Custom, Excise & Service Tax Tribunal
Muhammed Nisham vs Cc Airport Ch - I on 11 October, 2023
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
CHENNAI
REGIONAL BENCH - COURT NO. III
Customs Appeal No. 42292 of 2018
(Arising out of Order-in-Original No. 364/2015 dated 30.11.2015 passed by Principal Commissioner of
Customs I, New Customs House, Meenambakkam, Chennai - 600 027)
Mr. Muhammed Nisham ...Appellant
Baithul Eaman Madappedika Post,
Temple Gate Thalasserry,
Kannur - 670 102.
Versus
Principle Commissioner of Customs ...Respondent
Chennai I Commissionerate, New Custom House, Mennambakkam, Chennai - 600 027.
APPEARANCE:
For the Appellant : Shri Aswin Gopakumar, Advocate For the Respondent : Shri Harendra Singh Pal, Assistant Commissioner / A.R. CORAM:
HON'BLE MS. SULEKHA BEEVI C.S., MEMBER (JUDICIAL) HON'BLE MR. VASA SESHAGIRI RAO, MEMBER (TECHNICAL) DATE OF HEARING : 04.09.2023 DATE OF DECISION : 11.10.2023 FINAL ORDER No. 40899 / 2023 Order : [Per Mr. VASA SESHAGIRI RAO] By this Customs Appeal No. 42292 of 2018 Shri Muhammed Nisham, the appellant herein, has challenged the Order-in-Original passed by the Principal Commissioner of Customs, Chennai I, which has ordered absolute confiscation of 4000 gms of gold under Section 111 (d) & (I) of the Customs Act, 2 C/42292/2018 1962 read with Foreign Trade (Development & Regulations) Act, 1992, imposed a penalty of Rs.9,00,000/- under Section 112 (a) &
(b) of the Customs Act, 1962, and a penalty of Rs.4,00,000/-
under Section 114 AA of the Customs Act, 1962.
2.1 Briefly stated the facts in this appeal are as follows.
2.2 On the basis of specific intelligence that a passenger by name Shri Muhamed Nisham an Indian passport holder Bearing No. K1250928, would be smuggling gold through Chennai International Airport arriving by Saudi Airlines flight SV 778 from Riyadh via Dubai on 12.02.2015, the officers of DRI (Directorate of Revenue Intelligence), Chennai intercepted Shri Muhamed Nisham, occupying the seat No. 34 H, on the aero bridge. The modus operandi, as per the investigation, indicated that the said passenger would handover/drop the contraband at the toilet in the immigration hall for its retrieval and clearance without declaring to Customs and without payment of appropriate customs duty.
2.3 A scrutiny of the Customs Disembarkation Form (Declaration Form) indicated that „nothing‟ was mentioned against the column "Total value of goods imported". According to the investigation, the appellant replied in the negative, when the officers enquired with him as to whether he brought any gold bars. On repeated enquiry, the appellant / passenger has admitted that he was in possession of four 1 kg gold bars with "FG marking, FUJAIRAH GOLD, UAE, FINE GOLD, 995.0, 1000g" etched on them with serial Nos. B002045, B002046, B002049 and B002061.
2.4 Shri Gopi Achary, a certified gold assayer was asked to assay the purity, origin and value of the said gold bars. It was certified that each piece of said gold bars was of 1000 grams, collectively weighing 4000 grams and the goods were of foreign origin having 995.0 purity.
2.5 In his voluntary statement recorded in his own hand writing under the provisions of Section 108 of the Customs Act, 1962, the appellant has informed that he has been residing in Thalassery, Kerala that his father worked as a driver, he has completed his BCA in 2011 and he knew to read, write and speak 3 C/42292/2018 English and Malayalam and also he could understand Tamil. After working in a readymade shop, he started his own readymade garments business. The appellant has admitted that he had gone to Abu Dhabi in 2012 in search of a job. He also travelled to Dubai three times during 2014 and from Callicut on 14.01.2015 when he returned to Delhi and had travelled to Dubai on 28.01.2015 when he met Shri Mubash whom he knew earlier who also hails from Thalasery, Kerala. He was asked by Shri Mubash whether he was interested in smuggling foreign marked gold bars from Dubai to Chennai for a remuneration of Rs.25,000/- per trip. He has clearly narrated how he got into possession of the gold which was delivered to him at Dubai by an unknown person arranged by Shri Mubash and he was intercepted by the DRI officers on the aerobridge when he arrived at Anna International Airport on 12.02.2015. The appellant / passenger was arrested but later enlarged on bail.
