TaxTMI 
TaxTMI 
2010 (10) TMI 6
X X X X Extracts X X X X
X X X X Extracts X X X X
....o pay the Petitioner jointly and severally the compensation in the sum of Rs.13,65, 490/being equivalent of the value of Life Saving Medicines with interest thereon at the rate of 24% p.a. from the date of seizer till payment; and (v) that the Respondent No.4 i.e. Additional Commissioner of Central Excise, Raigad Commissionerate, be directed to pay compensatory cost to the Petitioner for this illegal and unauthorized act. FACTUAL MATRIX. 2 The factual matrix involved in the above Petition can be stated thus : The Petitioner is a citizen of Nigeria and claims to be a businessman dealing in medicines in Nigeria. The Petitioner had visited India on number of occasions in the past for making purchases of readymade garments and taking the same to Nigeria. The incident, which has given rise to the proceedings resulting in impugned orders in respect of which the Petitioner seeks the reliefs as mentioned in prayer clause (i), has occurred on the night of 19/20th April 2008. It appears that the Petitioner had arrived in India on 14th April 2008 and after staying for four days, the Petitioner was to leave for Nigeria on the night of 19/20th April 2010. The Petitioner h....
X X X X Extracts X X X X
X X X X Extracts X X X X
....r release of his passport as he wanted to go back to Nigeria. However, according to him, the said request was of no avail as no heed was paid by the Customs Authorities to his request. The Petitioner's further statement was again recorded on 24th April 2008 in which he stated that for the said medicines he did not have any Doctor's prescription and that the said medicines have been purchased by him as he had an order from one Anambra State Government Board General Hospital, Nigeria. In so far as confiscation is concerned, since the Petitioner had waived issuuance of show cause notice, the Assistant Commissioner, concerned, proceeded to hear the Petitioner and passed an order on 30th April 2008 confiscating the seized goods in question. Thereafter an Order in Original came to be passed on 22.5.2008 by the Joint Commissioner of Customs, Air Intelligence Unit. The Joint Commissioner held that export of commercial goods or goods in commercial quantity by a passenger from India cannot fall within the category of "Bonafide Baggage". The Joint Commissioner further held that the export of the said medicines was in violation of Section 113(1) of the Foreign Trade (Develo....
X X X X Extracts X X X X
X X X X Extracts X X X X
....inter alia held that export of commercial quantities of non-prohibited goods as part of baggage has been allowed by the Department in case the passenger concerned is able to establish that the money used for purchase of the commercial goods has been brought into the country in a legal manner and the same has been declared on arrival in India. The Central Government observed that in the instant case the Applicant i.e. the Petitioner herein had failed to do so; that the goods were in commercial quantities has never been disputed by the Applicant. The Central Government further observed that the though the Applicant claimed to have certain invoices for the purchases made by him, the said invoices were dated 24.5.2008 and 23.5.2008 whilst the Applicant was travelling on the night of 19/20042008. The Central Government therefore upheld absolute confiscation of medicines/pharmaceutical goods. However as regards redemption fine on goods valued at Rs.66,900/i. e. item Nos.17 to 23, the Central Government up held redemption fine of Rs.20,000/, but the personal penalty imposed on the Petitioner was brought down from 1,40,000/to Rs.40,000/in view of absolute confiscation of the medicines/phar....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nd, since no show cause notice was issued, the order has been passed in breach of principles of natural justice. The learned counsel for the Petitioner in support of his submission that show cause notice ought to have been issued to the Petitioner relied upon a Circular dated 27/7/2000 which, according to the learned counsel for the Petitioner, obligates upon the Respondents to follow a proper procedure by issuing show cause notice and, also relied upon a Circular dated 20/1/1997, which according to him, stipulates that even if a party wants to waive show cause notice , such a waiver should not be permitted and show cause notice should be issued. The learned counsel for the Petitioner submitted that the Order in Original confiscating the goods, which were sought to be taken by the Petitioner to Nigeria, was also passed in breach of principles of natural justice as the Petitioner was not granted a hearing in the matter. The learned counsel submitted that since the Order in Original had serious penal consequences, the Petitioner ought to have been heard and in support of the said submission, the learned counsel for the Petitioner sought to rely upon the judgment of the Apex....
