TaxTMI 
TaxTMI 
2023 (2) TMI 288
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....nce the year 2010. 4. A show cause notice came to be issued in relation to the seizure of gold weighing 46.3 kgs being F.No./DRI/AZU/GRU/Gold Bar/INT-12/2014 dated 09.04.2015 2014 on 09.04.2015 by the Additional Directorate General, DRI to various persons including the petitioner proposing to impose personal penalty under section 112 of the Customs Act, 1962. So far as the present petitioner is concerned, on the basis of the statement of various persons, the show cause notice is issued to the petitioner, namely, Shri Juma Khamisa Bhokal, Shri Hasim Tito, Shri Rakesh Karmata, Shri Mobin Amad Sanghar and Shri Abid Mamad Subhania. The show cause notice reveals that Shri Juma Bhokal in coordination with Shri Hasam Tito have initiated the activity of smuggling. Gold which was arranged through one Shri Ghani. Gold would come from Dubai through one Shri Gulam and 46.3 kgs of gold was smuggled through Shri Mobin in a vessel named Al Habibi through Tuna Port and when the petitioner was going along with Shri Bhokal to deliver the gold, they were intercepted by the DRI officers. 5. According to Rakesh Karanta 21.3 kgs of the gold was seized from his hotel room, which was to be supplied to s....
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....ery low income. 10.1 The application for waiver of condition of pre-deposit was moved along with the appeal filed against the order of Commissioner of Customs, Kandla. 11. The petitioner was not having knowledge of appeal having been listed on 10.04.20218. No notice was served upon the petitioner nor to any authorized representative nor to any other person for and on behalf of the petitioner. The Tribunal, after hearing the authorized representative or the Department, dismissed the appeal ex parte on the ground of the same being not maintainable, as the petitioner has not deposited the pre-deposit as mandated by the Customs Act, 1962. The petitioner's passport was taken away from him, and he has been in India and, he received a copy of the appellate Tribunal's order on 14.05.2018 . 12. It is the grievance of the petitioner that he never received a notice to show cause as to why 22.3 kgs of gold be not confiscated under section 111 of the Customs Act and as to why the penalty be not imposed under section 112 of the Customs Act. Principal Commissioner in an order in OIO imposed penalty on the petitioner with an assumed quantity of gold, which was never there. According to the ....
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....spondent No.2 denying all averments. According to the respondent, the intelligence was gathered by the officers of Directorate of Revenue Intelligence (DRI) suggesting that gang of smugglers was active in smuggling gold at Tuna Port of Kutch district. Some persons carrying consignment of two parcels of smuggled gold from the vicinity of Tuna port had planned to deliver one part of smuggled gold to a person at Hotel Regency at Rajkot-Ahmedabad highway, Chotila and another part to other person on the same highway near Chotila. Office of DRI mounted surveillance on various places on 19.04.2014 and they spotted Juma Khamisha Bhokal, resident of Jam-Khambhalia and Hasam Tito, a resident of Mota Salaya, Mandvi (Kutch), who arrived in a Tata Indica car at Hotel Regency, Chotila. Ramesh Kalabhai Karmata, who was staying in that hotel received a bag from Juma Khamisha Bhokal. After a few minutes Juma Khamisha Bhokal and Hasam Tito left the place in the very car and went towards Ahmedabad. A team of officers of DRI searched room of the hotel, where Ramesh Kalabhai Karmata was staying and the DRI recovered 21.300 kgs of gold in 213 gold bars of 100 grams each. It was apparent from the marking....
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....eive the show cause notice letters of personal hearing or OIO. The case, of course, is based on the confessional statements, but they are not contradictory. They are also supported by other independent evidence viz stay of persons in hotel, arrival of vessels in India etc. Reliance is placed on the decision of the Apex Court as to how the confessional statement of section 108 of the Customs Act is admissible. It is further contended that looking at the kind of quantum of gold smuggled in India, it is impossible to accept that he has no financial capacity. The provision of pre-deposit is mandatory under section 129E of the Customs Act and, therefore, such an application is not maintainable. 16. According to respondent No.4, opportunities of personal hearing had been granted to the petitioner on 04.12.2015, 22.01.2016, 03.03.2016 and 15.12.2016. However, the petitioner or his authorized representative failed to remain present at the date and time of personal hearing. He did not submit any written submission and, therefore, the case was adjudicated ex parte. Considering the evidence and role of the petitioner in outright smuggling of huge quantity of gold, in OIO, the penalty of Rs.1....
