TaxTMI 
TaxTMI 
2016 (9) TMI 879
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....elligence, Chennai. He showed his Customs declaration 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 r....
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....dered that the duty at the appropriate rate, would be chargeable, on redemption of 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 Fin....
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....retion to be exercised by the authority and the Tribunal cannot direct the said authority, to exercise 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 exc....
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....st respondent, even in respect of gold 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, 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-mut....
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....IR 1954 SC 202]. (iii) In The State of Bihar v. Hira Lal Kejriwal reported in AIR 1960 SC 47, the Supreme Court, at Paragraph 6, held that, "To 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 mean....
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....nd every word that is used by the legislature must be given its due import and significance. (ix) In Balasinor Nagrik Co-operative Bank Ltd., v. Babubhai Shankerlal Pandya reported in 1987 (1) SCC 606, the Supreme 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 kno....
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....ll settled principle of law that, the Court cannot change the scope of legislation or intention, when the language of the statute is plain and unambiguous. Narrow and pedantic construction may not always be given effect to. Courts should avoid a construction, which would reduce 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 d....
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.... (l) the protection of national treasures of artistic, historic or archaeological value; (m) conservation of exhaustible natural resources; (n) protection of patents, trademarks and copyrights; (o) prevention of deceptive practices; (p) carrying on of foreign trade in any goods by the State, or by a Corporation owned or controlled by the State to the exclusion, complete 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 dea....
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....d certifying the correctness of any list of samples so drawn. (1C) Where an application is made under sub-section (1B), the Magistrate shall, as soon as may be, allow the application. (2) Where any goods are seized under sub-section (1) and no notice in respect thereof is given under clause (a) of section 124 within six months of the seizure of the goods, the goods shall be returned to the person from whose possession they were seized : Provided that the aforesaid period of six months may, on sufficient cause being 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 follo....
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....ection 77; (m) any goods which do not correspond in respect of value or in any other particular with the entry made under this Act or in the case of baggage with the declaration made under section 77 in respect thereof, or in the case of goods under transhipment, with the declaration for transhipment referred to in the proviso to sub-section (1) of section 54; (n) any dutiable or prohibited goods transited with or without transhipment or attempted to be so transited in contravention of the provisions of Chapter VIII; (o) any goods exempted, subject to any condition, from duty or any prohibition in respect of the import thereof under this Act or any 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 fo....
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.... involved. 48. Section 123 of the Act, deals with burden of proof in certain cases and the same is extracted hereunder: (1) where any goods to which this section applies are seized under this Act in the reasonable belief that they are smuggled goods, the burden of proving that they are not smuggled goods shall be - (a) in a case where such seizure is made from the possession of any person, - (i) on the person from whose possession the goods were seized; and (ii) if any person, other than the person from whose possession the goods were seized, claims to be the owner thereof, also on such other person; (b) in any other case, on the person, if any, who claims to be the owner of the goods so seized. (2) This section shall apply to gold, and 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, i....
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....d in the business of manufacture and production of plastic compounds, plastic films and sheets and plastic chemicals. A detention order was passed, under section 3(1) of the Conservation of Foreign Exchange & Prevention of Smuggling Activities Act, 1974, with a view to prevent him from abetting the smuggling of goods. Consignment of Ethyle Hexanol (EHA) was transported to bonded warehouses, after assessment to duty in October-November, 1989 and subsequently, the goods were removed from the bonded warehouse, without the permission of the proper officer. Referring to Sections 111(J) and 243 of the Customs Act and Section 2(39), which defines, Smuggling, the Hon'ble Apex Court held that, The third point made by Sri Sen is that once goods are cleared by the customs authorities, they are not liable to confiscation unless the order granting clearance is reversed in appropriate proceedings. 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 som....
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....tractive. The proceedings of seizure and confiscation are proceedings in rem. Until the culmination of the adjudication it is difficult to envisage any right on the part of the respondents from whom they are seized to export them on the basis of a future title they expect to acquire by payment of fine. Learned Counsel, however, says that it would earn foreign exchange for the country. But sanctity of legal proceedings cannot be whittled down on grounds of such expediency. 4. In the circumstances, we set aside both the orders of the learned Single Judge as well as of the Division Bench. The Writ Petition before the High Court deserves to be and is hereby dismissed. The interest of the respondents will be adequately protected, if we direct the statutory adjudication to be completed within 45 days from 1st February, 1994. The first date of hearing before the statutory authority shall be 1st February, 1994, and the 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 m....