2.6 Statutory provisions, governing the import of gold through baggage are summarized below:-
2.7 As per paragraph 2.20 of Foreign Trade Policy (FTP), bona fide household goods and personal effects may be imported as part of passenger‟s baggage as per the limits, terms and conditions thereof in Baggage Rules, 1998 notified by Ministry of Finance. Further, as per Rule 3 (1) (h) of Foreign Trade (Exemption from application of Rules in certain cases) Order, 1993, "nothing contained in the Foreign Trade (Regulation) Rules, 1993 shall apply to the import of any goods by the person as passenger baggage to the extent admissible under the Baggage Rules for the time being in force, provided further that the import of gold in any form including ornaments (but excluding ornaments studded with stones or pearls) will be allowed as part of baggage by passengers of Indian origin or a passenger holding a valid passport issued under the Passports Act, 1967 (15 of 1967) subject to the following conditions, namely :-
(a) that the passenger importing the gold is coming to India after a period of not less than six months of stay abroad;
(b) the quantity of gold imported shall not exceed 5 Kilograms per passenger;
(c) import duty on gold shall be paid in convertible foreign currency......"4
C/42292/2018 2.8 Further, in terms of EXIM Code 98030000 under ITC (HS) classification of Export and Import Items 2009-2014, Import of all dutiable articles by a passenger in his baggage is "Restricted" and is subject to the fulfillment of the conditions imposed under the Customs Act, 1962, the Baggage Rules, 1998 and the Foreign Trade (Exemption from Application of Rule in Certain Cases) Order, 1993.
2.9 Further, according to Notification No. 12/2012-Cus dated 17.03.2012 (Sl. No. 321), gold bars, other than tola bars, bearing manufacturer‟s or refiner‟s engraved serial number and weight expressed in metric units, and gold coins having gold content not below 99.5%, imported by the eligible passengers; and gold in any form Including tola bars and ornaments are allowed to be imported upon payment of applicable rate of duty i.e., 10% or 15%, as the case may be, subject to the conditions prescribed at Sl.No. 35. As per the condition No. 35, the duty is to be paid in convertible foreign currency, on the total quantity of gold so imported not exceeding 1 kg only when the gold is carried by the 'eligible passenger' at the time of his arrival in India or imported by him within 15 days of his arrival in India. It has also been explained for the purpose of this notification, 'eligible passenger' means a passenger of Indian origin or a passenger holding valid passport issued under the Passport Act, 1967 who is coming to India after a period of not less than 6 months of stay abroad; and short visits, if any, made by the eligible passenger during the aforesaid period of 6 months shall be ignored, if the total duration of such stay does not exceed 30 days and such passenger has not availed of the exemption under this notification. Further, the Board has also issued instructions for compliance by 'eligible passengers' and for avoiding such duty concession being misused by unscrupulous elements vide Circular No. 6/2014-Cus. dated 06.03.2014.
2.10 A combined reading of the above-mentioned legal provisions under Foreign Trade Regulations, the Customs Act, 1962 and the notifications issued there under, clearly indicates that import of gold including gold jewellery through Baggage is restricted and conditions have been imposed on the said imports by a passenger such as he/she should be of Indian origin or a Indian 5 C/42292/2018 passport holder with minimum six months stay abroad etc. Only passengers who satisfy these mandatory conditions can import gold as a part of their bona fide personal baggage and the same has to be declared to the Customs at the time of their arrival and pay applicable duty in foreign currency/exchange. These conditions are nothing but restrictions imposed on the import of gold through passenger baggage.
The submissions of the appellant are as under:-
3.1 The appellant never had an opportunity to declare the goods before the Customs and pay appropriate Customs duty. Denial of opportunity to declare the goods and to pay Customs duty is the serious mistake committed by the officers.
3.2 That the subject gold bars which were seized by the DRI officers were kept inside a mobile pouch in his pocket and there was no concealment and the gold was handed over on enquiry by the officers. The events would indicate that there is no concealment.
3.3 After his interception, tremendous pressure was brought by the investigation officer who threatened him with slapping of COFEPOSA and he was compelled to give a statement under Section 108 of the Customs Act, 1962.