X X X X Extracts X X X X
X X X X Extracts X X X X
....tter of Sandvik Asia Ltd v/s. Commissioner of Income TaxI, Pune. The learned counsel for the Petitioner relying upon the said judgment submitted that the officers who were concerned with the seizure/retention of passport of the Petitioner and the confiscation of the goods would become liable to pay compensation to the Petitioner. 5 Per contra, it is submitted on behalf of the Respondents by the learned senior counsel that retention of passport of the Petitioner was on account of the fact that the entries in the said passport disclosed that the Petitioner, prior to the visit in question, had visited India as many as 18 times and the investigation as regards the confiscation of the medicines which were sought to be carried by the Petitioner as the Petitioner's baggage, was underway and therefore, the passport was retained by the authorities so as to facilitate the completion of investigation. The learned senior counsel for the Respondents submitted that the authorities have maintained records as regards retention of the passport by them in the concerned file and, therefore, it cannot be said that the passport of the Petitioner has been retained without any record being main....
X X X X Extracts X X X X
X X X X Extracts X X X X
....eclaration Form on his arrival in India on 14.4.2008. CONSIDERATION : 7 The matter can be conveniently dealt with under two Heads, A) Issue of Passport and, B) Challenge to the orders. A) Issue of Passport : It is an undisputed fact that the Petitioner was detained on the night of 19/20th April 2008 whilst he had checked in for boarding the Kenya Airways Flight to Nigeria. It is further an undisputed fact that the Petitioner was carrying 15 pieces of baggages which he had checked in. On examination of the said baggages, it was found that he was carrying huge quantity of medicines including life saving drugs and other goods such as stationery, clothes and wearing apparels. It is an undisputed fact that the Petitioner on the said night of 19/20th April 2008 could not produce any proof of having purchased the said goods on payment of foreign exchange as well as any receipt of the said purchases. Since the Customs Authorities were of the prima facie view that the said goods were being taken out of country illegally in contravention of the Customs Act and Rules thereunder and, since on verification of the passport it was also found that the Petitioner wa....
X X X X Extracts X X X X
X X X X Extracts X X X X
....personal baggage in commercial quantities. Therefore, the reliance placed by the Petitioner on the judgments of the Apex Court cited (supra), in our view, in the facts of the case, is misplaced. 9 It would also be relevant to note that right from the adjudicating authority to the revisional authority, the Petitioner had never made a grievance about retention of his passport by the customs authorities and in fact had not sought a relief before any of the authorities praying for return of his passport. It would, therefore, have to be understood that the Petitioner had also accepted the position that once the adjudicatory process was complete, his passport would be handed over to him as otherwise there was no reason for the petitioner to keep quite before the authorities as regards retention of his passport. It is also required to be noted that after the revisional authority had passed the order dated 25/6/2008, the passport of the Petitioner was returned to him on 4/7/2008. The grievance made by the Petitioner as regards prejudice caused to him on account of retention of his passport is, in our view, merely made to claim compensation on the ground of alleged wrongful retent....
X X X X Extracts X X X X
X X X X Extracts X X X X
....h May 2008 and 15th May 2008 as regards the manner in which he had procured the medicines in question. In the light of the aforesaid fact therefore we do not find any merit in the contention of the Petitioner that principles of natural justice have been violated as the Petitioner had himself waived the show cause notice. Reliance of the learned counsel for the Petitioner on the Circulars dated 20/1/1997 and 27/7/2000 does not take the Petitioner's case any further in view of the fact that the said circulars have been issued by the Central Board of Excise & Customs for internal guidance. The said circulars cannot be construed to mean that the Assessee or a defaulter cannot waive show cause notice. In the facts and circumstances of the present case, the probability is that the Petitioner had waived the show cause notice probably because the Petitioner would have been in a hurry to get the adjudication process completed as quickly as possible as he wanted to go back to Nigeria. The said circumstances therefore further fortify the position that the Petitioner had in fact waived the show cause notice and proceeded with the adjudication process without a show cause notice being....
