section 125 of the Customs Act, this Court held as under:-
"15.The second area of concern is applicability of Section 125 of the Act. Sub-section (1) of Section 125 provides that whenever confiscation of any goods is authorised by the Act the officer adjudging it may in the case of any goods, the importation or exportation whereof is prohibited under the Act or under any other law for the time being in force and shall in case of any other goods give to the owner of the goods or where such owner is not known the person from whose possession or custody such goods have been seized, an option to pay in lieu of confiscation such fine as the said officer thinks fit. This provision thus comes in two parts. The first part covers the cases where importation or exportation of the goods is prohibited under the Act. In such a case discretion is given to the competent (Downloaded on 28/02/2022 at 08:51:23 PM) (4 of 6) [CW-5640/2019] authority to offer redemption fine in lieu of confiscation. The second part covers a case where importation or exportation of the goods is not prohibited. In such a case there is a mandate to offer redemption fine in lieu of confiscation as the officer thinks fit. In the present case all three authorities have provided for absolute confiscation of the goods without any facility of payment of redemption fine. This in our view was not correct. This is exactly what the Andhra Pradesh High Court has held in case of Shaik Jamal Basha Vs. Government of India reported in 1997 (91) ELT 277 (AP). The Division Bench of the High Court in the context of Section 125 of the Customs Act had held as under:-
"3. But, all the same, we find the petitioner is entitled to a different relief. The order of confiscation is made under Section 111 of the Customs Act, 1962 on account of concealment.
Section 125 requires that whenever confiscation of any goods is authorised by the Act, the officer adjudging it may, in the case of any goods, the importation or exportation whereof is prohibited under the Act or under any other law for the time being in force, and shall in the case of any other goods, give to the owner of the goods an option to pay in lieu of confiscation such fine as the said officer thinks fit. Rule 9 of the Baggage Rules, 1978 framed under Section 79(2) of the Customs, Act, 1962 lists Gold in any form other than ornaments in Appendix B of the Rules as articles which shall not be imported free of duty. Hence gold in the form other than ornaments is entitled to be imported on payment of duty. Attempt to import gold unauthorisedly will thus come under the second part of Section 125(1) of the Act where the adjudging officer is under mandatory duty to give option to the person found guilty to pay (fine) in lieu of confiscation. Section 125 of the Act leaves option to the officer to grant the benefit or not so far as goods whose import is prohibited but no such option is available in respect of goods which can be imported, but because of the method of importation adopted, become liable for confiscation........."
16. This view may seem incongruent with the view expressed by Gujarat High Court in case of Bhargavraj Rameshkumar Mehta (supra) which we have also followed in this judgment but flavours of Section 112 and 125 of the Customs Act are entirely different. Section 112 of the Act pertains to penalty for improper importation of goods. Section 125 on the other hand (Downloaded on 28/02/2022 at 08:51:23 PM) (5 of 6) [CW-5640/2019] pertains to option to pay fine in lieu of confiscation. As noted sub-section (1) of Section 125 comes in two parts. Whenever confiscation of goods is authorized under the Act, as per sub-section (1) of Section 125 the adjudicating officer has a discretion to offer redemption fine in lieu of confiscation in case of goods importation or exportation whereof is prohibited. In all other cases there is a statutory mandate on the adjudicating officer to offer such redemption fine. If the interpretation of Section 112 and 125(1) is not reconciled as above, this latter portion of sub-section (1) of Section 125 which covers all cases except where the importation or exportation of the goods is prohibited, would become otiose.
17. Learned counsel for the respondents however heavily relied on the decision of Supreme Court in case of Om Prakash Bhatia Vs. Commissioner of Customs, Delhi reported in AIR 2003 SC 3581. Our attention was drawn to paragraph 9 and 10 of the judgment. However in our view this decision does not hold anything contrary to what we have observed in connection with Section 125 of the Customs Act. In fact it was a case in which the Supreme Court had confirmed the view of the customs authority of offering redemption fine in lieu of confiscation.
18. In the result petitions is disposed of with following directions:-
(i) The fine of Rs.40 lacs under Section 112 of the Customs Act imposed by revisional authority is reduced to Rs.30 lacs.
(ii) The issue of fixing the redemption fine in lieu of confiscation requires to be decided. To avoid further delay let this issue be decided by the revisional authority. The proceedings are placed back before the said authority for the limited purpose of deciding the redemption fine that the petitioner may pay if he wishes to avoid absolute confiscation of the seized gold. Fresh order shall be passed preferably within four months from today.
19. All pending applications also stand disposed of." Our attention was drawn to the judgment of the Madras High Court in the case of Commissioner of Customs Vs. Samynathan Murugesan 2009(247) ELT 21 (Madras) in which view taken was slightly different. It is pointed out that the (Downloaded on 28/02/2022 at 08:51:23 PM) (6 of 6) [CW-5640/2019] said decision was also upheld by the Supreme Court when the SLP was dismissed. In the said case, the reference was made to the decision in the case of Om Prakash Bhatia Vs. Commissioner of Customs, Delhi reported in AIR 2003 SC 3581 in which itself as observed in our earlier judgment, the redemption fine was offered and upheld by the Supreme Court.
In the result the petition is dismissed.
(SUDESH BANSAL),J (AKIL KURESHI),CJ
N.Gandhi/37
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