3.4 Due to continuous threat of arrest and preventive detention, he could not file any retraction to his statement.
3.5 The Adjudicating authority has issued the call letter dated 07.11.2015 intimating about the personal hearing which was fixed on 23.11.2015, 27.11.2015 or 30.11.2015 which was not in agreement with legal prescriptions that he could not avail the personal hearing as there was a flood in Chennai. As his inability was communicated telephonically to the officers, the adjudicating authority passed the Order-in-Original having 16 pages on the last date of the personal hearing itself which makes the order passed preconceived, predetermined and a programmed product without application of mind. As the impugned order has been issued without affording reasonable opportunity of being heard, the same 6 C/42292/2018 is against the principle of natural justice and so, requires to be set aside.
3.6 The appellant has purchased the subject goods on credit from his friends in order to sell the same to gold manufacturers in India and he was ready and willing to pay the duty as applicable. But, due to the interception by the investigation officer, he had lost his liberty and was prevented from declaring the goods.
3.7 The adjudicating authority has imposed a penalty of Rs.9,00,000/- under Section 112 (a) and (b) and Rs.4,00,000/- under Section 114AA of the Customs Act, 1962, but, both the Sections referred above are two distinct Sections and cannot be imposed jointly.
3.8 The subject goods i.e., 4 kg gold bars are not liable for confiscation.
3.9 The appellant has not made or used or signed any document, which is false and incorrect, and the penalty imposed under Section 114 AA is illegal and arbitrary.
3.10 The DRI officers does not have jurisdiction to intercept a passenger in a Buffer Zone which is the Aerobridge and the proceedings initiated are vitiated.
3.11 The goods impugned in this case are gold having purity of 99.50 which is not prohibited goods or contraband. These are importable subject to the compliance of certain conditions and payment of applicable duty. The Respondent ought to have considered the fact that the appellant was ready and willing to pay duty and hence, eligible to clear the goods and such an opportunity was taken away due to the actions of the DRI officers and hence he prayed for setting aside the impugned order and release of the gold on payment of appropriate duty.
4.1 During the hearing before the Tribunal, the Ld. Advocate Shri Aswin Gopakumar representing the appellant has argued that the appellant was never given an opportunity to declare the gold as he was intercepted by the DRI officers on the Aerobridge itself and 7 C/42292/2018 there was no concealment as the appellant himself handed over the gold on enquiry by the DRI officers. The statement recorded by the DRI officer was completely doctored and obtained under torture and coercion. It was obtained under threat of slapping of COFEPOSA forcing him not to file any retraction. He has also vehemently argued that the adjudicating authority has not complied with principles of natural justice by giving an opportunity of personal hearing in one letter fixing three dates which he could not attend due to floods in Chennai.
4.2 The Ld. Advocate has relied upon the decision rendered by the CESTAT Principal Bench New Delhi in the case of Commissioner of Customs Vs. Ashwini Kumar Alias Amanullah [2021 (376) ELT 321 (Tri.- Del.)] in support of his contention, for release of the gold on payment of duty which was seized from the appellant. He has also referred to the decision given by the Chennai Tribunal in the case of Shri Rajan Ran and Shri Vasu Arumugam Vs. Commissioner of Customs vide Final Order Nos. 40148-40149/2022 dated 25.04.2022.
4.3 The Ld. Authorised Representative Shri Harendra Singh Pal asserted the findings of the impugned order. He has submitted that the appellant / passenger is not an eligible passenger and a frequent flyer. In the statement given in his own hand writing before the officers which was recorded under Section 108, the passenger had admitted that he has attempted to smuggle the impugned gold for a consideration of Rs.25,000/- on behalf of one person by name Shri Mubash who was working in Dubai and who also hails from his native place and the officers coming to know of the intelligence, the appellant was intercepted on the Aerobridge itself as the modus operandi indicated that it would be handed over to some unknown person in the toilet near the immigration hall of Chennai International Airport. As the passenger was not an eligible passenger and he has attempted to smuggle the gold on behalf of some third person, the gold seized was rightly confiscated and penalties were imposed legally.
5. We have considered the submissions made by both sides.
8C/42292/2018
6. We find the following issues need to be decided in this appeal:-
i. Whether absolute confiscation of the 4000 grams of gold under Section 111 (d) & (I) of the Customs Act, 1962 is legal and proper in the facts of this case? And ii. Whether imposition of penalties under Section 112 (a) and
(b) of the Customs Act, 1962 and under Section 114AA of the Customs Act, 1962 are justified?
