TaxTMI 
TaxTMI 
2016 (9) TMI 879
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....laration form, indicating the contents of his baggage, as 4 dozen of Martin Shirts and 12 numbers of small calculators and miscellaneous goods. When questioned, as to whether, he was carrying any gold, his answer was 'No'. However, on examination of his baggage, 111 broken bits of gold biscuits, totally weighing 2548.3 grams, were found and recovered from certain folding scissor boxes and stapler pin boxes. In addition to other miscellaneous items, they were seized. Gold was valued at Rs. 10,34,355/- and other goods were valued at Rs. 41,117/-. All the above, were in excess of the declared items. 3. The Commissioner of Customs (Air), Chennai, appellant, has further submitted that according to Customs Notification No.171/94 (as amended by Notification No.31/2003-Customs), the passenger eligible for import of gold should have stayed abroad for a period of six months. But in the case on hand, the 1st respondent had stayed abroad only for a week. According to the appellant, the respondent had deliberately attempted to smuggle gold, by concealment and without declaration to customs. 4. Material on record discloses that the 1st respondent was arrested on 18.09.1999 and remanded....
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....goods, stated supra. 8. The Commissioner of Customs, Madras-1, has further ordered, absolute confiscation of the material objects, viz., folding scissors boxes, stapler pin boxes, aluminium foils, black gum tape and the suit case, used for concealing and carrying the aforesaid gold bits, under Section 119 of the Customs Act, 1962. 9. Keeping in mind, inter alia, that the 1st respondent was detained under COFEPOSA Act, for six months, the Commissioner has imposed a penalty of Rs. 50,000/-, under Section 112(a) of the Customs Act, 1962. 10. Being aggrieved by the Order-in-Original No.31 of 2000, dated 31.03.2000, the 1st respondent has filed Appeal No.C/589/2000, before CESTAT, Chennai. After hearing the parties, by observing that there is no need for absolute confiscation of the goods, and under Section 125 of the Customs Act, 1962, option for redemption against payment of fine is available to the 1st respondent, in respect of gold also, and that there is no bar against such option, by reason of the goods, being an item notified under Section 123 of the Act, or for any other reasons, vide Final Order No.455 of 2007, dated 20.04.2007, CESTAT, Chennai, held that the 1st respondent ....
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.... discretion, in favour of the respondent, in which case, there is nothing for the competent authority to exercise his discretion. He further submitted that use of the word, may in Section 125 of the Act, confers discretion on the adjudicating authority to pass appropriate orders, depending upon the facts and circumstances of each case. 14. Placing reliance on a decision of the Calcutta High Court in Commissioner of Customs (Preventive) v. Uma Shankar Verma reported in 2000 (120) ELT 322 (Cal.), Mr.V.Sundareswaran, learned counsel for the appellant further submitted that when goods are prohibited, then discretion is with the Customs authority to confiscate the same, without giving any option, to pay fine, in lieu thereof and when the goods are not prohibited, then the Customs Authority, has no option, but to allow an option to the owner, to pay a fine in lieu of confiscation. According to him, in the case of improper importation of gold, (being prohibited), option, as to whether to release the same, on payment of redemption fine or order for absolute confiscation, is with the exclusive jurisdiction of the concerned authority and on the facts and circumstances of the instant case, w....
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....ing an item, notified under Section 123 of the Act or for any other reasons, is not liable to be set aside and therefore, the direction issued by CESTAT, Madras, to the Commissioner, to give option to the 1st respondent to redeem golds seized, after determining a reasonable amount of redemption fine, is not violative of the provisions of the Customs Act, 1962 and for the abovesaid reasons, prayed for dismissal of the appeal. Heard the learned counsel appearing for the parties and perused the materials available on record. 19. Earlier in W.A.No.377 of 2016, dated 28.07.2016, on similar lines, we have considered a case, under Section 111(d) of the Customs Act, 1962, dealing with provisional release. Instant case deals with Section 125 of the customs act, 1962. On the scope and powers of the customs authority, under the provisions of the Customs Act, 1962, we have considered relevant provisions, notifications issued and answered the issues called for. We are of the view that extract from the said judgment, would be relevant for this case also, with changes, mutatis-mutandis, "38. Before adverting to the rival contentions of both parties, it is relevant to have a cursory look at th....
