TaxTMI 
TaxTMI 
2023 (5) TMI 265
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....rovisions contained under chapter XIV A of the Customs Act. 2. The writ petitioner, who is a Non-Resident Indian (for short, 'NRI'), was arrested on 04.10.2022 at the Delhi International Airport. It is the case of the respondent that petitioner had tried to smuggle high value goods, mainly watches through the green channel entrance, in order to escape from paying duty on the same. 3. On suspicion of the petitioner trying to smuggle goods through customs, a detailed examination of the person and baggage of the petitioner was conducted, and it resulted in the recovery of seven wrist watches, along with a few other high value goods. Since the petitioner appeared to have committed offences under Sections 132 and 135 of the Customs act, he was arrested on 05.10.2022. After the arrest, the petitioner herein then filed the present writ petition, wherein he sought for the issuance of directions for permission of home cooked food being granted to him. 4. The petitioner, being an NRI, has been unable to travel outside India since 06.10.2022, and as such has been amenable to settle the dispute by approaching the settlement commission under Section 127 of the Customs Act, by paying th....
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....ing authorities in identical cases, with similar facts and circumstances. 10. The Settlement Commission, governed by chapter XIV A of the Customs Act, was inserted by virtue of Section 102 of the Finance (No.2) Act, 1998 (Act No. XXI of 1998), with the aim of settling issues of tax evasion by virtue of a disclosure by the tax offender. Such a disclosure, if made bona fide, allowed for the tax evader to gain immunity from either fine or penalty. While at first glance, it may seem that such a provision allows for offenders to escape penal consequences with no benefit caused to the government, however, a deeper analysis of the provisions would prove otherwise. The withholding of tax by tax offenders, unlike most other offences, directly impacts the revenue of the country. Further, due to the complexities arising from such disputes, the adjudication of the same often takes a very long time. In such a scenario, wherein a long length of time consumed to resolve tax disputes directly affects the revenue, and resultantly the welfare of the country, the legislature found it imperative for the enactment of a beneficial and time saving remedy, that would not only help the government in hel....
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.... this Court, under writ jurisdiction, is not bound by the relief sought and can go beyond the original relief in order to meet the ends of justice. Further, in such a situation where there is a conflict of opinion on a legal issue between two High Courts, mere technical objections can not be allowed to stand in the way of exercising our powers conferred by way of Article 32 of the Constitution of India. 15. The reason why Article 32 is given such importance is because the state as an organ, if left without checks and balances, has the potential to become a tyrannical institution that can take the civil and individual liberties of its people for granted. To curb this inclination of the state at its very roots, the constitutional scheme envisaged an organ within the state machinery, namely the judicial organ, which is vested with the powers to interfere with the tyrannical tendencies of the state. This organ, with the Apex Court being at the helm of it, though functions within the state, in cases of violations of fundamental rights, also combats against it. 16. Further, the Constitution of India, amongst all the other rights conferred by it, has placed civil and individual libe....
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....sibility of attack or change which may be brought about by the passions and vicissitudes of party politics, by placing them under the jurisdiction of judges appointed in the manner provided for later on in this Constitution. Sir, it is because we all believe,-and that is the implication of this chapter of fundamental Rights,-that man has certain rights that are inalienable, that cannot be questioned by any humanly constituted legislative authority, that these Fundamental Rights are framed in this manner and a sanction and a protection given to them by this provision for appeal to the Supreme Court. As I said, Sir, the implication of this is that an individual must be protected even against the collective action of people who may not fully appreciate his needs, his rights, his claims. And the sacredness of the individual personality, the claims of his conscience, are, I venture to say, based upon a philosophy, an outlook on life which are essentially spiritual. Sir, if all our people and their outlook were entirely materialistic, if right and wrong were to be judged by a majority vote, then there is no significance in fundamental rights and the placing of them under the pro....