7.1 Section 111(d) provides for confiscation of any goods which are imported or attempted to be imported or are brought within the Indian customs waters for the purpose of being imported, contrary to any prohibition imposed by or under this Act or any other law for the time being in force. "Import", with its grammatical variations and cognate expressions, means bringing into India from a place outside India [Section 2(23)]. Thus, bringing any goods into India is an import whether through legal channels or by smuggling. "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 [Section 2(33)]. Thus, it includes not only goods whose import is absolutely prohibited but also those whose import is „restricted‟ subject to some conditions being fulfilled if such conditions are not fulfilled. It is undisputed that as per the Foreign Trade (Development and Regulation) Act, 1992 and the Foreign Trade Policy applicable during the period, only banks authorized by RBI, international passengers to a limited extent in baggage and others authorised by DGFT could have imported gold. The appellant would not fall under any of these categories and import of gold by him was prohibited and therefore the gold bars were prohibited goods in terms of Section 2(33). Further, in terms of Section 2(39) of Customs Act, 1962, smuggling in relation to any goods means any act or omission which will render such goods liable for confiscation under Section 111 or Section 113 of the said Act. Improperly imported goods are liable for confiscation under Section 111 which reads as follows :
9C/42292/2018 "SECTION 111. Confiscation of improperly imported goods, etc. - The following goods brought from a place outside India shall be liable to confiscation :-
(a) any goods imported by sea or air which are unloaded or attempted to be unloaded at any place other than a customs port or customs airport appointed under clause (a) of section 7 for the unloading of such goods;
(b) any goods imported by land or inland water through any route other than a route specified in a notification issued under clause (c) of section 7 for the import of such goods;
(c) any dutiable or prohibited goods brought into any bay, gulf, creek or tidal river for the purpose of being landed at a place other than a customs port;
(d) any goods which are imported or attempted to be imported or are brought within the Indian customs waters for the purpose of being imported, contrary to any prohibition imposed by or under this Act or any other law for the time being in force;
(e) any dutiable or prohibited goods found concealed in any manner in any conveyance;
(f) any dutiable or prohibited goods required to be mentioned under the regulations in an 1[arrival manifest or import manifest] or import report which are not so mentioned;
(g) any dutiable or prohibited goods which are unloaded from a conveyance in contravention of the provisions of section 32, other than goods inadvertently unloaded but included in the record kept under sub-section (2) of section 45;
(h) any dutiable or prohibited goods unloaded or attempted to be unloaded in contravention of the provisions of section 33 or section 34;
(i) any dutiable or prohibited goods found concealed in any manner in any package either before or after the unloading thereof;
(j) any dutiable or prohibited goods removed or attempted to be removed from a customs area or a warehouse without the permission of the proper officer or contrary to the terms of such permission;
(k) any dutiable or prohibited goods imported by land in respect of which the order permitting clearance of the goods required to be produced under section 109 is not produced or which do not correspond in any material particular with the specification contained therein;
(l) any dutiable or prohibited goods which are not included or are in excess of those included in the entry made under this Act, or in the case of baggage in the declaration made under section 77;
(m) any goods which do not correspond in respect of value or in any other particular with the entry made under this Act or in the case of baggage with the declaration made under section 77 in respect thereof, or in the case of goods under transhipment, with the declaration for transhipment referred to in the proviso to sub-section (1) of section 54;10
C/42292/2018
(n) any dutiable or prohibited goods transited with or without transhipment or attempted to be so transited in contravention of the provisions of Chapter VIII;
(o) any goods exempted, subject to any condition, from duty or any prohibition in respect of the import thereof under this Act or any other law for the time being in force, in respect of which the condition is not observed unless the non-observance of the condition was sanctioned by the proper officer;
(p) any notified goods in relation to which any provisions of Chapter IVA or of any rule made under this Act for carrying out the purposes of that Chapter have been contravened."