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...., the import or export of the goods of any specified description. The notification can be issued for the purposes specified in sub-section (2). Hence, prohibition of importation or exportation could be subject to certain prescribed conditions to be fulfilled before or after clearance of goods. 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 expo....
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....import or export of goods under the Act or any other law for the time being in force, it would be considered to be prohibited goods; and (b) this would not include any such goods in respect of which the conditions, subject to which the goods are imported or exported, have been complied with. This would mean that if the conditions prescribed for import or export of goods are not complied with, it would be considered to be prohibited goods. This would also be clear from Section 11 which empowers the Central Government to prohibit either 'absolutely' or 'subject to such conditions' to be fulfilled before or after clearance, as may be specified in the notification, the import or export of the goods of any specified description. The notification can be issued for the purposes specified in Sub-section (2). Hence, prohibition of importation or exportation could be subject to certain prescribed conditions to be fulfilled before or after clearance of goods. 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....
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....ssport at any time, or he or either of his parents or any of his grand parents, was a citizen of India by virtue of the Constitution of India or the Citizenship Act, 1955 (57 of 1955); provided that the national of Pakistan or Bangladesh shall be deemed to be not of Indian origin. A spouse (not being a national of Pakistan or Bangladesh) of a person of Indian origin shall also be deemed to be of Indian origin. 8. ............ 9. In view of meaning of the word prohibition as construed laid down by the Supreme Court in Om Prakash Bhatia case we have to hold that the imported gold was prohibited goods since the respondent is not an eligible passenger who did not satisfy the conditions. The impugned order deserves to be set aside. 10. In 1992 (61) ELT 372(cited supra), the Supreme Court directed the Collector to consider the exercise of discretion. In this case, the Collector had rightly considered it and refused to give the option. 61. Decision in Samyanathan Murugesan's case (cited supra), has been confirmed by the Hon'ble Supreme Court in Samyanathan Murugesan v. Commissioner of Customs (AIR) reported in 2010 (254) ELT A15(SC). ....
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....d goods cannot be ordered. 64. Dictum of the Hon'ble Supreme Court and the High Courts makes it clear that gold, may not be one of the enumerated goods, as prohibited goods, still, if the conditions for such import are not complied with, then import of gold, would squarely fall under the definition, prohibited goods, in Section 2(33) of the Customs Act, 1962, which states that, any goods the import or export of which is subject to any prohibition under this Act or any other law for the time being in force but does not include any such goods in respect of which the conditions subject to which the goods are permitted to be imported or exported have been complied with. When there is a violation of statutory prohibitions, mentioned in Sections 11 and 11A of the Customs Act, 1962 or any other law, for the time being in force or restrictions imposed, such restrictions would also encompass the expression, any prohibition. .................... 66. In Commissioner of Customs, Chennai v. Brinda Enterprises reported in 2010 (262) ELT 239 (Mad.), the company mis-declared the goods and there was no specific licence or certificate of registration. The adjudicating ....
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....r was carrying gold chains of 18 carat, two bangles of 24 carat purity, 12 kg of saffron, RMD Kutka, Gudang Garam Cigarette cartons, perfumes and two samsung mobiles. A search was conducted by the Officers of Directorate of Revenue Intelligence, Trivandrum, in the baggages of the petitioner therein. Thereafter, statements were recorded. On completion of the investigation, a show cause notice was issued, under Section 124 of the Customs Act, 1962, proposing as to why, the seized goods should not be confiscated and penalty should not be imposed. He sent a reply, disputing the allegations. A Writ Petition has been filed, seeking for a direction to the respondent therein to release the seized imported goods, under the Mahazar. Accepting the contention of the revenue that since the passenger had attempted to smuggle goods into India, by concealing the same in his person, as well as in his hand baggage and checked-in-baggage, without declaring the same to the Customs, in order to evade payment of Customs duty, the aforestated goods, are held liable for confiscation, under the provisions of Section 111(d) and 111(1) of the Customs Act, 1962 and hence, cannot be released provisionally unde....
