TaxTMI 
TaxTMI 
2020 (11) TMI 441
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....ninterrupted power supply systems (UPS) for computers. The consignment was opened and examined by customs officers and they found six gold bars weighing 6 kg concealed in the UPS. Another consignment was also imported by Shri Ashwini kumar alias Amanullah through the same courier under Airway bill no. 811609150515 declaring the goods as UPS which on opening was found to contain another 6 bars of gold weighing 6 kg. In all, 12 kg of gold was recovered from the UPS in the two consignments both of which were seized by the officers after following due procedures. The courier company M/s FedEx cooperated with the investigations and helped the officers locate the importer. The consignment was imported in the name of Shri Ashwini Kumar which was a pseudonym of Shri Amanullah as it came to light during investigation. 4. It is undisputed that as per the Foreign Trade Policy applicable during the period, gold was not freely importable and it could be imported only by the banks authorised by the RBI or by others authorised by DGFT and to some extent by passengers. Gold cannot be imported through courier at all as per Regulation 2(2) (iv) of Courier Imports and Exports (Clearance) Regulations....
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....duty. 8. Section 114A prescribes penalty for non-levy, short levy, non payment, short payment or erroneous refund arising out of a fraud, collusion, wilful misstatement or suppression of facts. Section 114AA provides for penalty for use of incorrect or false information in connection with the business under the Act. 9. Section 111 provides for confiscation of goods which have been improperly imported under various clauses. Section 112 provides for penalty for improper importation of goods which rendered them liable for confiscation under section 111. Section 125 of the Act provides for redemption of the confiscated goods on payment of fine. 10. Penalties under Section 114A (for non levy short levy, non-payment, short payment of duty due to certain reasons) and under Section 112 (for doing acts which render the goods liable to confiscation) are mutually exclusive. If a penalty is imposed under Section 114A, a penalty cannot also be imposed simultaneously under Section 112. Thus, if the importer mis-declared the goods resulting in short payment of duty, for instance, he will be liable for penalty under Section 114A. The goods so imported will also be liable for confiscation under ....
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....ustoms Act. Revenue is aggrieved by the fact that the Commissioner has confiscated the goods only under Section 111 (i), (l) & (m) and he should also have confiscated the goods under Section 111(d). Revenue is also aggrieved that the Commissioner allowed redemption of the gold under Section 125 after confiscation. It is their case that redemption should not have been allowed since gold is a prohibited good, it should have been absolutely confiscated. It is also the case of the Revenue that the Commissioner has not determined the duty payable under Section 28 and applicable interest in the impugned order and therefore the condition precedent for imposing a penalty under Section 114A has not been fulfilled. Therefore, he has wrongly imposed penalty under Section 114A. He should have instead imposed penalty under Section 112 of the Customs Act for improperly importing goods into India which rendered them liable for confiscation under Section 111. Thus, Revenue's prayer is for absolute confiscation of the gold (without an option of redemption) invoking an additional clause of section 111(d) and setting aside the penalty under Section 114A of the Customs Act on Shri Amanullah and imposi....
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....ection 2(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" Section 125 Option to pay fine in lieu of confiscation (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 where the proceedings are deemed to be concluded under the proviso to sub-section (2) of section 28 or under clause (i) of sub-section (6) of that section in respect of the goods which are not prohibited or restricted, the provisions of this section shall not apply: Provided furthe....
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.... "Provided also that where any penalty has been levied under this Section, no penalty shall be levied under Section 112 or Section 114". 18. Learned Commissioner has imposed a penalty under Section 114A instead of imposing a penalty under Section 112. He submits that an essential condition for imposing a penalty under Section 114A is the determination of duty under Section 28 which has not been done in this case. He also argued that although Section 125 of the Customs Act empowers the officer adjudicating the case to give an option to the owner to pay fine in lieu of confiscation, this was not the fit case to invoke the clause because gold is a prohibited good under Section 2(33). He also argued that the decision of the adjudicating authority to allow redemption of confiscated goods on payment of fine was incorrect as Shri Amanullah had not claimed ownership of the gold and confiscated goods can be released on redemption only to the owner. 19. Having considered the rival submissions, we find that the following issues need to be decided: i. whether the Commissioner has erred in not confiscating the gold bars under Section 111(d) also in addition to Section 111 (i) (l) and (m) a....