7.2 The appellant has not challenged the confiscation of the gold attempted to be smuggled into the country. It is also an admitted fact that he is not an eligible passenger. A perusal of the statement recorded under Section 108 of the Customs Act, 1962, in his own handwriting clearly indicate that he carried the gold for a promised consideration of Rs.25,000/- by Shri Mubash due to his family circumstances. At the relevant time, even an eligible passenger can legally bring only one kilogram of gold provided applicable duty is paid in convertible foreign currency. At the time of interception, he was found with 4 Kgs of gold and not required foreign currency towards the duty payment. He was found to be a frequent flyer to Dubai as admittedly he was travelling to Dubai since 2012 and returning to different Airports in to the country. Being an educated person and also due to frequent trips abroad, it is reasonable to draw an inference that he must be aware of the rules and procedures for carrying gold into the country. So, his contention that he was not given any opportunity to declare the gold brought by him lacks in merit and is not acceptable as he was not an eligible passenger and so cannot declare and pay applicable duty. His attempt to smuggle these gold bars was foiled by the DRI officers by timely interception. The impugned gold is thus liable for confiscation under Section 111(d) and 111(i) of the Customs Act, 1962.
7.3 It is pertinent to mention here that Hon‟ble Supreme Court of India in Sheikh Mohd Omer Vs. Collector of Customs, Calcutta [1983 (13) ELT 1439 (SC)] clearly laid down that any prohibition applies to every type of prohibition which may be complete or partial and even a restriction on import or export is to an extent a prohibition. Hence the restriction imposed on the 11 C/42292/2018 import of gold including gold jewelllery by a passenger as his personal baggage is to an extent a prohibition and any violation of the said conditions/restrictions would make the impugned goods viz., gold in any form liable for confiscation under Section 111 of Customs Act, 1962.
7.4 On the issue of release of confiscated gold on imposition of fine, the detailed discussion on the relevant statutory provisions and prescribed procedures is required as under:-
"SECTION 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 (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.
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".
7.5 From the above, it is clear, the Adjudicating Authority has no discretion in respect of goods which are not prohibited goods and he is bound to give an option of redemption. In case of prohibited goods, such as, the gold in this case, the Adjudicating Authority may allow redemption or may not allow redemption.
12C/42292/2018 There is no bar on the Adjudicating Authority allowing redemption of prohibited goods. The reason for such discretion left to the adjudicating authority is evident. In case of prohibited goods, the nature of the goods and the nature of the prohibition vary and cases have to be dealt with exercising discretion. For instance, spurious drugs, arms, ammunition, food which does not meet the food safety standards, etc. are harmful to the society if released to the owner and they find their way into the market. On the other hand, there could be goods which, though prohibited, may not be harmful and releasing them to the owner on payment of fine may be an option. There is absolutely no bar in Section 125 on the adjudicating authority releasing any goods whatsoever, which are prohibited or restricted on payment of redemption fine. The adjudicating authority can allow redemption under Section 125 of any goods which are prohibited either under the Customs Act or any other law on payment of fine but he is not bound to so release the goods.
7.6 C.B.I. & C.‟s instructions to departmental officers in paragraph 9.4 of Chapter 30 of the Customs Manual, 2018 also confirms this legal position. It reads as follows :
"9. Adjudication of confiscations and penalties :
9.4 Section 125 of the Customs Act, 1962 provides for option to pay fine in lieu of confiscation. The proviso to section 125 states that redemption fine shall not exceed the market price of the goods confiscated. This is the maximum penalty which can be levied. As per section 126 of the Customs Act, 1962 when any goods are confiscated, such goods shall thereupon vest in the Central Government. The officer adjudging confiscation shall take and hold possession of the confiscated goods.
Whenever the confiscation of goods is authorized as per the sub- section (1) of section 125, of the Customs Act, 1962, the adjudicating authority MAY in the case of any goods where the importation or exportation is prohibited under this Act or under any other law for the time being in force, and SHALL, in the case any other goods, give to the owner of the goods (or from whose possession or custody such goods have been seized), an option to pay in lieu of confiscation such fine as the said officer/authority thinks fit."
7.7 From Section 125, the Customs Manual, 2018 of the department and various case laws cited by both sides and discussed above, the following position is clear:
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(a) Allowing redemption of goods which are not prohibited is mandatory and the adjudicating authority has to allow it under Section 125.
(b) Allowing redemption of goods whose import is prohibited is discretionary and the adjudicating authority may or may not allow it.
(c) Import of gold is not absolutely prohibited but is restricted.
(d) The owner or the person from whom the goods are seized cannot claim as a matter of right that the prohibited goods must be allowed to be redeemed as held by Hon‟ble High Court of Madras in the case of Samyanathan Murugesan and by Hon‟ble High Court of Kerala in case of Abdul Razak. Both these judgments were upheld by the Hon‟ble Supreme Court.