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....elation to any goods, means any act or omission which will render such goods liable to confiscation under Section 111 or Section 113 of the Act. 7) Dutiable goods are goods whose import is permitted by the Act or any other law in force. Duty is the tax leviable on the goods occasioned by their import into India or their export out of India. The dutiability of the goods is covered by Section 12 of the Act which is the charging section. Under this Section, all goods imported into or exported from India are liable to Customs duty unless the Customs Act itself or any other law for the time being in force provides otherwise. The rate of duty is fixed by the Customs Tariff Act, 1975. "Import" and "Imported Goods" means that if goods are brought into India, meaning thereby into the territory of India from outside, there is import of goods and the goods become imported goods and become chargeable to duty upto the moment they are cleared for home consumption. The word `importer' has been defined in the Act as importer in relation to any goods at any time between their importation and the time when they are cleared for home consumption includes any owner or any person who holdin....
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....arent impression that they are contradictory to each other. But this is only apparent. A close scrutiny will reveal that there is no real contradiction amongst the judgements at all. The synthesis of the views is quite clearly that the general rule is strict interpretation while special rule in the case of beneficial and promotional exemption is liberal interpretation. The two go very well with each other because they relate to two different sets of circumstances. ............ 13) In short, question before us is whether goods that are smuggled into the country can be read within the meaning of the expression `imported goods' for the purpose of benefit of the exemption notification. We are of the view that `smuggled goods' will not come within the definition of `imported goods' for the purpose of the exemption notification, for the reason, the Act defines both the expressions looking at the different definitions given to the two classes of goods: imported and smuggled, and we are of the view that if the two were to be treated as the same, then there would be no need to have two different definitions. 14) In order to understand the true meaning ....
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....re concerned, Paragraph 2.17 of the Foreign Trade Policy, prior to its amendment, stipulated that Digital Multifunction Print and Copying Machines were restricted items, and that they would be allowed to be imported only as per the provisions of the Foreign Trade Policy. On the expression, prohibited goods, at Paragraphs 12 to 14, a learned single Judge, held as follows: 12. The expression " Prohibited Goods" is defined in Section 2(33) of the Customs Act, 1962 to mean "any goods, the import or export of which is subject to any prohibition under the Customs Act or any other law for the time being in force, but it does not include any such goods in respect of which, the conditions subject to which the goods are permitted to be imported or exported have been complied with." 13. Unfortunately, the Act does not define the expression "Restricted Goods". But the definition of the expression "Prohibited Goods" itself contains an indication as to how the expression "Restricted Goods" has to be understood. 14. A careful look at Section 2(33) would show that even prohibited goods could be permitted to be imported or exported subject to some terms and conditions. Th....
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....on on importation and exportation goods and detection of illegally imported goods prevention and disposal thereof, morefully described in Sections 11 and 11A of the Act, are also to be treated as prohibited. Goods imported from outside of the territory waters of the country, against any prohibition or restriction under the Customs Act, 1962 or any other law, time being in force, are to be treated as prohibited goods. 75. There is one thing to state that gold is not one of the enumerated prohibited goods and another, to state that goods are not permitted to be brought into the country, by smuggling, which, means any act or omission which would render such goods liable to confiscation under section 111 or section 113. There may not be total prohibition for import of goods, but if import is not done lawfully, in other words against any prohibition or restriction, which are inbuilt in the Customs Act, 1962 or any other law for the time being in force, then such goods should fall within the definition of Section 2(33) of the Act. 76. A conjoint reading Sections 2(33), 11 or 11A of the Act and other provisions in the Customs Act, 1962, and any other law, for the time be....
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....therefore, those goods, would also fall under the definition of prohibited goods, in terms of Section 2(33) of the Customs Act, 1962. .............. 84. Reading of Section 125 of the Act, also makes it clear that the language employed by the Legislature is only, may. Few decisions on the aspect of usage of words, shall or may, in the context, in which, such words appear in an enactment, are reproduced hereunder: (i) In P.T.Rajan v. T.P.M.Sahir reported in 2003 (8) SCC 498, the following conclusions are relevant, 45. A statute as is well known must be read in the text and context thereof. Whether a statute is directory or mandatory would not be dependant on the user of the words shall or may. Such a question must be posed and answered having regard to the purpose and object it seeks to achieve. 46. .. 47. The construction of a statute will depend on the purport and object for which the same had been used. ... 48. .. 49. Furthermore, a provision in a statute which is procedural in nature although employs the word shallmay not be held to be mandatory if thereby no prejudice is caused. (ii) In Ashok Lanka ....