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.... caused because of the lack of an authoritative pronouncement on the subject matter by this Court. This lack of certainty in the law, has led to differential outcomes of similarly situated persons in different jurisdictions. 22. In such a circumstance, where similarly situated persons are becoming victim to differential outcomes, this court must clarify such an ambiguity, by resolving the conflict between the two sets of judgments, to ensure that the mischief caused by the conflicting views is erased, and the certainty in law is restored. 23. In light of the abovementioned discussions, we are not inclined to agree with the preliminary objections raised by the respondent, regarding maintainability of the petition on mere technicalities and accordingly reject the same. CONFLICT BETWEEN THE TWO SETS OF HIGH COURT JUDGMENTS 24. During the course of arguments on merits, the learned counsel appearing on behalf of the petitioner herein placed strong reliance on the judgment of Union Of India vs Suresh Raheja & Ors 2011 (267) E.L.T. 487 (Bom.). The petitioner in the abovementioned case was caught trying to smuggle goods through the green channel of entry. The seizure of the imp....
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....Section 127B(1) of the Act. In other words, it does not fall under any of the excluded categories of cases. It may be noted at this stage that the decision in Additional Commissioner of Customs v. Shri Ram Niwas Verma (supra), was a case where imported goods were covered under the third Proviso to Section 127B(1) and, therefore, the said decision is distinguishable on facts." 27. To clear this cloud of ambiguity, and to settle the conflict between these two sets of High Court judgments, we must first analyze Section 123 and Section 127 B of the Customs Act. For the sake of convenience, the relevant Sections are being reproduced herein:- "123. Burden of proof in certain cases. (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 ....
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....on of the goods under the Customs Tariff Act, 1975 (51 of 1975). (1A) Notwithstanding anything contained in sub-section (1), where an application was made under sub-section (1) before the 1st day of June, 2007 but an order under sub section (1) of section 127C has not been made before the said date, the applicant shall within a period of thirty days from the 1st day of June, 2007 pay the accepted duty liability failing which his application shall be liable to be rejected." 28. Section 123 of the Customs Act 1962, states that if an accused is caught by the authorities in the act of smuggling goods, the burden of proof, which originally vests with the prosecution, is reversed, and the same is transferred from the prosecution to the defense. In simpler terms, this would mean that in such cases, it is the accused who is tasked with proving his innocence, rather than the prosecution proving the accused person's guilt. 29. This discharge of burden of proof, in our opinion, can only happen in cases where there is a reasonable possibility of the accused being innocent. In the present case at hand, the petitioner herein was caught with the impugned goods within the customs ar....
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....d declare the goods that require duty as per Section 77 of the Customs Act. 35.If a passenger opts for the green channel mode of entry, it implies that the passenger, by virtue of not opting for the red channel mode of entry, is stating that he has no goods that are liable to duty, and hence, it is deemed that they are making a declaration under Section 77 of the Customs Act of carrying "Nil" dutiable goods. 36. However, if a passenger decides to opt for the green channel of entry, but, is still found with goods that are subject to the levy of duty, they become liable to confiscatory and penal action as per the Customs Act. Since they become subject to the penal provisions of the Customs Act, by default, it must also be implied that they are given the benefit of settlement as per the same Act. No surgery in such a scenario can be done, wherein the accused is held liable of the penal consequences of the act, however, is denied the benefit of remedy under the same Act. 37. Further, if we were to accept the proposition that a non-declaration under Section 77 of the Customs Act would automatically bar the incoming passenger from availing the benefit of settlement, in light of our....
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.... the respondent even in this regard is liable to be rejected. CONCLUSION 43. By way of additional submissions made by the petitioner, it has been brought to our notice that the Commissioner of Customs has issued a show cause notice to the petitioner. Since a show cause notice has already been issued, no direction is that regard is warranted. If an application of settlement is filed by the petitioner, the same shall be dealt with by the Settlement Commission on its own merits and in accordance with law and the procedure prescribed u/s 127H of the Customs Act. However, we deem it appropriate to observe that, if at all, the Settlement Commission would deem fit, it can always seek further report from the "Commission (Investigation)" appointed within the Settlement Commission even after issuance of the show cause notice for this one time opportunity of settlement. 44. We refrain from making any observations on the merits of the case and leave the same for consideration by the Settlement Commission. 45. The Writ petition along with application therein are, accordingly, disposed of. J. (KRISHNA MURARI) WRIT PETITION (CRIMINAL) NO. 55/2023 JUDGMENT SANJAY KAROL, J. ....