7.8 The appellant has advanced a plea that there was no mis-declaration or concealment on his part and he should be given an opportunity to declare and pay appropriate Customs duty on the gold brought by him. He has submitted that he has availed loans from his friends to purchase this gold and his intention was to sell to the jewellery manufacturers in the country. The appellant in his statement recorded in his own hand writing has informed that the gold was handed over by an unknown person in Dubai as arranged by Shri Mubash who also hails from his native place Thalasserry, Kerala and he has agreed to carry the gold due to his family financial conditions for a consideration of Rs.25,000/-. There was no retraction of the above statement recorded under Section 108 of the Customs Act, 1962, till the case came up for hearing before the Tribunal. The appellant being an ineligible passenger could not have brought gold and clear after declaration on payment of duty. As, at that relevant time even an eligible passenger can bring only 1 Kg gold in terms of Notification No. 12/2012-Cus dated 17.03.2012. The smuggling of gold by the appellant is proved beyond any doubt. So, we have to hold that it was rightly confiscated absolutely by the original adjudicating authority. No credence can be given to the appellant‟s statement that he purchased the gold after making loans from his friends. He has not produced any evidence as to where he had purchased and for how much and from whom and when and where. In his statement he had explained how he got possession of this gold that it was handed over by some unknown person in Dubai as arranged by Shri Mubash. Regarding the prayer of the appellant that the 14 C/42292/2018 confiscated gold should have been allowed to be redeemed on payment of fine, we are of the view that it is the discretion of the adjudicating authority to allow redemption of goods or to absolutely confiscate depending upon the facts of each case. The decision is required to be taken by the adjudicating authority in regard to absolute confiscation of the smuggled goods or their release on payment of redemption fine considering all the facts of a case. The present case is a pure case of smuggling of gold into the country and therefore the Ld. Commissioner exercising his discretionary power to confiscate the gold absolutely is to be upheld. Smuggling of gold or any other prohibited / restricted goods is a serious economic crime which is required to be dealt with sternly.
7.9 The appellant has relied upon the decisions given in the cases of Commissioner of Customs, New Delhi Vs. Ashwini Kumar Alias Amanullah (supra) and Rajan Ran and Vasu Arumugam @ Manoj Vs. Commissioner of Customs F.O.No. 40148-40149/2022 dated 25.04.2022 to support his contention that he should be given an opportunity to redeem the gold brought by him on payment of fine and penalty.
7.10 His main argument is that he was not allowed to declare the imported gold having been intercepted at the Aerobridge itself that he was denied an opportunity to declare and pay duty. The Ld. Advocate for the appellant has vehemently put forth that the impugned gold should be released on payment of applicable Customs duty having recorded the statement under threat of COFEPOSA and the original adjudicating authority having violated the principles of natural justice by fixing three dates for personal hearing through a single letter which he could not avail due to the flood situation in Chennai.
7.11 We have perused the decisions. In the case of Rajan Ran (supra), the passenger was intercepted and gold was recovered while he was going through the green channel. The passenger was found to be an eligible passenger and also in a possession of adequate foreign currency for payment of the duty on the imported gold. Whereas in this case, the appellant is not an eligible passenger, he could not have been able to declare and clear 15 C/42292/2018 as at that relevant time even an eligible passenger can legally bring only 1kg of gold and on payment of applicable duty is convertible foreign currency. He has attempted to smuggle in 4Kg of gold and he was not in possession of required foreign exchange toward the applicable duty on quantity of 4Kg of gold. So, the facts are distinguishable from the case on hand and are not applicable to the facts of this case.
7.12 The decision rendered in the case of Ashwini Kumar Alias Amanullah (supra) involves smuggling of gold which was attempted by concealing it in uninterrupted power supply system imported through the courier made. In that case, the issue to be decided was whether the gold concealed in the uninterrupted power supply system could be released on payment of applicable Customs duty to the importer and the original authority has allowed release of the confiscated gold using his discretion. Whereas, in the instant case, the appellant has not submitted any evidence regarding the purchase of the gold or how he got the possession of the gold. He was a frequent flyer and he has admitted that he had carried the gold for a consideration of Rs.20,000/- to be handed over to an unknown person in the toilet attached to immigration hall. As such, the original authority‟s order of absolute confiscation need not be interfered with.
