1992 (3) TMI 211 - AT - Customs

Court upholds diamond confiscation and penalty imposition, emphasizing customs compliance.

The court dismissed the appeal, upholding the absolute confiscation of the diamonds and the imposition of a penalty on the appellant. The court found no ... Confiscation and Penalty Issues Involved:1. Non-service of Show Cause Notice within six months.2. Ownership claim of the diamonds by the partnership firm.3. Voluntariness and reliability of the appellant's statement.4. Applicability of Section 20 of the Customs Act regarding re-importation.5. Legality of confiscation and imposition of penalty.Issue-wise Detailed Analysis:1. Non-service of Show Cause Notice within six months:The appellant argued that the Show Cause Notice was given after six months, violating Section 110(2) of the Customs Act, which mandates that notice should be 'given' and not just 'issued.' The court examined Section 153 of the Customs Act, which prescribes the manner of service of notice, including sending it by registered post. The notice was sent on 17-7-1986 by R.P.A.D., and the court found that this constituted 'giving' notice within the stipulated period, rejecting the appellant's claim. The court cited the Kerala High Court's judgment in C.D. Gavinda Rao, which held that the date of dispatch by registered post is the relevant date for service of notice.2. Ownership claim of the diamonds by the partnership firm:The appellant claimed that the diamonds belonged to the partnership firm, which was not served a notice. The court held that Section 110(2) of the Customs Act requires the return of goods to the person from whose possession they were seized if no notice is given within six months. Since the notice was served on the appellant, from whose possession the diamonds were seized, within the stipulated period, the claim for return of the diamonds to the firm was rejected. The court also noted inconsistencies in the appellant's statements regarding the ownership of the diamonds.3. Voluntariness and reliability of the appellant's statement:The appellant retracted his initial statement given after the seizure, claiming it was not voluntary. However, he relied on the same statement to support his claim that the diamonds were rejected goods from a foreign buyer. The court found the appellant's retraction unconvincing and upheld the initial statement as reliable, noting that the panchnama for the seizure was undisputed and clearly indicated non-declaration and recovery of the diamonds only after a personal search.4. Applicability of Section 20 of the Customs Act regarding re-importation:The appellant argued that the diamonds were of Indian origin and were re-imported after being rejected by a foreign buyer, thus falling under Section 20 of the Customs Act and not requiring an import license. The court rejected this argument, stating that there was no tangible evidence to establish the identity of the diamonds as the same ones exported earlier. The court emphasized that Section 20 requirements are mandatory and not merely procedural, and the appellant failed to fulfill these conditions.5. Legality of confiscation and imposition of penalty:The court found that the appellant attempted to smuggle the diamonds without declaration to customs, making them liable for confiscation under Section 111(d) of the Customs Act. The court also upheld the imposition of a penalty under Section 112(a) of the Act, considering the appellant's status as a diamond exporter and his awareness of customs regulations. The court noted that the penalty was not excessive given the value of the diamonds and the covert manner of smuggling.Conclusion:The court dismissed the appeal, upholding the absolute confiscation of the diamonds and the imposition of a penalty on the appellant. The court found no merit in the appellant's arguments and emphasized the importance of adhering to customs regulations and procedures.