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....e being in force, one cannot ignore, the Conservation of Foreign Exchange and Prevention of Smuggling Activities Act, 1974, rules framed by way of delegated legislation, like the Baggage Rules, 1998, framed in exercise of the powers conferred under Section 79 of the Customs Act, 1962 or for the matter, Section 77 of the Customs Act, 1962, which mandates, the owner of the baggage for the purpose of clearing the goods, to make a declaration of the contents of the baggage to the proper office and also the customs Notification No.3/2012, dated 16.01.2012, that only passengers of Indian origin or a passenger in possession of a valid passport, issued under the Passport Act, 1967, who have stayed abroad for six months and above alone are eligible to import gold of foreign origin and clear the same on payment of customs duty, at the rate prescribed. ............... 92. Objective satisfaction, at the stage of provisional release or on culmination of adjudication proceedings, casts a duty on the authority, to consider, as to whether, there are prohibitions/restrictions in the Customs Act, 1962, or any other law for the time being in force and whether he is bound to exercise....
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....d have addressed himself to the said issue and passed orders. 21. Reading of the abovesaid judgment shows that at that point of time, zip fasteners were imported freely. Having regard to the said fact, prevalent at that point of time, the Hon'ble Supreme Court, by observing that presumably the Additional Collector of Customs had assumed that he was bound to confiscate the goods and because of that, he had not adverted to the aspect of exercising his discretion to give an option to the appellant's therein, to pay a fine, in lieu of confiscation. On the facts and circumstances of the reported case, the Hon'ble Supreme Court ordered as hereunder: "4. We therefore direct that the matter be remitted to the Collector of Customs for this limited purpose to this limited extent as to whether or not to give an option to the importers (appellants) to redeem the confiscated goods on payment of such fine as may be considered appropriate by him in lieu of confiscation. It will be open to the concerned officer to take a decision one way or the other in accordance with law as is considered appropriate in the circumstances of the case after hearing the appellants. We have no....
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....ithout due consideration to the above facts and statutory provisions and the categorical finding of the adjudicating authority, the Tribunal has observed that there is no need for absolute confiscation of the goods. At this juncture, we deem it fit to extract the opening sentence of Paragraph 3 of the order, impugned before us, "After considering the grounds of this appeal and the submissions of learned SDR, we are not convinced of the need to have ordered absolute confiscation of the goods." 24. In Garg Woollen Mills (P) Ltd., v. Addl. Collector of Customs, New Delhi reported in 1998 (104) ELT 306 (SC), the department contended that serviceale garments were concealed, amongst multilated garments and they were seized. Confiscation was ordered. Referring to Section 125 of the Customs Act, 1962, release of goods was sought for. After considering the manner, in which, goods were sought to be imported, at Paragraph 5, the Hon'ble Supreme Court held as follows: "Under Section 125 a discretion has been conferred on the officer to give the option to pay fine in lieu of confiscation in cases of goods, the importation or exportation whereof is prohibited under the A....
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....hat, release of goods, in the said case, has been made, on consent. One of the contentions raised before us, in the instant case, is that gold is not a prohibited item and therefore, there can be an order to release the same, on payment of redemption fine. In the above reported case, while adverting to the substantial question of law, "Whether gold is a prohibited item within the meaning of the provisions of the Customs Act, 1962?" and after considering the statutory provisions under the Customs Act, 1962 and Foreign Trade (Development and Regulations) Act, 1992 and public notices in No.51, dated 27.10.1997 and No.54, dated 04.09.1997, the Hon'ble Division Bench of Calcutta High Court has categorically held that gold is a prohibited item, which comes within the first part of Section 2(33) of the Customs Act. While considering the contention of the 1st respondent herein that gold is not a prohibited item, it is worthwhile to extract Paragraphs 5 to 19 of the judgment in Uma Shankar Verma's case (cited supra), as follows: "5. The matter relating to export and import of goods is covered by the Foreign Trade (Development and Regulation) Act, 1992. Section 3 of the said....