7.13 In this connection, we refer to the case of Abdul Razak [2012 (275) ELT 300 (Ker.)] wherein the appellant claimed that he has a right to redemption of the seized gold whose import was subject to restrictions which he did not fulfil. Hon‟ble High Court of Kerala held that the appellant had no such right and this position was upheld by the Hon‟ble Supreme Court. Relevant paragraphs of the judgment are as follows :
"5. Before us Learned Counsel for the appellant contended that Section 125 does not provide for confiscation of goods other than prohibited goods, and according to him, importers' conduct has no significance for considering whether the option exercised by importers to release the goods on payment of redemption fine and duty should be allowed or not. While the Learned Counsel for the appellant relied on the provisions of the Foreign Trade (Development and Regulation) Act, 1992, and Foreign Trade (Exemption from Application of Rules in Certain Cases) Order, 1993 to contend that gold is not a prohibited goods which can be released on payment of redemption fine and duty, Learned Standing Counsel appearing for the Department relied on the judgment of the Supreme Court in Om Prakash Bhatia v. Commissioner of Customs, Delhi reported in 2003 (155) E.L.T. 16 C/42292/2018 423, and contended that when import is permissible on satisfaction of certain conditions, the violation of the same will make the goods imported as prohibited goods within the meaning of Section 2(33) of the Act, which reads as follows :-
"2(33) '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."
6. After hearing both sides and after considering the statutory provisions, we do not think the appellant, as a matter of right, can claim release of the goods on payment of redemption fine and duty. Even though gold as such is not a prohibited item and can be imported, such import is subject to lot of restrictions including the necessity to declare the goods on arrival at the Customs Station and make payment of duty at the rate prescribed. There is no need for us in this case to consider the conditions on which import is permissible and whether the conditions are satisfied because the appellant attempted to smuggle out the goods by concealing the same in emergency light, mixie, grinder and car horns etc. and hence the goods so brought is prohibitory goods as there is clear violation of the statutory provisions for the normal import of gold. Further, as per the statement given by the appellant under Section 108 of the Act, he is only a carrier i.e. professional smuggler smuggling goods on behalf of others for consideration. We, therefore, do not find any merit in the appellant's case that he has the right to get the confiscated gold released on payment of redemption fine and duty under Section 125 of the Act.
7. This Writ Appeal is therefore dismissed."
7.14 Further, even in the case of Samyanathan Murugesan [2009 (247) ELT 21(Mad.)], the passenger imported gold in violation of the conditions and the gold was absolutely confiscated by the Additional Commissioner which decision was upheld by the Commissioner (Appeals). On appeal, CESTAT remanded the matter directing a reasonable opportunity be given to the passenger for redemption. This order of the CESTAT was challenged by the Revenue in the Hon‟ble High Court of Madras who allowed Revenue‟s appeal and set aside the order of the CESTAT. The judgment of the Hon‟ble High Court of Madras was upheld by the Hon‟ble Apex Court.
8. To summarize, the appellant is not an eligible passenger and he was not in possession of required foreign currency to pay the applicable duty on the smuggled gold and so it can be concluded that even if an opportunity to clear the gold given to the appellant on payment of duty, he could not have been able to declare and pay the applicable duty. Appellant‟s interception by DRI officers and subsequent investigation carried out clearly 17 C/42292/2018 confirmed the modus operandi of smuggling of gold into the country. The modus operandi was to deliver to some unknown person in the men‟s toilet near the immigration hall of Chennai International Airport has to be given credence. Further, the appellant passenger has not retracted his statement till the hearing before the Tribunal where he has requested for release of gold on payment of duty. He is adequately educated and frequently travelled to Dubai. No convincing reason has been given for coming to Chennai or going to other places when he belongs to Kerala. Being a frequent flyer, his narration of picking up gold in Dubai from an unknown person to be delivered to an unknown person in men‟s toilet and his interception with the gold confirmed the modus operandi of smuggling. So, we uphold the decision of the adjudicating authority‟s decision on absolute confiscation of the smuggled gold in the instant case.
