Allahabad High Court
Commissioner Of Customs Aliganj Lko. vs Sri Rajesh Jhamatmal Bhat And Anr. on 6 July, 2022
Author: Devendra Kumar Upadhyaya
Bench: Devendra Kumar Upadhyaya
HIGH COURT OF JUDICATURE AT ALLAHABAD, LUCKNOW BENCH RESERVED IN THE HIGH COURT OF JUDICATURE AT ALLAHABAD SITTING AT LUCKNOW Case :- CUSTOM APPEAL No. - 7 of 2019 Appellant :- Commissioner Of Customs Aliganj Lko. Respondent :- Sri Rajesh Jhamatmal Bhat And Anr. Counsel for Appellant :- Dipak Seth Counsel for Respondent :- Ankit Singh,Hemant A. Tambat,Yogesh Kumar S. Gorle Hon'ble Devendra Kumar Upadhyaya J.
Hon'ble Subhash Vidyarthi J.
(Per Subhash Vidyarthi J.)
1. Heard Sri. Dipak Seth, Advocate, the learned counsel for the appellant-Commissioner of Customs, Aliganj, Lucknow and Sri. Yogesh Kumar S. Gorle, Advocate, the learned counsel appearing for the respondents and perused the records.
2. The instant appeal under Section 130 of the Customs Act, 1962 (which will hereinafter be referred to as ''the Act') has been filed against the judgment and order dated 13.02.2019, passed by the Customs, Excise and Service Tax Appellate Tribunal, Allahabad dismissing Customs Appeal Nos. C/71388-71389 of 2018, which were filed by the appellant - Commissioner of Customs against the order dated 27.08.2018, passed by the Commissioner (Appeals), Customs, GST and Central Excise, Lucknow, whereby the respondents were given an option to redeem the confiscated gold on payment of redemption fine.
3. Briefly stated, the facts of the case are that on 11.12.2014 the Government Railway Police (G.R.P.) Mughalsarai had called and informed the officers of the Directorate of Revenue Intelligence (DRI) Varanasi that the respondents had been intercepted by the G.R.P. and during search gold bars were recovered from the specially designed cavities made in the shoes of the respondents. The gold bars were found to be weighing 4,076 grams and valued at Rs.1,09,98,018/- only. On 30.12.2015 the Additional Commissioner, Customs (P.) Commissionerate, Lucknow, had passed an order for absolute confiscation of the seized gold bars and some foreign currencies recovered from the respondents. Further a penalty of Rs.10,00,000/- was imposed on each of the respondents.
4. The respondents filed an appeal against the aforesaid order and the Commissioner (Appeals) partly allowed the appeal by means of his order dated 27.08.2018. The Commissioner held that the gold is not a prohibited item as its import was not prohibited under the foreign trade policy or in any other law for the time being in force. The only offence made out in respect of the Gold bars is its non-declaration in the disembarkation slip in contravention of Section 77 of the Act rendering the same liable to confiscation under Section 111 (1) of the Act. The Commissioner (Appeals) held that there is no sufficient ground for absolute confiscation of the gold and he gave the respondents an option to redeem the confiscated gold on payment of redemption fine of Rs.25,00,000/- and he further held that the respondents shall be liable to pay the applicable duty and charges in respect of the confiscated gold.
5. The Commissioner of Customs filed Customs Appeal Nos. C/71388-71389 of 2018 before the Customs, Excise and Service Tax Appellate Tribunal, Allahabad against the aforesaid order dated 27.08.2018 passed by the Commissioner (Appeals).
6. The Customs, Excise and Service Tax Appellate Tribunal, Allahabad, dismissed the Appeals by means of an order dated 13.02.2019 holding that from the entire proceedings, it could not be found out as to how the customs authorities posted at Gaya International Airport could not detect such a huge quantity of gold being removed from the Airport by the respondents on their arrival and the respondents did not give any explanation as to how they removed the gold on arrival from Bangkok and as to how they procured the gold before they were intercepted at Mughalsarai Railway Station. The Tribunal dismissed the appeal filed by the Revenue.
7. By the same order dated 13.02.2019, the Tribunal partly allowed the appeal filed by the respondents and reduced the redemption fine from Rs.25,00,000/- to Rs.15,00,000/- and the penalty was reduced from Rs.10,00,000/- to Rs.5,00,000/- each.
