2022 (2) TMI 1391 - HC - Customs

Dismissal of Petition Against Redemption Fine for Seized Gold Upheld Under Customs Act

Commissioner of Customs (Preventive), Jodhpur Versus Mehboob

The petition challenging the order offering redemption fine of Rs. 6,00,000 in lieu of confiscation of seized gold under the Customs Act, 1962 was ... Smuggling - Absolute Confiscation of seized Gold - prohibited goods - power of the adjudicating authority in terms of Section 125 of Customs Act, to confiscate absolutely - HELD THAT:- Sub-section (1) of Section 125 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 [2022 (2) TMI 1081 - RAJASTHAN HIGH 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 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. Attention drawn to the judgment of the Madras High Court in the case of COMMISSIONER OF CUSTOMS (AIR) VERSUS SAMYNATHAN MURUGESAN & CESTAT [2009 (4) TMI 77 - MADRAS HIGH COURT] in which view taken was slightly different. It is pointed out that the said decision was also upheld by the Supreme Court when the SLP was dismissed. Petition dismissed. Issues:Challenge to order of redemption fine in lieu of confiscation of seized gold under Customs Act, 1962.Analysis:1. The petition filed by the Union of India challenged an order offering redemption fine of Rs. 6,00,000 to the respondent in lieu of confiscation of seized gold, contending that the gold being smuggled was a prohibited item, making redemption fine unavailable.2. The adjudicating authority had ordered absolute confiscation of the gold under Section 125 of the Customs Act, 1962, as prohibited goods. However, the revisional authority offered redemption fine, leading to the current challenge.3. The petitioner argued that there was a systematic attempt at gold smuggling, justifying absolute confiscation under Section 125, and that the revisional authority erred in offering redemption fine.4. Section 125 of the Act allows for the option to pay fine in lieu of confiscation, with specific provisions for goods prohibited under the Act, limiting the fine to the market price of the goods confiscated.5. The counsel for the department contended that the case falls under the first part of Section 125(1), where importation or exportation of goods is prohibited, giving the competent authority the discretion to offer redemption fine.6. A recent Division Bench judgment considered a similar issue, emphasizing the distinction in Section 125(1) between goods whose importation is prohibited and those that are not, highlighting the mandatory duty to offer redemption fine in the latter case.7. Reference was made to a Madras High Court judgment upheld by the Supreme Court, which upheld the offering of redemption fine in a case similar to the present one, reinforcing the interpretation of Section 125.8. Ultimately, the petition was dismissed, affirming the decision to offer redemption fine and upholding the authority's discretion in such cases under the Customs Act, 1962.