2011 (6) TMI 207 - AT - Customs

Tribunal upholds diamond confiscation with reduced penalties, export obligations emphasized

The Tribunal upheld the absolute confiscation of diamonds seized from an individual and indigenous diamonds from a company, with reduced penalties and ... Confiscation - The recovered 265 carats of cut and polished diamonds were valued at Rs. 17,32,406/- by the Appraiser, Gem and Jewellery Complex, SEEPZ - Immediate stock taking of diamonds of M/s. Tara Jewels Exports Ltd. were undertaken which revealed that they had in stock inter alia 4 packets in white wrapping containing cut and polished diamonds weighing 265 carats equal to the quantity which was also imported and was being removed surreptitiously and seized by the customs at the SEEPZ gate - These diamonds were permitted to be imported by the appellant, M/s. Tara Jewels Exports Ltd., duty free subject to the condition that they are used in the manufacture of studded jewellery and for export thereafter - Held that: the order of the adjudicating authority confiscating absolutely 265 carats of cut and polished diamonds seized from Shri Dharmesh K. Pandya cannot be faulted Regarding penalty - Since the value of the goods involved in this case is only Rs. 17,32,406/- we find that the penalty of Rs. 10 lakhs is much on the higher side and, therefore, we reduce the penalty from Rs. 10 lakhs to Rs. 5 lakhs - The appeals are disposed of Issues Involved:1. Absolute confiscation of diamonds.2. Confiscation of indigenous diamonds.3. Imposition of penalties on individuals and the company.4. Validity of statements and retractions.5. Applicability of legal provisions and precedents.Issue-wise Detailed Analysis:1. Absolute Confiscation of Diamonds:The Commissioner ordered the absolute confiscation of 265 carats of diamonds valued at Rs. 17,32,406/- seized from an individual under Sections 111(d), 111(o), 111(j), and 113(d) of the Customs Act, 1962. The Tribunal upheld this decision, confirming that the diamonds were imported duty-free for manufacturing and export purposes. The substitution of these diamonds with indigenous ones and their removal from SEEPZ violated the conditions of import, rendering them 'prohibited goods' under Section 2(33) of the Customs Act. Therefore, absolute confiscation under Section 125 was justified.2. Confiscation of Indigenous Diamonds:The Commissioner also ordered the confiscation of 265 carats of indigenous diamonds valued at Rs. 11,38,910/- from the company's premises under Section 113(d) of the Customs Act. The Tribunal upheld this confiscation, noting that the indigenous diamonds were intended to be exported as imported diamonds, violating EXIM policy and Customs Notifications. However, the Tribunal reduced the redemption fine from Rs. 5 lakhs to Rs. 2.5 lakhs and removed the condition that these diamonds must be exported or used for manufacturing export jewelry.3. Imposition of Penalties:The Commissioner imposed penalties of Rs. 5 lakhs on the individual and Rs. 10 lakhs on the company under Sections 112(a) and 114 of the Customs Act. The Tribunal reduced the penalty on the company to Rs. 5 lakhs, emphasizing that the company is responsible for fulfilling export obligations and proper storage of imported goods. The penalty on the individual was reduced to Rs. 2 lakhs, considering the value of the seized goods.4. Validity of Statements and Retractions:The individual argued that his statements given under duress were retracted in his bail application. The Tribunal, referencing the judgment in Anjani Kumar Shah vs. Commissioner of Customs, held that retractions must be addressed to the same authority that recorded the statement. Therefore, the retraction was invalid, and the original statements were upheld.5. Applicability of Legal Provisions and Precedents:The Tribunal referenced several judgments to support its decisions. The case of Prakash Bhatia vs. Commissioner of Customs, Delhi was cited to establish that non-fulfillment of import conditions renders goods 'prohibited' under Section 2(33). The Tribunal also cited Universal Traders vs. Commissioner of Customs and Commissioner of Customs (Export), Chennai-I vs. Bansal Industries to justify absolute confiscation and the imposition of penalties without the need for mens rea.Conclusion:The Tribunal upheld the absolute confiscation of the diamonds seized from the individual and the confiscation of indigenous diamonds from the company, with a reduced redemption fine and no export condition. Penalties on both the individual and the company were reduced, and the appeals were disposed of accordingly.