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.... ascertain the meaning of a section it is not permissible to omit any part of it: the whole section should be read together and an attempt should be made to reconcile both the parts. ......The first part gives life to that Order, and, therefore, the acts authorised under that Order can be done subsequent to the coming into force of the Ordinance. ......The second part appears to have been enacted for the purpose of avoiding this difficulty or, at any rate, to dispel the ambiguity. " (iv) In State of W.B., v. Union of India reported in AIR 1963 SC 1241, the Apex Court held that in considering the expression used by the Legislature, the Court should have regard to the aim, object and scope of the statute to be read in its entirety. (v) In State of Uttar Pradesh v. Dr.Vijay Anand Maharaj reported in AIR 1963 SC 946, the Hon'ble Supreme Court held as follows: The fundamental and elementary rule of construction is that the words and phrases used by the Legislature shall be given their ordinary meaning and shall be constructed according to the rules of grammar. When the language is plain and unambiguous and admits of only one meaning, no question of construction of a statute a....
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....reme Court, at Paragraph 4, held as follows: It is an elementary rule that construction of a section is to be made of all parts together. It is not permissible to omit any part of it. For, the principle that the statute must be read as a whole is equally applicable to different parts of the same section. .......It also provides for the manner of the exercise of such power. .......... Sub-section (1) of Section 36 is made subject to the fulfilment of the conditions prerequisite, (x) In the case of Reserve Bank of India v. Peerless G.F., & Co., Ltd., AIR 1987 SC 1023, the Hon'ble Apex Court held : "Interpretation must depend on the text and the context. They are the bases of interpretation. One may well say if the text is the texture, context is what gives the colour. Neither can be ignored. Both are important. That interpretation is best which makes the textual interpretation match the contextual. A statute is best interpreted when we know why it was enacted. With this knowledge, the statute must be read, first as a whole and then section by section, clause by clause, phrase by phrase and word by word. If a statute is looked at, in the context of its enactment, with the ....
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....duce the legislation to futility. It is also well settled that every statute is to be interpreted without any violence to its language. It is also trite that when an expression is capable of more than one meaning, the Court would attempt to resolve the ambiguity in a manner consistent with the purpose of the provision, having regard to the great consequences of the alternative constructions. (xiv) In Visitor Amu v. K.S.Misra reported in 2007 (8) SCC 594, the Supreme Court held that, It is well settled principle of interpretation of the statute that it is incumbent upon the Court to avoid a construction, if reasonably permissible on the language, which will render a part of the statute devoid of any meaning or application. The Courts always presume that the legislature inserted every part thereof for a purpose and the legislative intent is that every of the statute should have effect. The legislature is deemed not to waste its words or to say anything in vain and a construction which attributes redundancy to the legislature will not be accepted except for compelling reasons. It is not a sound principle of construction to brush aside words in a statute as being in apposite surplus....
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....te or partial, of citizens of India; (q) the fulfilment of obligations under the Charter of the United Nations for the maintenance of international peace and security; (r) implementation of any treaty, agreement or convention with any country; (s) the compliance of imported goods with any laws which are applicable to similar goods produced or manufactured in India; (t) prevention of dissemination of documents containing any matter which is likely to prejudicially affect friendly relations with any foreign State or is derogatory to national prestige; (u) prevention of the contravention of any law for the time being in force; and (v) other purpose conducive to the interests of the general public. 42. Chapter IV-A deals with detection of illegally imported goods and prevention of the disposal thereof. Section 11A speaks about illegal import, intimated place, notified date and notified goods. Section 11A(a) of the Act, defines, illegal importand the same is extracted hereunder: illegal import" means the import of any goods in contravention of the provisions of this Act or any other law for the time being in force. 43. Chapter XIII deals with searches, seizure and ar....
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....ing shown, be extended by the Commissioner of Customs for a period not exceeding six months. (3) The proper officer may seize any documents or things which, in his opinion, will be useful for, or relevant to, any proceeding under this Act. (4) The person from whose custody any documents are seized under sub-section (3) shall be entitled to make copies thereof or take extracts there from in the presence of an officer of customs. .......... 45. Chapter XIV deals with the confiscation of goods and conveyances and imposition of penalties. Section 111, dealing with confiscation of improperly goods, etc., read as follows: "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 ....
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.... 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." 46. Section 112 deals with the penalty for improper importation of goods, etc., and the same is extracted hereunder: SECTION 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 penal....
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....d manufactures thereof, watches, and any other class of goods which the Central Government may by notification in the Official Gazette specify. 49. Section 125 of the Act, speaks about the option to pay fine in lieu of confiscation and the said Section is extracted hereunder: (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, 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 additi....