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....customs is empowered to arrest a person under Section 105 if he has reason to believe that such a person may have made a false declaration (Section 132), obstructed a customs officer (Section 133) or evaded customs duty that is liable to be paid (Section 135). Furthermore, Section 108B penalises failure to furnish information as directed by the proper officer. 13. Chapter XIV allows for the confiscation of goods and the imposition of penalties. Sections 111 and 112 thereunder enumerate a list of goods which are liable for confiscation and the penalty thereof. Section 123 reverses the burden of proofs of certain specified seized goods. 14. Chapter XIVA contains the mechanism for the settlement of cases. 15. Chapter XVI of the Act lays down offences and prosecution under the Customs Act. This chapter imposes, as a penalty, imprisonment for certain offences. They are: making a false declaration relating to customs (Section 132; may extend to 1 year), obstruction of an officer of customs (Section 133; may extend to 1 year), refusal to be Xrayed (Section 134; may extend to 6 months) and evasion of duty or prohibitions (Section 135; may extend to seven years). 16. Given the a....
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....n incurred, the additional amount of customs duty accepted to be payable by him and such other particulars as may be specified by rules including the particulars of such dutiable goods in respect of which he admits short levy on account of misclassification, undervaluation or in-applicability of exemption notification [or otherwise] and such application shall be disposed of in the manner hereinafter provided : Provided that no such application shall be made unless,- (a) the applicant has filed a bill of entry, or a shipping bill, in respect of import or export of such goods, as the case may be, and in relation to such bill of entry or shipping bill, a show cause notice has been issued to him by the proper officer; (b) the additional amount of duty accepted by the applicant in his application exceeds three lakh rupees; and (c) the applicant has paid the additional amount of customs duty accepted by him along with interest due under section 28AB: Provided further that no application shall be entertained by the Settlement Commission under this subsection in cases which are pending in the Appellate Tribunal or any court : Provided also that ....
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....t meant to be applied in all categories of cases. Only in the following circumstances can an application be made to the settlement commission: a) the applicant has filed a bill of entry, or a shipping bill, in respect of the import or export of such goods, as the case may be, and in relation to such bill of entry or shipping bill, a show cause notice has been issued to him by the proper officer; (b) the additional amount of duty accepted by the applicant in his application exceeds three lakh rupees; (c) the applicant has paid the additional amount of customs duty accepted by him along with interest due under section 28AB: and (d) the proviso to Section 127B is not attracted. 26. Furthermore, as discussed above, the scheme of the Act involves payment of fines and/or imprisonment for offences enumerated under Chapter XVI. All offences, under the Act, cannot be permitted to go before the Settlement Commission under Section 127B. This would make the legislative intent behind the proviso to Section 127B, which bars certain goods, including those mentioned under Section 123 and goods which are prohibited under the Narcotic Drugs Psychotropic Substan....
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.... is excluded. 26.4 Significantly, in the above-mentioned cases, the decision of the Delhi High Court in Commissioner of Customs v. Ashok Kumar Jain, 2013 (292) ELT 32 (Del), wherein settlement application under 127B was allowed for watches recovered, has been distinguished on the ground that the said decision did not consider Section 123 and the consequent bar therein. 26.5 It is also pertinent to note that the reasoning in Suresh Raheja (supra) was given in the facts and circumstances of that case, wherein the entire baggage, including the watches, had become wet and affected by the floods. 27. In the present case, the recovery from the Petitioner was on crossing the green channel at the Delhi airport on 05.10.2022, wherein the officers of the Investigating Agency apprehended him with dutiable goods, including watches of admitted foreign origin. Watches is one of the categories of goods mentioned in Section 123 of the Act. Since there is a recovery of goods to which Section 123 applies, the same is a bar for the Petitioner to approach the Settlement Commission. The matter, in my view, is fit to be remitted to the adjudicating authorities to take appropriate action, as per....