9.1 Having rendered the gold liable for confiscation by his various acts of commission and omission, the appellant is liable for penal action under Section 112 of the Customs Act, 1962. The appellant was imposed with penalties under Section 112 and also 114AA of Customs Act, 1962 by the impugned order No. 364/2015 dated 30.11.2015. Section 112 and 114AA of the Customs Act, 1962, reads as follows:-
"112. Penalty for improper importation of goods, etc. - Any person, -
(a) who, in relation to any goods, does or omits to do any act which act or omission would render such goods liable to confiscation under section 111, or abets the doing or omission of such an act, or
(b) who acquires possession of or is in any way concerned in carrying, removing, depositing, harbouring, keeping, concealing, selling or purchasing, or in any other manner dealing with any goods which he knows or has reason to believe are liable to confiscation under section 111, shall be liable, -
(i) in the case of goods in respect of which any prohibition is in force under this Act or any other law for the time being in force, to a penalty not exceeding the value of the goods or five thousand rupees, whichever is the greater;
(ii) in the case of dutiable goods, other than prohibited goods, to a penalty not exceeding the duty sought to be evaded on such goods or five thousand rupees, whichever is the greater;
(iii) in the case of goods in respect of which the value stated in the entry made under this Act or in the case of baggage, in the declaration made under section 77 (in either case hereafter 18 C/42292/2018 in this section referred to as the declared value) is higher than the value thereof, to a penalty not exceeding the difference between the declared value and the value thereof or five thousand rupees, whichever is the greater;
(iv) in the case of goods falling both under clauses (i) and (iii), to a penalty not exceeding the value of the goods or the difference between the declared value and the value thereof or five thousand rupees, whichever is the highest;
(v) in the case of goods falling both under clauses (ii) and
(iii), to a penalty not exceeding the duty sought to be evaded on such goods or the difference between the declared value and the value thereof or five thousand rupees, whichever is the highest."
"Section 114AA in the Customs Act, 1962 1[114AA. Penalty for use of false and incorrect material.--If a person knowingly or intentionally makes, signs or uses, or causes to be made, signed or used, any declaration, statement or document which is false or incorrect in any material particular, in the transaction of any business for the purposes of this Act, shall be liable to a penalty not exceeding five times the value of goods.]"
9.2 A penalty of Rs.9,00,000/- was imposed on the appellant under Section 112 (a) and (b) of the Customs Act, 1962. Further, a penalty of Rs.4,00,000/- was imposed under Section 114AA of the Customs Act, 1962. The appellant has submitted that both penalties under Section 112 and 114AA are not imposable. It was also submitted that he has not concealed the gold and there was no opportunity given for making a declaration.
9.3 A reading of these provisions make it clear that there is no bar for imposition of penalties under both these Sections. Penalty is imposable for rendering the goods liable for confiscation by one‟s acts of omission and commission under Section 112 of the Customs Act, 1962. Whereas, penalty under Section 114AA is imposable if any person knowingly or intentionally makes, signs or uses or causes to be made, signed or used any declaration, statement or document which is false and incorrect. The appellant has prepared the Customs Declaration Form wherein „nothing‟ was written against column- Total value of dutiable goods imported. His argument centers around that as he was intercepted at the Aerobridge and so, there was no opportunity to declare the gold brought by him. Being an ineligible passenger this argument of the appellant that he could have declared the gold attempted to be 19 C/42292/2018 smuggled by him but for his interception on the Aerobridge does not have any factual basis and so not acceptable. Having rendered the gold liable for confiscation penalty under Section 112 of the Customs Act, 1962, penalty is imposable and has been rightly imposed. In the Customs Declaration Form which has been filed in, he had written „nothing‟ against the column of „total value of goods imported‟. So, penalty under Section 114AA is imposable. As such penalties imposed under Section 112 & 114AA of the Customs Act, 1962 are in accordance with the legal provisions in the instant case.
10. However, having regard to all the facts of the case, we are of the considered view that penalties imposed are harsh as he accepted and acted to smuggle gold for a consideration of Rs.25,000/-. So, penalty imposed under Section 112 of Customs Act, 1962 is reduced to Rs.2,00,000/- (Rupees Two Lakhs Only) and penalty imposed under Section 114AA of the Customs Act, 1962 is reduced to Rs.1,00,000/- (Rupees One Lakh Only).
11. Thus, the appeal is partly allowed on the above terms with consequential relief, if any, as per law.
(Order pronounced in open court on 11.10.2023) Sd/- Sd/-
(VASA SESHAGIRI RAO) (SULEKHA BEEVI C.S.) MEMBER (TECHNICAL) MEMBER (JUDICIAL) MK