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....roceedings. He places reliance for this proposition on Union of India v. Jain Shudh Vanaspathi [1992 (1) Scale 34], affirming the decision of the Delhi High Court in Jain Shudh Vanaspati Ltd., and Anr. v. Union of India & Ors., [1982] 10 E.L.T. 43 (Del.) (to which one of us was a party). There was some discussion before us as to whether this Court has confirmed the decision of the High Court on the above point or left it open in para 4 of the judgment. We do not think it is necessary for for us to enter into this controversy. That was a case where the goods had been completely cleared accepting the plea of the importer that their import was not prohibited. The High Court held that so long as this acceptance stood the goods were not liable to confiscation. We are here concerned with the question whether the goods are liable to confiscation under s.111(j) and this question has to be answered in the affirmative in view of the language of the section. The conclusion here that the goods are liable to confiscation does not go behind or ignore the effect of the order of clearance, as in that case. It accepts the fact of clearance and proceeds on the footing that the goods, rightly cleared....
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....e respondents shall appear before the authority without further notice. The authority shall call the matter on that date for further proceedings in the matter. The claim of the respondents to entitlement to redeem the goods by payment of fine in lieu of confiscation may be considered by the authority at the appropriate stage and in accordance with law. If the goods are so returned to the respondents, then respondents may become entitled to export them. Against the adjudication the respondents shall, of course, be entited to pursue their statutory appeals etc. ............ 59. In Om Prakash Bhatia v. Commissioner of Customs, Delhi reported in 2003 (155) ELT 423 (SC), the Hon'ble Apex Court considered a case of over-invoicing goods and consequently, a claim of fraudulent drawback........ Rejecting the contention of the appellant therein that Section 113(D) of the Customs Act, would be applicable, as the goods were not prohibited goods and agreeing with the contention of the revenue, that over-invoicing is not permitted under the Act and therefore, it is in violation of the statutory provisions and in that context, Section 113(D) of the Act would be attracted, which states tha....
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....law for the time being in force in this country" is liable to be confiscated. "Any prohibition" referred to in that section applies to every type of "prohibition". That prohibition may be complete or partial. Any restriction on import or export is to an extent a prohibition. The expression "any prohibition" in section 111(d) of the Customs Act, 1962 includes restrictions. Merely because Section 3 of the Imports and Exports (Control) Act, 1947, uses three different expressions "prohibiting", "restricting" or "otherwise controlling", we cannot cut down the amplitude of the word "any prohibition" in Section 111(d) of the Act. "Any prohibition" means every prohibition. In other words all types of prohibitions. Restriction is one type of prohibition. From item (I) of Schedule I, Part IV to Import Control Order, 1955, it is clear that import of living animals of all sorts is prohibited. But certain exceptions are provided for. But nonetheless the prohibition continues." 60. In Commissioner of Customs (AIR), Chennai-I v. Samynathan Murugesan reported in 2009 (247) ELT 21 (Mad.), about 7.075 Kgs gold ornaments were recovered from a T.V. Set. Goods were claimed to be prohibited, as the p....
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.... If conditions are not fulfilled, it may amount to prohibited goods. This is also made clear by this Court in Sheikh Mohd. Omer v. Collector of Customs, Calcutta and others [(1970) 2 SCC 728], wherein it was contended that the expression 'prohibition' used in Section 111(d) must be considered as a total prohibition and that the expression does not bring within its fold the restrictions imposed by Clause (3) of the Import Control Order, 1955. The Court negatived the said contention and held thus:-- "...What Clause (d) of Section 111 says is that any goods which are imported or attempted to be imported contrary to "Any prohibition imposed by any law for the time being in force in this country" is liable to be confiscated. "Any prohibition" referred to in that section applies to every type of "prohibition". That prohibition may be complete or partial. Any restriction on import or export is to an extent a prohibition. The expression "any prohibition" in Section 111(d) of the Customs Act, 1962 includes restrictions. Merely because Section 3 of the Imports and Exports (Control) Act, 1947, uses three different expressions "prohibiting", "restricting" or "otherwise controlling", ....
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....confirmed by the Hon'ble Supreme Court in Samyanathan Murugesan v. Commissioner of Customs (AIR) reported in 2010 (254) ELT A15(SC). 62. In Abdul Razak v. Union of India reported in 2012 (275) ELT 300 (Ker)(DB), there was an attempt by the appellant therein to smuggle gold, weighing over 8 Kgs, by concealing the same, in emergency light, mixie, grinder and car horns, etc. The authorities seized the same. Adjudicatory proceedings ended in confiscation. Contention of the appellant therein, before the High Court, was that Section 125 of the Customs Act, 1962, does not provide for confiscation of goods, other than prohibited goods. Repelling the said contention and following Om Prakash Bhatia's case (cited supra), at Paragraph 6, after referring to Section 2(33) of the Customs Act, 1962, a Hon'ble Division Bench of Kerala High Court, held as follows: 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 ....