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.... (d) any goods which are imported or attempted to be imported or are brought within the Indian Customs water for the purpose of being imported, contrary to any prohibition imposed by or under this Act or any other law for the time being in force." 9. Section 125 of the Customs Act, 1962 provides for option to pay fine in lieu of confiscation which is to the following effect :- "125. (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 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 subsection (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 therein. (2) Where any fine in lieu of confiscation of goods is imposed under subsection (1), the owner of such goods or the person referred to in Sub-s....
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....re, evident that the gold could be imported only against a Special Import Licence or by the agencies authorised by the Reserve Bank of India. 14. The entire case of the writ petitioner/respondent is that they have purchased gold from Standard Chartered Bank which was meant for sale. The said question is essentially a question of fact and as such we need not consider the same in this proceeding as such a question will have to be determined by the statutory authority. 15. Having regard to the provisions of the Customs Act as also the 1992 Act, we are of the opinion that keeping in view the fact that a legal fiction has been created in terms of Section 3(3) of the said 1992 Act, there cannot be any doubt whatsoever, that gold would come within the purview of a prohibited item. A legal fiction as is well known must be giving its full effect. In Gajraj Singh and Ors., v. State Transport Appellate Tribunal and Ors., [1997 (1) SCC 650], it has been held as under - "Legal fiction is one which is not an actual reality and which the law recognises and the court accepts as a reality. Therefore, in case of legal fiction the court believes something to exist which in ....
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....in case of specified industries are so closely connected with each other that taking into account the balancing charge (i.e. deemed profits) before computing the 8% deduction under Section 80-E(1) would amount to extending the legal fiction within the limits of the purpose for which the said fiction has been created." We are unable to agree with the submissions of Shri Ranbir Chandra that reference to the language of Section 41(2) in Cambay Electric case was only incidental. It is evident from the meaning and effect of Section 41(2) of the Act in that case, which it did. The two provisions namely Section 10(2)(vii) second proviso of the 1922 Act and Section 41(2) of the Act both create a legal fiction, difference in language notwithstanding." 17. In Aluminium Industries Ltd., v. Collector of Central Excise [1998 (99) ELT 486 (SC) = 1998 (9) SCC 404, it has been held as under: - "4. By virtue of this proviso a legal fiction has been created. The price fixed under any law for time being in force has to be taken as the normal price of the goods. In that view of the matter, in the instant case, the price fixed by the notification dated 18-10-1978 will have to....
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....they were liable for confiscation, was right or not? The Tribunal upheld the order of the adjudicating authority. By observing that there is discretion on the authority and as the Tribunal had upheld the same and taking note of the word, May under Section 125(1) of the Customs Act, the Bombay High Court, declined to interfere with the discretion exercised by the adjudicating authority. 30. On the facts and circumstances of the instant case, besides testing the correctness of the Order-in-Original, as to whether, the adjudicating authority has exercised his discretion, satisfying the twin test, which we have extracted in the foregoing paragraphs of the judgment, we are also called upon to answer, as to whether the Tribunal can issue any positive directions to the adjudicating authority to exercise discretion, under Section 125 of the Act, in favour of the 1st respondent herein, to give option to redeem the gold, after determining the redemption fine amount. When exercise of discretion is conferred on the adjudicating authority to decide, as to whether, such discretion should be exercised in favour of the importer or any other person, falling under Section 112(b) of the Customs Ac....
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....'ble Division Bench of this Court, vide order, dated 01.04.2011, while modifying the order of the learned single Judge, directed the respondent therein to deposit 50% duty of the value of the goods, instead of depositing the entire customs duty and redemption fine and on such deposit being made, the goods shall be released forthwith, in favour of the respondent therein. Review filed against the Division Bench order, came to be dismissed on 25.04.2011. With due respect, in the decision of the Hon'ble Division Bench, the issue, as to whether, prohibited goods and other miscellaneous goods, attempted to be smuggled, can be released or not, has not been argued in the light of Section 2(33) of the Customs Act, 1962 and decided. 35. In Aiyakannu v. Joint Commissioner of Customs reported in 2012 (281) ELT 223, holder of a Srilankan Passport, was found to have concealed 10 gold bars with foreign markings, each weighing 1165 grams, valued at Rs. 4,78,081/-. There was an attempt to smuggle gold into India, by way of concealing the same, inside the zip bag covered with black colour adhesive carbon tapes. The adjudicating authority came to the conclusion that the gold bars so import....