8. The appellants have challenged the order dated 13.02.2019, passed by the Customs, Excise and Service Tax Appellate Tribunal, Allahabad only in so far as it relates to the decision of Customs Appeal Nos. C/71388 and 71389 of 2018, which were filed by the appellants. The appellant has not challenged the order dated 13.02.2019, passed by the Tribunal in so far as it decides the Appeal Nos.71403 and 71405 of 2018 which were filed by the respondents and which were partly allowed and the amount of penalty and fine was reduced.
9. On 24.09.2019, this Court had admitted the appeal on the following substantial questions of law:
"A. Whether the Customs Excise & Service Tax Appellate Tribunal, Allahabad is correct in upholding the order dated 27.08.2018 passed by the Commissioner (Appeals) without addressing itself in its final order the findings recorded by the Adjudicating Authority relating to absolute confiscation of smuggled gold and foreign currency?
B. Whether the Customs Excise & Service Tax Appellate Tribunal, Allahabad is correct in allowing to release the smuggled gold on redemption of fine and also by reducing the redemption fine?"
10. However, during submissions made in support of the appeal, Sri. Dipak Seth, the learned counsel for the appellant has abandoned the second substantial question of law and he confined his submissions to the first substantial question of law framed by this Court.
11. Before proceeding to analyze the submissions made on behalf of the contesting parties, it would be appropriate to go through Section 125 of the Act, which reads as follows:
"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 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 (1) of sub-section (6) of that section in respect of the goods which are not prohibited or restricted, the provisions of this section shall not apply:
PROVIDED FURTHER that, without prejudice to the provisions of sub-section (2) of section 115, such fine shall not exceed the market price of the good 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-sect (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 f 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.
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 B 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."
12. Sri. Seth has placed reliance on a judgment of Bombay High Court in the case of Commissioner of Customs Airport, Mumbai Vs. Alfred Menezes; 2009 (242) E.L.T. 334 (Bom.), wherein the Bombay High Court has held that: -
"3. It is, therefore, clear that Section 125(1) deals with two situations (1) the importation and exportation of prohibited goods and (2) the importation and exportation of any other goods.
4. Insofar as importation or exportation of prohibited goods, the expression used is that where the goods were confiscated, the officer "may". In the case of any other goods, which are confiscated, the officer "shall".
5. It is, therefore, clear that insofar as the prohibited goods are concerned, there is discretion in the officer to release the confiscated goods in terms as set out therein. Insofar as other goods are concerned, the officer is bound to release the goods. In the instant case, we are concerned with prohibited goods. The officer has exercised his discretion. The Tribunal [2009 (236) E.L.T. 587 (Tri. - Mum.)] has upheld the order of the adjudicating officer."
13. Sri. Seth has also submitted that in the case of Commissioner of Customs Airport, Mumbai Vs. Alfred Menezes (supra) the discretion was exercised by the adjudicating officer and it was confirmed by the appellate authority and, therefore, the High Court had refused to interfere in the matter, whereas in the instant case the adjudicating authority has refused to release the goods and the Commissioner has reversed the order of the adjudicating authority whereby he had exercised his discretion.
14. Sri. Seth has submitted that although the expression "officer adjudging" has not been defined in the Act, it refers to the "adjudicating authority", which is defined in Section 2 (1) of the Act as follows: -
"adjudicating authority" means any authority competent to pass any order or decision under this Act, but does not include the Board, Commissioner (Appeals) or Appellate Tribunal."
15. Sri. Seth has submitted that since the Commissioner (Appeals) stands excluded from the definition of the adjudicating authority, he could not exercise any discretion to give an option to pay fine in lieu of confiscation and such discretion could only have been exercised by the officer adjudging.
16. Per contra, Sri. Yogesh Kumar S. Gorle, learned counsel appearing for the respondents has submitted that Section 128-A (3) of the Act provides as follows:
"128A Procedure in appeal.
(1) The Commissioner (Appeals) shall give an opportunity to the appellant to be heard if he so desires.
(2) The Commissioner (Appeals) may, at the hearing of an appeal, allow the appellant to go into any ground of appeal not specified in the grounds of appeal, if the 286 Commissioner (Appeals) is satisfied that the omission of that ground from the grounds of appeal was not wilful or unreasonable.