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....ld bars were prohibited goods in terms of section 2(33). Improperly imported goods are liable for confiscation under Section 111 which reads as follows: SECTION 111. Confiscation of improperly imported goods, etc. - 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 tidal river for the purpose of being landed at a place other than a customs port; (d) any goods which are imported or attempted to be imported or are brought within the Indian customs waters 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; (e) any dutiable or prohibited goods found concealed in any manner in any conveya....
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....restricted item for import but which was imported without fulfilling the conditions for import is a prohibited good in terms of Section 2(33) and hence it was also liable for confiscation under Section 111(d) of the Customs Act as asserted by the Revenue. It is undisputed that Section 111 (i) (l) and (m) are also applicable in this case as the gold was found concealed in the package and it was not included in the declaration and the goods which were declared namely UPS do not correspond to goods which were imported namely UPS with gold bars inside them. Therefore, the smuggled gold bars are liable for confiscation under Section 111 (d) also although it will not make material difference because the gold was anyway confiscated under a same section invoking three other clauses. 22. Therefore, a penalty could have been imposed on Shri Amaanullah under Section 112. This section reads as follows: 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 poss....
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....on under section 28AB, is paid within thirty days from the date of the communication of the order of the proper officer determining such duty, the amount of penalty liable to be paid by such person under this section shall be twenty-five per cent. of the duty or interest, as the case may be, so determined Provided further that the benefit of reduced penalty under the first proviso shall be available subject to the condition that the amount of penalty so determined has also been paid within the period of thirty days referred to in that proviso: Provided also that where the duty or interest determined to be payable is reduced or increased by the Commissioner (Appeals), the Appellate Tribunal or, as the case may be, the court, then, for the purposes of this section, the duty or interest as reduced or increased, as the case may be, shall be taken into account: Provided also that where the duty or interest determined to be payable is increased by the Commissioner (Appeals), the Appellate Tribunal or, as the case may be, the court, then, the benefit of reduced penalty under the first proviso shall be available if the amount of the duty or the interest so increased, along with the i....
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....d 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 where the proceedings are deemed to be concluded under the proviso to sub-section (2) of section 28 or under clause (i) of sub-section (6) of that section in respect of the goods which are not prohibited or restricted, no such fine shall be imposed: Provided further 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 addition, be liable to any duty and charges payable in respect of such goods. (3) Where the fine imposed under sub-section (1) is not paid within a period of one hundred and twenty ....
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.... As per section 126 of the Customs Act, 1962 when any goods are confiscated, such goods shall thereupon vest in the Central Government. The officer adjudging confiscation shall take and hold possession of the confiscated goods. Whenever the confiscation of goods is authorized as per the sub-section (1) of section 125, of the Customs Act, 1962, the adjudicating authority MAY in the case of any goods where the importation or exportation is prohibited under this Act or under any other law for the time being in force, and SHALL, in the case any other goods, give to the owner of the goods (or from whose possession or custody such goods have been seized), an option to pay in lieu of confiscation such fine as the said officer / authority thinks fit. 28. Learned Departmental Representative argues that this was not a fit case for allowing redemption and the Learned Commissioner should not have exercised his discretion under section 125 to allow redemption even though there is no bar on he exercising this right. He relies on the following case laws in support: (a) Abdul Razak [2012 (275) ELT 300 (Ker)] affirmed in [2017 (350) ELT A 173 SC] (b) Samaynathan Murugesan [2009 (247) ELT 21 (Mad....