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....l reported in 1991 (3) SCC 239 and on the facts and circumstances of the reported case, the Hon'ble Division Bench of Calcutta High Court, held that whenever discretion is vested, the administrative authority shall do well to atleast briefly record the reasons, why they have chosen to exercise the discretion, in one way or the other. 38. In the case on hand, before the adjudicating authority, the appellant, inter alia, has contended that, "8. Shri M.Abdul Nazeer, Advocate on behalf of Shri P.Sinnasamy submitted that his client has not committed the offence and that at Chennai Airport the baggage of another passenger Shri Babu Chinnasamy got mixed with his baggage; that the mahazar was in English which he did not know; that he was not explained about the contents of the mahazar and he wanted cross-examination of mahazar witnesses and Officers who recorded his statement. 9. On 21.03.2000 Shri Abdul Nazeer, counsel for the accuscd cross-examined Shri.A.Elumalai, Mahazar witness, who interalia staled that there was only one passenger by name Shri.Sinnasamy alongwith the baggage at the Table; that he did not remember the passenger disowning the goods; that....
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....another Babu Chinnasamy also appears to he unacceptable as he has not stated so in his voluntary statement dated 18.09.1999 and also it is evident from the cross-examination of mahazar witness and the Officer who effected the seizure that there was only one passenger viz., Sinnasamy at the Table and the officers did not bring any other passengers. In view of the above, the contention that he is innocent is not acceptable. It is therefore clear that Shri P.Sinnasamy was knowingly concerned in the import of the aforesaid goods without any valid permit/licence and by way of concealment and non-declaration in violation of Section 77 of the Customs Act 1962 with a view to evade Customs Duty. 12. As per Clause 3 of Foreign Trade (Exemption from application of rules in certain case) order, 1993, issued under Foreign Trade (Development and Regulation) Act, 1992, read with Customs Notification No. 171/94 dated 30-09-94 (as amended) the import of gold in any form including ornaments (but excluding ornaments studded with stones or pearls) will be allowed as part of baggage by a passenger of Indian origin or a passenger holding a valid passport issued under the Passport Act, 1957, sub....
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....ustoms Act 1962 read with the Foreign Trade (Development & Regulation) Act 1992. However, under Section 125 of the Customs Act, 1962, I allow the passenger to redeem the same on payment of a redemption fine of Rs. 20,500/- (Rupees Twenty Thousand Five Hundred Only ) within 30 days of receipt of this order. Duty at the appropriate rate is chargeable on redemption of the goods. I order absolute confiscation of 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. Keeping in mind intcralia the submission that the passenger has been detained under the COFEPOSA Act for 6 months, I impose on Shri P.Sinnasamy & penalty of Rs. 50,000/- (Rupees Fifty Thousand Only), under Section 112(a) of the Customs Act, 1962." 40. Thus, after recording a categorical finding of attempted smuggling of 2548.3 gms., of gold, by concealment and without declaration to the customs, the adjudicating authority has exercised his discretion to order absolute confiscation of gold, and some of the material objects used for concealing and....
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....ording to law and not humour. It is to be not arbitrary, vague and fanciful but legal and regular and it must be exercised within the limit to which an honest man to the discharge of his office ought to find himself. Discretion means sound discretion guided by law. It must be governed by rule, not by humour, it must not be arbitrary, vague and fanciful. 43. In Fasih Chaudhary v. Director General, Doordarshan and others reported in 1989 1 SCC 89, the Hon'ble Supreme Court held that exercise of discretion should be legitimate, fair and without any aversion, malice or affection. Nothing should be done which may give the impression of favouritism or nepotism. While fair play in action in such matters is an essential requirement, free play in the jointsis also a necessary concomitant for an administrative body functioning in an administrative sphere or quasi-administrative sphere as the present one. 44. While considering, a litigation arising out of Bangalore Development Authority Act, 1976, the Hon'ble Supreme Court in Bangalore Medical Trust v. B.S.Muddappa and others reported in (1991) 4 SCC 54, held that "discretion is an effective tool in administration. It provides a....