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....declared the goods and there was no specific licence or certificate of registration. The adjudicating authority ordered for confiscation. Matter went upto the Tribunal, which remanded the same, for a decision, which ultimately landed up in the High Court. After considering the rival contentions therein, and Om Prakash Bhatia's case (cited supra), at Paragraph 20, a Hon'ble Division Bench of this Court, held as follows: 20. If we employ the meaning of the word prohibition as was done in Om Prakash Bhatia's case we have to hold that the imported druid was Prohibited goodssince the respondent is not an eligible passenger as he did not satisfy the conditions. The impugned order deserves to be set aside. In view of the above decision, the order, dated 30.04.2008 consequent to the order of remand also is set aside. Since we are of the opinion that the conclusion of the Tribunal was wrong and the order of remand was also erroneous. 67. From the decisions in Samyanathan Murugesan's case (cited supra), Abdul Razak's case (cited supra) and Brinda Enterprises's case (cited supra), it is manifestly clear that the adjudicating authorities/Courts have to consider tw....
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....the Customs Act, 1962 and hence, cannot be released provisionally under Section 110 of the Customs Act, 1962, at Paragraphs 13 and 14, a learned single Judge of this Court held as follows: 13. Further, when the goods were confiscated under Section 111(d) and 111(I) of the Customs Act, 1962, the question of provisional release under Section 110 of the Customs Act, 1962, does not arise. Therefore, this Court is of view that only after the completion of adjudication process, the adjudicating authority would decide whether the goods confiscated under Section 111(d) and 111(1) of the Customs Act, 1962, could be released or not. 14. Accordingly, the respondent, who is the adjudicating authority, is directed to complete the adjudication, after affording an opportunity of personal hearing to the petitioner, within a period of eight weeks from the date of receipt of a copy of this order. The petitioner shall cooperate with the adjudicating authority to complete the adjudication as aforestated. 71. In Commissioner of Customs (Prev.), Mumbai v. M.Ambalal & Co., reported in 2010 (260) ELT 487 (SC), after referring to the expression, dutiable goods, duty, import, imported goods, importer....
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....ng himself out to be importer. The word `smuggling', in relation to goods, means any act or omission which will render such goods liable to confiscation under Section 111 or Section 113 of the Act. 8) Section 11 of the Act enables the Central Government to prohibit importation or exportation of goods either absolutely or subject to conditions as specified in the notification, the import or export of the goods of any specified description. Section 11A to 11G speaks of detention of illegally imported goods and prevention of the disposal thereof. Section 12 of the Act is the charging Section. Under this Section, the duty is leviable on all imported goods. Valuation of the imported goods is done as provided under Section 14 of the Act. Section 25 of the Act empowers the Central Government to issue notifications exempting generally either absolutely or subject to such conditions as specified in the notification, goods of any specified description from the whole or any part of the Customs Act leviable thereon. The definition of imported goods has to be read along with Section 111 of the Act which deals with goods brought from place outside India. Section 111 of the Act provides for....
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....exemption notification, the entire scheme of the Act requires to be taken note of. As noted above, `imported goods' for the purpose of this Act is explained by a conjoint reading of Section 2(25), Section 11, Section 111 and Section 112. Reading these Sections together, it can be found that one of the primary purposes for prohibition of import referred to the latter is the prevention of smuggling [See Section 11(2)(c)]. Further, in the light of the objects of the Act and the basic skeletal framework that has been enumerated above, it is clear that one of the principal functions of the Act is to curb the ills of smuggling on the economy. In the light of these findings, it would be antithetic to consider that `smuggled goods' could be read within the definition of `imported goods' for the purpose of the Act. In the same light, it would be contrary to the purpose of exemption notifications to accord the benefit meant for imported goods on smuggled goods. 72. Following an earlier decision of this Court in W.P.No.21194 of 2013, dated 08.10.2014, in a decision in R.K.Enterprises v. The Commissioner of Customs reported in 2015-TIOL-2733-HC-MAD-CUS, a learned single Judge hel....
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....prohibited goods. This is why the exclusion clause contained in the second part of Section 2(33) uses the expression "any such goods". Therefore, it appears that the Customs Act recognizes only two types of goods namely: (1) those that are prohibited; and (2) those that are not prohibited. The Act also recognizes the fact that even prohibited goods could be imported or exported subject to certain conditions. If those conditions are fulfilled, prohibited goods would automatically become non-prohibited goods. While considering Sections 111 and 125(1) of the Customs Act, 1962, the Court held thus, 15. Section 11 of the Act empowers the Central Government, by Notification in the official gazette, to prohibit either absolutely or subject to such conditions to be fulfilled before or after clearance of the import or export of goods of any specified description. The expression "illegal import" is defined in Section 11A(a) of the Customs Act, 1962 to mean the import of any goods in contravention of the provisions of the Customs Act or any other law for the time being in force. 16. What is to be done if goods are improperly imported into or exported outside India, is spelt out in Chapt....