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....ation of OIO and after getting the copy of the same, he realized that how the same has resulted into imposing the penalty, which is in gross violation of principles of natural justice. According to him, any reliance on the part of the respondents or any of the statements, even if it is permissible under the law, the principles of natural justice cannot be overlooked and, hence, he has urged that the pre-deposits may not be insisted upon and the opportunity of hearing be given. He also urged the Court that the Court may consider his request for cross-examination as equity changes with Chancellor's foot. He has relied upon the following authorities to substantiate his submissions: 1) Saral Wire Craft Pvt. Ltd. vs. Commr. of Cus., C. Ex. And Service Tax, 2015 (322) E.L.T. 192 (S.C.). 2) Jindal Drugs Pvt. Ltd. vs. Union of India, 2016 (340) E.L.T.67 (P &H). 3) G-Tech Industries vs. Union of India, 2016(339) E.L.T. 209 (P & H). 4) J & K Cigarettes Ltd. vs. Collector of Central Excise, 2009 (242) E.L.T. 189 (Del.). 5) Manoj Kumar Jha vs. D.R.I. , 2019 (365) E.L.T. 166(Del.). 6) Rajkamal Textile Printery vs. Union of India, 2016 (332) E.L.T. 99 (Guj.). 7) ARCL Organics....
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....each case. The appeal was preferred in the year 2019. The cross-examination is not an absolute right. Therefore, it cannot be insisted upon. He also further urged that there are two families essentially of Shri Juma Khamisa Bhokal and Mohamed Sumbhaniya involved in this act of smuggling. 22. Having thus heard both the sides and also having closely examined the material on the record, the preposition of law authorities shall need to be firstly looked into. 23. Reliance is placed on the decision of M/s. Cannon India Limited vs. Commissioner of Customs, [2022] 138 taxmann.com 496 (SC), whereas the Apex Court has held that DRI has no jurisdiction to issue show cause notice under the Customs Act inasmuch as only such officer of Customs who has been assigned specific function would be a "a proper officer" under the Central Government in terms of section 2(34) of the Act to issue notice, while exercising the powers under section 6 of the Customs Act. Therefore, the show cause notice issued to the petitioner by the DRI is invalid and this decision would be binding to the Courts within the territory of India under Article 141 of the Constitution of India. Therefore, the show cause notice ....
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....al Solicitor General, relied on a Notification No.17/2002 - Customs (NT) dated 7.3.2002 to show all Additional Directors General of the DRI have been appointed as Commissioners of Customs. At the relevant time, the Central Government was the appropriate authority to issue such a notification. This notification shows that all Additional Directors General, mentioned in Column (2), are appointed as Commissioners of Customs. 18. The next step is to see whether an Additional Director General of the DRI who has been appointed as an officer of Customs, under the notification dated 7.3.2002, has been entrusted with the functions under Section 28 as a proper officer under the Customs Act. In support of the contention that he has been so entrusted with the functions of a proper officer under Section 28 of the Customs Act, Shri Sanjay Jain, learned Additional Solicitor General relied on a Notification No.40/2012 dated 2.5.2012 issued by the Central Board of Excise and Customs. The notification confers various functions referred to in Column (3) of the notification under the Customs Act on officers referred to in Column (2). The relevant part of the notification reads as follows:- "[To b....
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....ms officer on other officers of the Central or the State Government or local authority, it reads as follows:- "6. Entrustment of functions of Board and customs officers on certain other officers - The Central Government may, by notification in the Official Gazette, entrust either conditionally or unconditionally to any officer of the Central or the State Government or a local authority any functions of the Board or any officer of customs under this Act." 21. If it was intended that officers of the Directorate of Revenue Intelligence who are officers of Cenral Government should be entrusted with functions of the Customs officers, it was imperative that the Central Government should have done so in exercise of its power under Section 6 of the Act. The reason why such a power is conferred on the Central Government is obvious and that is because the Central Government is the authority which appoints both the officers of the Directorate of Revenue Intelligence which is set up under the Notification dated 04.12.1957 issued by the Ministry of Finance and Customs officers who, till 11.5.2002, were appointed by the Central Government. The notification which purports to entrust functio....