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....trictions including the necessity to declare the goods on arrival at the Customs Station and make payment of duty at the rate prescribed. There is no need for us in this case to consider the conditions on which import is permissible and whether the conditions are satisfied because the appellant attempted to smuggle out the goods by concealing the same in emergency light, mixie, grinder and car horns etc. and hence the goods so brought is prohibitory goods as there is clear violation of the statutory provisions for the normal import of gold. Further, as per the statement given by the appellant under Section 108 of the Act, he is only a carrier i.e. professional smuggler smuggling goods on behalf of others for consideration. We, therefore, do not find any merit in the appellant's case that he has the right to get the confiscated gold released on payment of redemption fine and duty under Section 125 of the Act. 7. This Writ Appeal is therefore dismissed. 31. In the case of Samyanathan Murugesan (supra), the passenger imported gold in violation of the conditions and the gold was absolutely confiscated by the Additional Commissioner which decision was upheld by the Commissioner (....
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....gold brought by the applicant had become prohibited when it was sought to be smuggled in by changing the form of gold into wire and by concealing the same in beading of his stroller bag. But he has not cited any legal provision under which the import of gold is expressly prohibited and has only stated that the applicant was not an eligible passenger to bring any quantity of gold as per Notification No. 12/2012-Cus. (N.T.), dated 17-3-2012 and thus an option for redemption of confiscated gold could not be given. But Government finds that the said notification is only a general exemption notification for several goods and gold is also one of many goods in respect of which concessional rate of duty is provided on fulfilment of condition Number 35. Thus, under this notification eligibility of the passenger is relevant only for determining the admissibility of concessional rate of duty and not for deciding the eligibility to import or not to import gold. The exemption from customs duty was never the issue in this case and it could not be given because the applicant did not declare the importation of gold at all and rather changed the form of gold into wire and by concealing the same in ....
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....tion of redemption is to be provided compulsorily under Section 125 of the Act will become redundant. Thus while any goods imported without payment of duty and in violation of any provision of the Customs Act is also certainly liable for confiscation under Section 111 of the Customs Act, but confiscated goods is not necessarily to be always prohibited goods. While there is no dispute in this case that the gold brought by the applicant from Dubai is liable for confiscation because he did not follow the proper procedure for import thereof in India and attempted to smuggle it without payment of customs duties, it is beyond any doubt that the gold is not a prohibited item under Customs Act. The Hon'ble Madras High Court, in its decision in the case of T. Elavarasan v. CC (Airport), Chennai, 2011 (266) E.L.T. 167 (Mad.), has held that gold is not a prohibited goods and a mandatory option is available to the owner of the goods to redeem the confiscated gold on payment of fine under Section 125 of Customs Act, 1962. Even the Hon'ble High Court of Andhra Pradesh in the case of Shaikh Jamal Basha v. GOI, 1997 (91) E.L.T. 1277 (A.P.), has also held that as per Rule 9 of Baggage Rules, 1979 r....
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....and Other Wastes (Management and Transboundary Movement) Rules, 2016 (hereinafter referred to as "Waste Management Rules"). Redemption fine was imposed under Section 125 of the Customs Act, 1962 and the consignment released for re-export only. Penalty was also imposed under Section 112(a) along with penalty under Section 114AA of the Customs Act as also penalty was imposed on the Directors. 3. In appeal before the Tribunal, the respondents did not contest that the import was in violation of the Foreign Trade Policy having been made without the necessary prior authorisation. The Tribunal held that the MFDs did not constitute "waste" under Rule 3(1)(23) of the Waste Management Rules and had a utility life of 5 to 7 years, as certified by the Chartered Engineer. Release of the consignment was directed under Section 125 of the Customs Act as the respondents were held to have substantially complied with the requirements of Rule 13 of the Waste Management Rules read with Schedule VIII Entry 4(j) except for the country of origin certificate. The Tribunal further noticed that earlier also, similar consignments of the respondent and others had been released at the Calcutta, Chennai and Co....