(3) The Commissioner (Appeals) shall, after making such further inquiry as may be necessary, pass such order, as he thinks just and proper
(a) confirming, modifying or annulling the decision or order appealed against or
(b) referring the matter back to the adjudicating authority with directions for fresh adjudication or decision, as the case may be, in the following cases, namely:-
(i) where an order or decision has been passed without following the principles of natural justice; or
(ii) where no order or decision has been passed after re-assessment under Section 17; or
(iii) where an order or refund under Section 27 has been issued by crediting the amount to Fund without recording any finding on the evidence produced by the applicant.
17. The learned counsel appearing on behalf of the respondents submits that the Commissioner (Appeals) is empowered to confirm, modify or annul the decision or order appealed against and as he has modified the order passed by the adjudicating officer in exercise of its powers under Section 128 (A) (3) (a) of the Act, therefore, the Commissioner (Appeals) has acted within his powers in modifying the order of absolute confiscation by converting it to an order giving an option to the respondents to pay fine in lieu thereof. He has further submitted that the object of the Act is not to confiscate the goods but to recover the custom duty.
18. In rebuttal Sri. Dipak Seth has submitted that Section 128-A of the Act contains a general provision, whereas Section 2 (1) of the Act contains a special provision and it is settled law that the special provision will override the general provision and, therefore, the provision of Section 128-A of the Act will not empower the Commissioner (Appeals) to exercise his discretion as vested in the adjudicating officer by Section 125 of the Act.
19. Having given our thoughtful consideration to the rival submission made on behalf of the parties, we find that although as per the provisions contained in Section 2 (1) of the Act, the Commissioner (Appeals) or the Appellate Tribunal are not included within the definition of the term "adjudicating authority" and, therefore, they cannot exercise the powers vested in the "officer adjudging" but the power conferred by Section 128-A (3) (a) of the Act to "modify" the decision or order appealed against, is not at all curtailed by Section 2 (1) of the Act and thus, in our considered opinion, the Commissioner (Appeals) has not exceeded his jurisdiction while modifying the order passed by the "adjudicating authority". The submission of Sri. Seth that Section 2 (1) if the Act is a special provision and Section 128 A is a general provision, is fallacious is this case for the reason that provisions of the entire Act have to be taken into consideration in their entirety to decipher the exact scheme of the Act as contemplated by the Legislature.
20. Moreover, we find that in the order dated 27.08.2018, the Commissioner (Appeals) has held that the import of gold was not prohibited under the Foreign Trade Policy or any other law for the time being in force and, therefore, there is no sufficient ground for absolute confiscation of the gold. This finding has not been reversed by the Tribunal as the Tribunal has affirmed the order passed by Commissioner (Appeals). Nothing has been placed before this Court to establish that this finding of the Commissioner (Appeals) is wrong or erroneous and that gold falls within the category of ''prohibited goods'. Therefore, we proceed to decide the appeal on the factual premise that Gold does not fall within the category of ''prohibited goods'.
21. Section 125 of the Act deals with confiscation of two separate categories of goods. It provides that in the case of goods, the importation or exportation whereof his prohibited under the Act or under any other law for the time being in force, the Officer adjudicating may give an option to pay in lieu of confiscation such fine as the said officer thinks fit. However, in case of any other goods, the officer adjudicating shall give an option to pay in lieu of confiscation such fine as the said officer thinks fit. The Commissioner (Appeals) has held that the gold is not a prohibited item, it should be offered for redemption in terms of Section 125 of the Act and this finding has not been assailed by the Appellants in this Appeal.
22. In view of the aforesaid discussion, our answer to the first substantial question of law framed in this Appeal is that the Additional Commissioner, Customs (P.) Commissionerate, Lucknow had passed the order of confiscation of Gold without taking into consideration the fact that Gold is not a prohibited item and, therefore, it should be offered for redemption in terms of Section 125 of the Act and thus the Customs Excise & Service Tax Appellate Tribunal, Allahabad has not committed any error in upholding the order dated 27.08.2018 passed by the Commissioner (Appeals) holding that Gold is not a prohibited item and, therefore, it should be offered for redemption in terms of Section 125 of the Act.
23. Certain other submissions have also been advanced by the learned Counsel for the parties, but those do not relate to the substantial questions of law on which the Appeal had been admitted and, therefore, the same need not be adjudicated by this Court.
24. This appeal lacks merit and is accordingly dismissed.
25. However, there will be no order as to costs.
Order Date :- 6.7.2022 Ram.
Judgment pronounced in open Court by me under Sub Rule (2) of Rule 1 of Chapter VII of Allahabad High Court Rules, 1952.
(Devendra Kumar Upadhyaya, J.) 6.7.2022