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....ying with the conditions, or in violation of statutory provisions in the Customs Act, 1962 or any other law for the time being in force and in all cases, whether there is either total prohibition or restriction, in the light of the judgmnet of the Apex Court in Om Prakash Bhatia's case, such goods should fall within the definition of Prohibited goods. When import is in contravention of statutory provisions, in terms of Sections 11 or 11A of the Customs Act, 1962 or any other law, for the time being in force and when such goods squarely fall within the definition illegal import, or the other provisions in the statute, dealing with prohibition/restriction, the same are to held as, "prohibited goods" and liable for confiscation. 77. .........under Section 123 of the Customs Act, 1962, if the importer fails to discharge the burden that the goods seized from him, were not smuggled, then there is a strong reason for the proper officer to seize such goods. Smuggling is nothing but importing goods clandestinely, without payment of duty and such goods would squarely fall within the definition of Prohibited goods, under Section 2(33) of the Act. 78. The expression, subject to the pr....
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....cheme. It is now well known that use of the expression shall or may by itself is not decisive. The court while construing a statute must consider all relevant factors including the purpose and object the statute seeks to achieve. (see P.T.Rajan v. T.P.M.Sahir and U.P.SEB v. Shiv Mohan Singh). 85. If Section 125 of the Customs Act, 1962 has to be interpreted in the manner, as contended by the learned counsel for the appellant, to confer powers on the proper officer to release of the goods, pending orders of the adjudicating authority, then the Legislature would have used the word, shall, instead of word, may. In the case on hand, considering the material on record, the respondent-adjudicating authority, has decided not to order provisional release, pending adjudication. 86. If there is a fraudulent evasion of the restrictions imposed, under the Customs Act, 1962 or any other law for the time being in force, then import of gold, in contravention of the above, is prohibited. For prohibitions and restrictions, Customs Act, 1962, provides for machinery, by means of search, seizure, confiscation and penalties. Act also provides for detection, prevention and punishment for evasion of....
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....hether subjective satisfaction is based on valid materials, and not on whims and fancies of the authority. 93. Keeping in mind, the objects and purpose for which, Customs Act, 1962, is enacted, dealing with prohibition/restriction, this Court is of the considered view that the competent authority, has to arrive at a satisfaction, as to whether, goods seized and liable for confiscation, can be released provisionally, pending adjudication or after adjudication, and in that context, the role of the Courts, in exercise of the powers, under Article 226 of the Constitution of India, should be confined only to test such satisfaction, arrived at, by the competent authority, with regard to the objects of the Customs Act, 1962 and any other law for the time being in force. 94. Though the argument of the learned counsel for the appellant is that since gold is not notified, as one of the prohibited goods, by way of any notification, in the official gazette and therefore, .....release can be ordered, we are not inclined to accept the said contention, as prohibition/restriction, is inbuilt in the Customs Act, 1962." 20. In Hargovind Das K.Joshi v. Collector of Customs and others reported i....
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....govind Das K.Joshi's case, the Hon'ble Apex Court has remitted the matter to the Commissioner of Customs, for the limited purpose, as to whether or not, to give an option to the appellant therein, to redeem the confiscated goods on payment of such fine, as may be considered appropriate by him, in lieu of confiscation and further directed that it would be open to the concerned officer to take a decision one way or the other, in accordance with law, considered appropriate on the circumstances of the case, after hearing the appellants therein, in the instant case, if we may say so, usurping the powers of the adjudicating authority, the Tribunal has observed that there is no need for absolute confiscation of the goods. As rightly contended by the learned counsel for the appellant, the Tribunal has arrogated the powers of the adjudicating authority, directed the adjudicating authority, to release gold, by exercising option in favour of the respondent. 23. When it is the case of the appellant that 2548.3 grams of gold were concealed and not declared, in contravention of Section 77 of the Customs Act, 1962 and that there was a violation of Section 111(d)(i)(l) and (m) of the Cust....
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....nal Collector has found that the goods had been imported in violation of the provisions of Import (Control) Order, 1955 read with Section 3(i) of the Import and Export (Control) Act, 1947. In the circumstances he considered it appropriate to direct absolute confiscation of the goods which indicates that he did not consider it a fit case for exercise of his discretion to give an option to pay the redemption fine under Section 125 of the Act. The Tribunal also felt that since this was a case in which fraud was involved, the order of the Additional Collector directing absolute confiscation of the goods did not call for any interference. We do not find any reason to take a different view." 25. In Commissioner of Customs (Preventive) v. Uma Shankar Verma reported in 2000 (120) ELT 322 (Cal.), the Commissioner of Customs (Preventive) challenged the order of a trial Judge, who allowed release of gold on payment of redemption fine. Reading of the above judgment shows that the said order has been passed, on the suggestion of the learned counsel for the department, appellant therein. While testing the correctness of the same, a Hon'ble Division Bench of the Calcutta High Court, at Para....