X X X X Extracts X X X X
X X X X Extracts X X X X
....sell drugs ( 1) A licence [to sell, stock, exhibit or offer for sale or distribute] drugs other than those specified in Schedules C, C(1) and X and by retail on restricted licence or by wholesale, shall be issued in Form 20, Form 20A or Form 20B, as the case may be : Provided that a licence in form 20A shall be valid for only such drugs as are specified in the licence. (2) A licence [to sell, stock, exhibit or offer for sale or distribute] drugs specified in Schedules C and C(1) excluding those specified in Schedule X, by retail on restricted licence or by wholesale shall be issued in Form 21, Form 21A or Form 21B, as the case may be: [Provided that a licence in Form 21A shall not be granted for drugs specified in Schedule C and shall be valid for only such Schedule C (1) drugs as are specified in the licence.] (3) A licence [to sell, stock, exhibit or offer for sale or distribute] drugs specified in Schedule X by retail or by wholesale shall be issued in Form 20F or Form 20G as the case may be]" Form 20B [See Rule 61(1)] Licence to sell, stock or exhibit [or offer] for sale, or distribute by wholesale, drugs oth....
X X X X Extracts X X X X
X X X X Extracts X X X X
....the firm with the changed constitution. Form 21B [See Rule 61(2)] Licence to sell, stock or exhibit [or offer] for sale, or distribute by wholesale drugs specified in Schedules C and C(1) [excluding those specified in Sch.X] 1,................................................ is hereby licensed to sell, stock or exhibit [or offer] for sale, or distribute by wholesale on the premises situated at ................................... the following categories of drugs specified in Schedules C and C(1) [excluding those specified in Sch. X] to the Drugs and Cosmetics Rules, 1945. Categories of drugs 2 This licence shall be in force from................. to .................... 2A [The sale shall be made under the personal supervision of a competent person (Name of the competent person)] 3 This licence is subject to the conditions stated below and to the provisions of the Drugs and Cosmetics Act, 1940, and the Rules thereunder. Licence No......................... Date ........................... Licensing Authority................. Conditions of Licence 1 This licence shall be displayed in a ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....person holding requisite licence to sell, stock or exhibit for sale or distribute the drug. Exceptions are mentioned in the said clause (3) (ii) in which exceptions are included Government authorities or a manufacturer of beverages etc where such drugs are required for processing the products. 12 In the instant case, the Petitioner has laid much store on the circulers governing goods to be carried as and by way of bonafide baggage. The circular dated 1/3/1995 is relevant and the same is reproduced herein under : Baggage---Export of commercial goods Instructions Circular No.17/95Cus., dated 1-3-1995 [From F.No.520/118/93Cus.VI] Government of India Ministry of finance (Department of Revenue) New Delhi Subject : Export of Commercial goods as baggage - Instructions regarding The undersigned is directed by say that in terms of para 129 of the Exim Policy (199297), bona fide personal baggage of a passenger is permitted to be exported as accompanied or unaccompanied baggage. Instances have, however, been brought to the notice of the Board where passengers, especially passengers leaving for CIS countries, Pakistan, Thailand etc. were expor....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... he had the currency declaration form. It is required to be noted that the Petitioner had returned to Nigeria immediately on 4th April 2008 and, therefore, when he arrived again on 14th April 2008 he ought to have declared the foreign currency which he had brought with him. It is the case of the Petitioner that he had made purchases i.e. the medicines and other items out of the said amount of US $ 52,250 which he had brought on his earlier visit on 3rd April 2008 and which he had converted into Indian currency in the grey market i.e. unauthorised channels. Therefore, the facts, as emerging from the Petitioner's case, are firstly, that he had not declared any foreign currency on arrival of India on 14th April 2008 and that he had converted the foreign currency into Indian Rupees in the grey market. Though the circular permits export of goods as passenger's baggage but the same would be permissible only if source of funding was legal and inasmuch as it has to be established that the foreign exchange brought by the passengers on their arrival in India is being utilised, as also proper proof of the goods having been procured against payment in foreign exchange is provided by the passen....