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.... India and others reported in 1997 1 SCC 444 the Hon'ble Supreme Court held that the discretionary power has to be exercised to advance the performance, to subserve for which the power exists. 46. In A.P. Aggarwal v. Govt. of NCT of Delhi reported in (2000) 1 SCC 600, the Hon'ble Supreme Court held as under: "The conferment of power together with a discretion which goes with it to enable proper exercise of the power and therefore it is coupled with a duty to shun arbitrariness in its exercise and to promote the object for which the power is conferred which undoubtedly is public interest and not individual or private gain, whim or caprice of any individual." 47. In Indian Railway Construction Co. Ltd. v. Ajay Kumar reported in (2003) 4 SCC 579, at paragraph 13 to 15, the Hon'ble Supreme Court explained the manner in which discretionary power has to be exercised, while discharging administrative function. In the above judgment, the Hon'ble Supreme Court held that in matters relating to administrative functions, if a decision is tainted by any vulnerability as such illegality, irrationality and procedural impropriety, Courts should not hesitate to interf....
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....by the subject-matter of a particular power, in that case national security. Many prerogative powers are in fact concerned with sensitive, non-justiciable areas, for example, foreign affairs, but some are reviewable in principle, including the prerogatives relating to the civil service where national security is not involved. Another non-justiciable power is the Attorney-Generals prerogative to decide whether to institute legal proceedings on behalf of the public interest." 15. The court will be slow to interfere in such matters relating to administrative functions unless decision is tainted by any vulnerability enumerated above: like illegality, irrationality and procedural impropriety. Whether the action falls within any of the categories has to be established. Mere assertion in that regard would not be sufficient. 17. Before summarizing the substance of the principles laid down therein we shall refer to the passage from the judgment of Lord Greene in Associated Provincial Picture Houses Ltd. v. Wednesbury Corpn. (KB at p.229 : All ER pp.682 H-683 A). It reads as follows: "It is true that discretion must be exercised reasonably. Now what does that mean?....
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.... implies vigilant circumstances and care; therefore, where the Legislature concedes discretion it also imposes a heavy responsibility. " 49. In Union of India v. Kuldeep Singh reported in (2004) 2 SCC 590, the Supreme Court again explained the meaning and significance of the word discretionas follows: "The word "discretion" signifies unrestrained exercise of choice or will; freedom to act according to one's own judgment; unrestrained exercise of will; the liberty or power of acting without control other than one's own judgment." 50. In the reported judgment, the Hon'ble Supreme Court while testing the correctness of a judgment rendered under the Narcotic Drugs and Psychotropic Substances Act, 1985, and the discretion to be exercised by the High Court, explained the principles governing the mode of exercise of the discretionary power for public functionaries as follows: "20. When anything is left to any person, judge or Magistrate to be done according to his discretion, the law intends it must be done with sound discretion, and according to law. In its ordinary meaning, the word "discretion" signifies unrestrained exercise of choice or will; freedom to ....
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.... and circumstances which are necessary to make a sound, fair and just determination and a knowledge of the facts upon which discretion may properly operate. When it is said that something it to be done according to the rules of reason and justice and not according to private opinion; according to law and not honour. It only gives certain latitude liberty accorded by statute or rules, to a Judge as distinguished from a ministerial or administrative official, in adjudicating on matters brought before him." 52. In State of NCT of Delhi v. Sanjeev, reported in (2005) 5 SCC 181, the Hon'ble Supreme Court, explaining the scope of judicial review of executive action held as follows: "15. One of the points that falls for determination is the scope for judicial interference in matters of administrative decisions. Administrative action is stated to be referable to broad area of governmental activities in which the repositories of power may exercise every class of statutory function of executive, quasi-legislative and quasi-judicial nature. It is trite law that exercise of power, whether legislative or administrative, will be set aside, if there is manifest error in the exerci....