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....iting, restricting or otherwise regulating, in all cases or in specified classes of cases and subject to such exceptions, if any, as may be made by or under the order, the import or export of goods. (3) All goods to which any order under Sub-section (2) applies shall be deemed to be goods the import or export of which has been prohibited under Section 11 of the Customs Act, 1962 (52 of 1962) and all the provisions of that Act shall have effect accordingly." 6. Section 5 of the said Act provides that the Central Government may from time to time formulate and announce by notification in the Official Gazette the export and import policy and may also in like manner amend that policy. Pursuant to and in furtherance of the said provisions Export Import Policy for the year 1997-2000 had been taken, Clause 4.1 whereof reads thus - "4.1 Exports and Imports shall be free except to the extent they are regulated by the provisions of this Policy or any other law for the time being in force. The itemwise export and import policy shall be, as stated in columns 3 to 5 of the book, titled "ITC (HS) Classifications of Exports and Import Items" published and notified by the Director General of ....
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....n to the party to pay a fine in lieu of confiscation. 11. The principal question which, thus, arises for consideration is as to whether gold is a prohibiited item ? A Public Notice No. 51, dated 27th October, 1997 was issued which reads thus - "Attention is invited to Public Notice No. 214/(PN)/92-97, dated 1st June, 1994 vide which import of gold and silver was allowed without licence by Reserve Bank of India or any other agency to be designated by the Ministry of Finance (Deptt. of Economic Affairs). In exercise of the powers conferred under paragraph 4.11 of the Export and Import Policy 1997-2002 read with Col. 4 of the ITC (HS) Classification in Chapter 71, the Director General of Foreign Trade hereby notifies that these disignated agencies as mentioned in the Notification 80/97 referred above may import gold and silver for sale in the domestic market also without a licence or without surrender of SIL in respect of following entries of ITC (HS) Classifications of Export and Import Items 1997-2002 :- Gold: 710812 00 Other unwrought forms." 12. The same was further amended by a Public Notice No. 54 dated 4th November, 1997 which is to the following effect :- "Attentio....
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.... nevertheless this provision creates a legal fiction whereby an amount received in excess of the written-down value is firstly treated as income and secondly regarded as income from business or profession and thirdly it is considered to be the income of the previous year in which the money payable became due. That this section creates a legal fiction has been held by this Court in Cambay Electric case where (at ITR p. 93) it was observed as under : (SCC p. 654, para 7) "It is true that by a legal fiction created under Section 41(2) a balancing charge arising from sale of old machinery or building is treated as deemed income and the same is brought to tax; in other words, the legal fiction enables the Revenue to take back what it had given by way of depreciation allowance in the preceding years since what was given in the preceding years was in excess of that which ought to have been given. This shows that the fiction has been created for the purpose of computation of the assessable income of the assessee under the head 'Business Income'. It was rightly pointed out by the learned Solicitor General that legal fictions are created only for a definite purpose and they should be....
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....under Section 108 of the Customs Act, 1962, was recorded. Taking note of the policy adopted by the Central Government that import of gold beyond 5 Kgs., was not permissible, revisional authority therein, under the Customs Act, 1962, while exercising discretion, allowed gold, weighing 5 Kgs., on payment of redemption fine, amounting Rs. 5,00,000/- plus duty, at the normal baggage and that the balance gold was ordered to be confiscated. He also imposed penalty. When the said order was tested, by way of a Writ Petition, under Article 226 of the Constitution of India and though the revenue, before the Writ Court contended that the entire gold ought to have been confiscated, taking note of the policy of the Central Government, permitting import gold of 5 Kgs., a Hon'ble Division Bench of the Calcutta High Court, has negatived the challenge of the petitioner therein. 28. Facts of the reported case is inapposite to the case on hand. That was a case, where the discretion was exercised, having regard to the policy prevailed, at that point of time. Whereas, in the case on hand, the appellant has contended that there was a deliberate attempt to smuggle gold. Merely because, discretion ha....