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....ay the amount specified in the notice: Provided that where any duty has not been levied or has been short-levied or the interest has not been charged or has been part paid or the duty or interest has been erroneously refunded by reason of collusion or any wilful mis-statement or suppression of facts by the importer or the exporter or the agent or employee of the importer or exporter, the provisions of this sub-section shall have effect as if for the words 'one year' and 'six months', the words 'five years' were substituted." 18. It is plain from the provision that the 'proper officer' being subjectively satisfied on the basis of the material that may be with him that customs duty has not been levied or short levied or erroneously refunded on an import made by any individual for his personal use or by the Government or by any educational, research or charitable institution or hospital, within one year and in all other cases within six months from the relevant date, may cause service of notice on the person chargeable, requiring him to show cause why he should not pay the amount specified in the notice. It is evident that the notice under the said provision has to be issued by ....
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.... that he was not in a position to contest the allegations levelled in the show cause notice. Reliance is also place in the decision of the Apex Court in the case of Saral Wire Craft Pvt. Ltd. (supra). 25. Much emphasis is placed on the ground of violation of principles of natural justice, as penalty imposed here is based on the statement of co-accused and without any independent corroborative evidence. Application of section 9D of the Central Excise Act and section 138B of the Customs Act is made which makes it mandatory for the Commissioner to conduct the examination-in-chief before admitting the statements and evidence. Section 138B of the Customs Act makes it clear that no statement can be used as evidence unless and until the contents are affirmed by the person before the Commissioner. 26. It is also the say of the petitioner that Customs Excise and Service Tax Appellate Tribunal (CESTAT) dismissed the appeal for non-compliance of the requirement of pre-deposit as provided statutorily. Therefore, the petitioner has no remedy and the petitioner's property has also been attached. According to the petitioner, there are various decisions of the High Court that if a person is....
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....itioner. However, the same was rejected by the CESTAT essentially on the ground that in absence of the amount of the pre-deposit and penalty, the appeal is not maintainable. 32. According to the petitioner, the challenge to the main order of the adjudicating authority and all consequential orders, is on the ground of absence of any opportunity of cross-examination and gross violation of the principles of natural justice in adjudication of proceedings. 33. What has been alleged by the department is that on 05.06.2014 at Jamnagar-Jam-Khambhalia highway, Adam Bhokal was interrogated and on his personal search, there was a recovery of 5.660 kgs of foreign mark gold bars valuing at Rs.1.63 crores. This gold was part of quantity of the smuggled gold unloaded from Vessel MSV Al Ashaque- Al-Madina by one Bashir Khamisha Bhokal. It is also alleged that the smuggled gold of 8.800 kg valued at Rs.2.65 crores was found abandoned near Pir Sarkar Dargah, off Porbandar road, which was also part of gold smuggled through Vessel MSV Al Ashaque- Al- Madina. Statements have been recorded under section 108 of the Customs Act and they are sought to be relied upon by the department considering their ad....
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....ustice had been violated with the allegations that the Customs Department had not been able to produce any evidence that the goods had been smuggled and that these goods had been brought across in Customs from the frontiers of India. The High Court held that the onus of proof that the wrist watches were lawfully imported, had shifted upon the appellant after the Customs Authorities had informed the appellant of the result of enquiries and investigations regarding claim made by it with regard to possession of the watches and, his onus, the appellant had failed to discharge. According to the High Court, the result of enquiries were communicated, yet no attempt was made to substantiate the claim regarding lawful importation of watches twice before the writ petition was preferred and appropriate reliefs had been granted and yet, it failed to satisfy the Customs Authority that 280 watches were not imported in violation of the statutory restrictions. The Customs Authorities concluded that watches were illegally imported and, therefore, order for confiscation. It was not for the Court to revise or set aside or quash the order. One of the contentions was that of the persons from whom....
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.... the petitioner was missing when OIO was finalized. 37. All these aspects, which have been raised before this Court in the writ jurisdiction are not to be gone into by this Court in wake of availability of Appellate remedy which can surely examine all these aspects of breach of principles of natural justice and entire spectrum of factual matrix. Decision of the Apex Court rendered in the case of Phoenix ARC Private Limited vs. Vishwa Bharati Vidya Mandir and others, (2022) 5 SCC 345 makes it abundantly clear not to enter the writ petition and to touch the merit when efficacious alternative remedy under the statute is available. Relevant paragraph is reproduced as under: "11.In City and Industrial Development Corpn. v. Dosu Aardeshir Bhiwandiwala, it was observed by this Court in SCC p.175, para 30 that the Court while exercising its jurisdiction under Article 226 is duty-bound to consider whether the petitioner has any alternative or effective remedy for the resolution of the dispute. 38. With regard to non-availment of opportunity for want of necessary pre-deposit required under section 29E of the Customs Act, the appellate authority could not adjudicate on merits. Therefore,....