TaxTMI 
TaxTMI 
2018 (3) TMI 284
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....o make it look like zinc ingots. The ones carrying concealed gold had distinguishing mark to enable their separation from the rest of the cargo. A fullfledged investigation was carried out. Statements of the importers and their agents were recorded under section 108 of the Customs Act,1962. According to the Customs authorities, the petitioner was the kingpin of this smuggling attempt. He was the one who had roped in the actual importer and the middleman. A show cause notice dated 11.10.2014 was therefore, issued against all such persons including the petitioner for smuggling of gold weighing 24.980 kgs. The show cause notice also covered an earlier instance where allegedly the partnership firm of the petitioner was instrumental in smuggling of 4 kgs of gold. In this show cause notice, the petitioner was called upon to explain why penalties should not be imposed on him under sections 112 and 114AA of the Customs Act, 1962. Case of the petitioner is that such show cause notice was never served on him. The department though fully aware that the petitioner is a resident of Sharjah, sent the notices at the address of partnership firm at Rajkot and, thereafter, proceeded exparte against ....
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....al contentions were the following : i) That the petitioner had even as per the show cause notice and final conclusions of the adjudicating authority, masterminded the entire attempt of smuggling through his establishment at Sharjah. If the petitioner therefore, had never visited India during any such process of conspiring to smuggle gold with other noticees, the jurisdiction of the Commissioner would not permit him to call upon the petitioner to answer the charges. After initially arguing this point for sometime, counsel for the petitioner dropped the same possibly when faced with the allegations in the show cause notice which ultimately came to be confirmed by the Commissioner that it was during one of his trips from Sharjah to India that the petitioner had hatched the conspiracy with the importer and the agent for smuggling gold for lucrative returns. This issue therefore, must rest here. ii) The second contention of the counsel for the petitioner was that the show cause notice and notice for personal hearing were never served on the petitioner. He contended that the petitioner was being called upon in his personal capacity to answer the charges levelle....
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....d the decisions cited therein. 6. As noted, we are called upon to decide only two issues namely, of the service of the show cause notice and the notices of personal hearing on the petitioner and the limitation of imposing penalty under section 112 of the Act, if any. In context of the service of notice, respondent no.2 Assistant Commissioner of Customs, in his affidavit in reply dated 12.1.2018 clarified the position as under : "4. It is submitted that Two Summon were issued to Shri Bhargav Mehta, partner of Shri Rajkot lmpex and were sent through post at his office address, situated at 4th Floor, SamrudhiBhavan, Gondal Rajkot which was received as undelivered with postal remarks 'Door locked". Also two summonses were issued at his residential address at 'Mahi' 29, Basera Park, Near R.K. Nagar, Opposite Crystal Mall, Off Kalavad Road, Rajkot which were also returned back with postal remarks as "locked". Further summon was issued to Shri Bhargav Mehta at his present business address of M/s. Save Green General Trading Co. LLC, Sharjah which was not received back. The personal hearing of the case was held on 13.01.2016, 02.03.2016, 28.03.2016 and 30.03.2016. Letter dated 2....
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....ch summonses and notices at Mundra Customs House. The petitioner cannot take a stand that the notices and summonses were not duly served. All the attempts of actual service having failed, the department had no choice but to exhibit such notices and summonses at the Customs House. Significantly, such notices and summonses were dispatched at the Rajkot address of the partnership firm, of which the petitioner was the partner. The petitioner may have been called upon in his personal capacity to answer the charges, nevertheless, he cannot disown the establishment of the partnership firm, of which he was an active partner and claim that any summons or notice dispatched at the address of the partnership firm would not amount to service on him. This would be way too technical. Even otherwise the department had sent one summons to his address at Sharjah and finally relied on exhibition of such notices and summonses at the Customs House. The question of breach of principles of natural justice therefore does not arise. 8. More complex and interesting question however is, whether the power of the Commissioner to impose penalty under section 112 of the Customs Act was hedged with limitation ....
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.... arise as per clause(i), the person concerned would be liable to penalty not exceeding the value of the goods or five thousand rupees whichever is greater, in case of goods in respect of which any prohibition is in force under the Act or any other law for the time being in force. However, if such goods are dutiable goods other than prohibited goods as per clause(ii), such penalty would not exceed 10% of the duty sought to be evaded or five thousand rupees whichever is greater. 12. In this context, the terms 'prohibited goods', and "dutiable goods" become important. Term 'prohibited goods' is defined under section 2(33) of the Act as under: "(33) "prohibited goods" means 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." 13. Term 'dutiable goods' is defined under section 2(14) of the Act as under: "(14) dutiable goods" means any goods which are chargeable to duty and on which duty has not been p....
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....to which the goods are permitted to be imported or exported have been complied with. From the definition of term 'prohibited goods', in case of goods, import of which is permitted would be excluded subject to satisfaction of the condition that conditions for export have been complied with. By necessary implication therefore in case of goods, import of which is conditional, would fall within the definition of prohibited goods if such conditions are not complied with. 16. Further clarity in this respect would be available when one refers to the term 'dutiable goods' as to mean any goods which are chargeable to duty and on which duty has not been paid. We refer to this definition since section 112 makes the distinction in respect of goods in respect of which any prohibition is imposed and dutiable goods other than prohibited goods. When clause (ii) of section 112 therefore, refers to dutiable goods other than prohibited goods, it shall necessarily have the reference to the goods, import of which is not prohibited or of which import is permissible subject to fulfillment of conditions and such conditions have been complied with. Condition of declaration of dutiable go....
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....ited. Failure to check the goods on the arrival at the customs station and payment duty at the rate prescribed, would fall under the second limb of section 112(a) of the Act, which states omission to do any act, which act or omission, would render such goods liable for confiscation under Section 111 of the Act. Sub section (b) to Section 111 of the Act covers the persons involved. xxxx 54 If the contentions of the appellant have to be accepted, then all the goods seized and liable for confiscation have to be provisionally released, in terms of Section 110(1A) of the Customs Act, 1962, and in such circumstances, the very object of the Customs Act, 1962, would be defeated. Going through the notifications, we are of the view that the abovesaid notifications do not confer any absolute right to the appellant, to seek for provisional release of gold, alleged to have been smuggled. At this juncture, it is relevant to extract Paragraphs 41 and 42 in the show cause notice, dated 16.09.2013, issued by the Directorate of Revenue Intelligence, as to how, the gold came to be seized and liable for confiscation......" 18. In the judgment of Kerala High Court in case of Abdul ....
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....iled four shipping bills declaring the export of 28000 pieces of ladies' skirts at contract price, total value of which would come to Rs. 1.21 crores (rounded off). On checking by the Customs authorities, it was found that the actual quantity of skirts was 21184 pieces and the market price of the garment was Rs. 45 per piece which was much below the declared price and according to which the total value of the goods came to Rs. 9.53 lacs (rounded off). The exporter had claimed drawback of Rs. 21.87 lacs on the consignment at the rate of Rs. 78/per piece. The exporter contended that it was an unintentional mistake. During the hearing of the drawback proceedings, it was admitted by the exporter that market price of Rs. 45/per piece was acceptable and on such basis the drawback claim was granted. The Commissioner of Customs was of the opinion that this was the second such case of the same exporter and there was an organized racket to claim fraudulent drawback by overinvoicing the goods. He therefore, imposed redemption fines and personal penalties. In such background, the question of authority of the Customs department to confiscate the goods and the definition of term 'prohibi....