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.... Assailing the correctness, contentions have been made that import of gold was allowed free, under the Export-Import Policy 2002-07, as amended and hence, gold was not prohibited goods, within the meaning of the Customs Act, 1962 but was only dutiable goods, within the meaning of the said Act, and under such circumstances, the adjudicating authority ought to have exercised his discretion, to allow redemption of the gold seized, upon payment of redemption fine, to be fixed by the adjudicating authority, in terms of Section 125 of the Customs Act, 1962. On the above facts and submissions, the Calcutta High Court, having found that the adjudicating authority has not offered any reasons in the order of confiscation, as to why, discretion was not exercised, set aside the order of confiscation, and remanded the matter to the competent authority. 32. Going through Suresh Bhosle's case (cited supra), it could be deduced that there was no argument advanced by the revenue, as to what are prohibited goods, in terms of Section 2(33) of the Customs Act, 1962 and therefore, with due respect, we are of the view that the Hon'ble Division Bench only considered the Export-Import Policy 2002....
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....ply only to the passenger of Indian origin or a passenger holding a valid passport issued under the Passport Act, 1967. The petitioner does not satisfy the above condition. Further, the attempt to smuggle the goods by green channel without payment of duty justifies the order of absolute confiscation as has been held by the Division Bench of this Court and upheld by the Supreme Court referred to above. 9. Petitioner's plea for redemption cannot be justified as he attempted to misuse the facility which does not apply to a foreign national. This is revealed by the petitioner's statement given to the Customs Officer referred to supra." 36. In Fortis Hospital Ltd., v. Commissioner of Customs, Import reported in 2015 (318) ELT 551 (SC), show cause notice issued under Section 124 of the Customs Act, 1962 was for confiscation and penalty. Nothing was stated about the payment of duty. But ultimately, final order was passed, including a direction to pay the customs duty. The department attempted to justify the order under Section 125 of the Customs Act, 1962, On the said facts, the Hon'ble Supreme Court held that direction for payment of customs duty, could not be issued unde....
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....n, Intelligence Officer, Directorate of Revenue Intelligence, Chennai stated that he identified Shri.P.Sinnasamy when the passengers were coming out after immigration clearance; that none of the officers brought any person by name Shri Babu Chinasamy; that the Officers were looking for Shri.P.Sinnasamy only and nobody else. The counsel submitted that Shri.P.Sinnasamy is undergoing COFEPOSA detention and is very poor and requested for leniency." 39. After careful consideration of the entire records, the adjudicating authority, vide order, dated 31.03.2000, in Order-in-Original No.31 of 2000, has recorded the findings as hereunder: "10. I have carefully gone through the records of the case. In this case the passenger Shri. P. Sinnasamy was intercepted by the Officers of Directorate of Revenue Intelligence and on being questioned about the contents of his baggage, he produce the customs declaration form indicating the contents as Martin Shirts, calculators anti miscellaneous goods whereas thorough search of his baggage in the presence of witnesses has resulted in the recovery of 111 gold bits totally weighing 2548.3 Grams valued at Rs. 10,34,355/- (MV) and other assorted goods valu....
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....terial objects used for concealing and carrying the aforesaid gold bits under seizure are also liable for confiscation under Section 119 of the Customs Act, 1962. As per para 5.6 of the Exim Policy 1997-2002, only bonafide household goods and personal effects may be imported as part of passenger's baggage. In this case, the assorted goods viz., 18 Nos. Aiwa Walkman, 120 Nos. Citizen calculators etc., totally valued at Rs. 41,117/- (CIF) are clearly in commercial quantity. Moreover the passenger himself confessed in his voluntary statement that he brings electronic goods from Singapore for sale in India. Hence the aforesaid assorted goods cannot be considered as items of his bonafide baggage. Further the passenger had not made a proper declaration of the goods as required by Section 77 of the Customs Act, 1962 and his intention to evade payment of Customs duty is evident. In view of the above, the assorted goods brought by the passenger in excess of the declared goods, valued at Rs. 41,117/- (CIF) are also liable for confiscation under Section 111(d) (l) & (m) of the Customs Act, 1962 read with Section 3 (3) of the Foreign Trade (Development & Regulation) Act 1992. Besides Shri ....
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....n-Original No.31 of 2000, dated 31.03.2000, has given reasons, as to why, gold seized is liable for confiscation. On the facts and circumstances of the case, we are of the view that it cannot be contended that there is any failure on the part of the adjudicating authority to exercise his discretion, under Section 125 of the Customs Act, 1962. 41. In the case on hand, when discretion is conferred on the adjudicating authority, under Section 125 of the Customs Act, 1962, as to whether, gold and other goods seized, should be confiscated absolutely or be permitted to be redeemed on payment of fine, on the facts and circumstances of the case, and considering the statutory provisions and notification, he has ordered absolute confiscation of gold and other goods, used for import and released certain goods on payment of fine and duty. Exercise of discretion has been interfered with by the Tribunal, with a specific direction to give option for redemption, in which event, there is no choice left to the adjudicating authority to act. He has no freedom or liberty to act, according to own will and that he has been compelled to exercise discretion and his power, without control, other than his ....