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....Shri Mukul Rohatgi, Learned Senior Counsel appearing for the respondent submitted that MFDs were imported in October-November, 2016. The requirement of extended producer responsibility under the E-waste (Management) Rules, 2016 was deferred till 30-4-2017 by the Technical Committee under the Ministry of Environment and Forest. In any event, the respondent has obtained the same before release of the consignment. The question for disposal of the imported machine at this stage is premature as it has a utility life of 5 to 7 years. The consignment was not a prohibited but restricted item. Section 125 of the Customs Act vests discretion in the authority to levy fine in lieu of confiscation. The discretionary power has to be tampered with reason and has to be read along with the Foreign Trade Act and the policy framed under the same. The Customs Department has consistently in the past been permitting the release of MFDs on levy of redemption fine. The discriminatory treatment with regard to the present consignment is unjustified. The DGFT had declined to issue authorization certificate. There was substantial compliance with the requirements of Rule 13 of the Waste Management Rules read w....
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....e Act and Section 125 of the Customs Act will therefore not detract from the redemption of such restricted goods imported without authorisation upon payment of the market value. There will exist a fundamental distinction between what is prohibited and what is restricted. We therefore, find no error with the conclusion of the Tribunal affirmed by the High Court that the respondent was entitled to redemption of the consignment on payment of the market price at the reassessed value by the Customs authorities with fine under Section 112(a) of the Customs Act, 1962. 10. The Central Government had permitted the import of used MFDs with utility for at least five years keeping in mind that they were not being manufactured in the country. The Chartered Engineer commissioned by the Customs authorities had certified that the MFDs were capable of utility for the next 5 to 7 years without any major repairs. Considering that at import they had utility, the High Court rightly classified them as "other wastes" under Rule 3(1)(23) of the Waste Management Rules, which reads as follows :- "Other wastes means wastes specified in Part B and Part D of Schedule III for import or export and includes a....
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.... goods are seized cannot claim as a matter of right that the prohibited goods must be allowed to be redeemed as held by Hon'ble High Court of Madras in the case of Samyanathan Murugesan and by Hon'ble High Court of Kerala in case of Abdul Razak. Both these judgments were upheld by the Hon'ble Supreme Court. (e) Although, as per Section 2(33) of the Customs Act, 'prohibited goods' includes restricted goods in respect of which the conditions have not been fulfilled, a distinction was drawn by the Government of India in the case of Ashok Kumar Verma (supra) and redemption was allowed of the gold which was smuggled by the appellant passenger ingeniously concealing it in the stroller of the bag. It has also been indicated in this order that Government of India has consistently held the view in many cases that gold is not prohibited but restricted and allowed redemption of confiscated gold. (f) The Apex Court has also drawn a distinction between goods whose import is absolutely prohibited and those whose import is restricted under the Foreign Trade (D&R) Act and redemption was allowed in the case of restricted goods. (g) Thus, while Section 125 allows the adjudicating authority the....
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....asily be calculated which can be done by the officers as it is a simple case of arithmetic calculation. An appeal has also been made to allow the appellant benefit of the provisions of Section 28(5) and 28(6). On a specific query from the bench whether they had paid duty within the time mentioned under Section 28(5) and 28(6), learned Counsel answered in the negative. Therefore, we find no reason to pass any order on this count. 39. The last contention of Shri Amanullah in his appeal is that since penalty has been imposed under Section 114A, no penalty should be imposed under Section 114AA also upon them. We find that the ingredients of Section 114A and Section 114AA are different. Section 114A provides for non-levy of duty or short levy of duty due to certain reasons. There is no dispute that no duty was levied or paid on the imported gold concealed in the UPS by mis-declaring the nature of goods. Therefore, Section 114A has been correctly invoked in this case and a penalty has been imposed. 40. The penalty under Section 114AA is for use of false or incorrect materials in the transaction of any business for the purposes of the Act. The name of the importer as well as the nature ....