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....se it unfairly. Where the law requires an authority to act or decide, 'if it appears to it necessary' or if he is 'of opinion that a particular act should be done' then it is implicit that it should be done objectively, fairly and reasonably. In a democratic set up the people or community being sovereign the exercise of discretion must be guided by the inherent philosophy that the exercise of discretion is accountable for his action. It is to be tested on anvil of rule of law and fairness or justice particularly if competing interests of members of society is involved. Decisions affecting public interest or the necessity of doing it in the light of guidance provided by the Act and rules may not require intimation to person affected yet the exercise of discretion is vitiated if the action is bereft of rationality, lacks objective and purposive approach. Public interest or general good or social betterment have no doubt priority over private or individual interest but it must not be a pretext to justify the arbitrary or illegal exercise of power. It must withstand scrutiny of the legislative standard provided by the statute itself. The authority exercising discretion ....
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....propriety. These principles were highlighted by Lord Diplock in Council of Civil Service Unions v. Minister for the Civil Service (commonly known as CCSU case). If the power has been exercised on a non-consideration or non-application of mind to relevant factors, the exercise of power will be regarded as manifestly erroneous. If a power (whether legislative or administrative) is exercised on the basis of facts which do not exist and which are patently erroneous, such exercise of power will stand vitiated. (See CIT v. Mahindra and Mahindra Ltd.) The effect of several decisions on the question of jurisdiction has been summed up by Grahame Aldous and John Alder in their book Applications for Judicial Review, Law and Practice thus: There is a general presumption against ousting the jurisdiction of the courts so that statutory provisions which purport to exclude judicial review are construed restrictively. There are, however, certain areas of governmental activity, national security being the paradigm, which the courts regard themselves as incompetent to investigate, beyond an initial decision as to whether the Governments claim is bona fide. In this kind of non-justiciable area judic....
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.... that it lay within the powers of the authority. ... In another, it is taking into consideration extraneous matters. It is unreasonable that it might almost be described as being done in bad faith; and in fact, all these things run into one another. Lord Greene also observed: (KB p.230 : All ER p.683 F-G) ... it must be proved to be unreasonable in the sense that the court considers it to be a decision that no reasonable body can come to. It is not what the court considers unreasonable. ... The effect of the legislation is not to set up the court as an arbiter of the correctness of one view over another. (emphasis supplied) 18. Therefore, to arrive at a decision on reasonablenessthe court has to find out if the administrator has left out relevant factors or taken into account irrelevant factors. The decision of the administrator must have been within the four corners of the law, and not one which no sensible person could have reasonably arrived at, having regard to the above principles, and must have been a bona fide one. The decision could be one of many choices open to the authority but it was for that authority to decide upon the choice and not for the court to substitute ....
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....th caution; nice discernment, and judgment directed by circumspection; deliberate judgment; soundness of judgment; a science or understanding to discern between falsity and truth, between wrong and right, between shadow and substance, between equity and colourable glosses and pretences, and not to do according to the will and private affections of persons. 22. The word "discretion" standing single and unsupported by circumstances signifies exercise of judgment, skill or wisdom as distinguished from folly, unthinking or haste;evidently therefore a discretion cannot be arbitrary but must be a result of judicial thinking. The word in itself implies vigilant circumspection and care; therefore, where the legislature concedes discretion it also imposes a heavy responsibility. "The discretion of a judge is the law of tyrants; it is always unknown. It is different in different men. It is casual, and depends upon constitution, temper and passion. In the best it is often times caprice; in the worst it is every vice, folly, and passion to which human nature is liable," said Lord Camden, L.C.J., in Hindson and Kersey reported in (1680) 8 HOW St Tr 57." 51. In Aero Traders Pvt. Ltd., v. Rav....
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.... matter before it; it must not act under the dictates of another body or disable itself from exercising discretion in each individual case. In the purported exercise of its discretion, it must not do what it has been forbidden to do, nor must it do what it has not been authorised to do. It must act in good faith, must have regard to all relevant considerations and must not be influenced by irrelevant considerations, must not seek to promote purposes alien to the letter or to the spirit of the legislation that gives it power to act, and must not act arbitrarily or capriciously. These several principles can conveniently be grouped in two main categories: (i) failure to exercise a discretion, and (ii) excess or abuse of discretionary power. The two classes are not, however, mutually exclusive. Thus, discretion may be improperly fettered because irrelevant considerations have been taken into account, and where an authority hands over its discretion to another body it acts ultra vires. 53. In Reliance Airport Developers Pvt. Ltd., v. Airports Authority of India reported in 2006 (10) JT 423 (SC), the Hon'ble Apex Court held that the discretion must be governed by rule and not by hum....