TaxTMI 
TaxTMI 
2023 (12) TMI 51
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.... Reddy, learned counsel for the petitioner and Sri Dominic Fernandes, learned counsel appearing for the respondent-Department. 3. The brief facts relevant for adjudication of the present writ petition are that on 05.10.2016, a person by the name Sri Ambala Sreedhar Reddy was intercepted by the Directorate of Revenue Intelligence (DRI), Hyderabad, at the Rajiv Gandhi International Airport, Hyderabad, when the aforesaid person was about to board the flight traveling by Air Asia flight AK 068 scheduled at 23.55 hrs on 05.10.2016 to Kuala Lampur. Upon enquiry, he informed that he is carrying certain medicines to Vietnam which were there in his checked in baggage. As a consequence of his disclosure of carrying certain medicines, the checked in baggage were retrieved and were opened and checked. 4. In the course of checking, it was found that the said person was smuggling certain high value medicines in the commercial quantity out of India to Vietnam. In the course of further enquiry, it was found that the checked in baggage contained 247 boxes of prescription drugs manufactured by various leading pharmaceutical companies. These medicines were required for treatment of Hepatitis C.....
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....and he had also recorded his statement under Section 108 of the Act wherein he has specifically stated as under: That they resorted to sending the Hepatitis C medicines in tablet form through persons in their checked-in baggage and the persons who go to Vietnam will hand over the same and collect the amount from the concerned person and the same is brought to India. Generally, his employee, Shri A. Sreedhar Reddy carries the Hepatitis C tablets in his checked-in baggage to Vietnam and hands over the same to the concerned person in Vietnam and collects the amount from him and comes back to India. That they do not have any export permission from the Drug Controller. That as per their stocklist agreement with the companies mentioned above, they are stockists in India and to the region mentioned therein. That they had gone through the panchanama dated 05/06.10.2016 and appended his dated signature. That he had given these Hepatitis C medicines to the Applicant, an employee of his company Haeal Pharma to handover to Mr. Chang in Ho Chi Minh City, Vietnam. That at his instance only, his employee Sri Ambala Sreedhar Reddy carried these medicines in his checked i....
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....cution proceedings under Section 135(1)(b) read with Section 135 (1) (ii) of the Act. As soon as the said notice of prosecution was issued to the petitioner, he though belatedly preferred an appeal against the order passed by the respondent No.6 dated 28.02.2018 before the Customs, Excise and Service Tax Appellate Tribunal (herein referred to as 'the Tribunal') vide Customs Appeal No.30383 of 2023. After condoning the delay, the Tribunal proceeded to decide the appeal on merits and vide order dated 06.09.2023 the appeal was allowed in part. The order of confiscation was maintained and the valuation of goods was reduced to Rs.19,00,000/- instead of Rs.53,45,000/- and the order of penalty of Rs.2,50,000/- was reduced to Rs.50,000/-. 9. Subsequent to the order of the Tribunal in response to the earlier notice of prosecution issued by the respondent No.3, the petitioner appeared before the officer concerned on 08.09.2023 i.e. after the appeal stood decided by the Tribunal. The petitioner pressed before the respondent No.3 for accepting the compounding application and requested the respondent No.3 to allow the application for compounding. For ready reference, it would be relevant at ....
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....h immunity has been granted to him." 11. Immediately, after the order dated 12.09.2023 at the behest of the petitioner having been passed, the petitioner turned around and has now filed the present writ petition on 27.09.2023 challenging the order passed on the application for compounding of offense. The petitioner had raised various grounds to challenge the prosecution proceedings itself. 12. According to the learned counsel for the petitioner, at the first instance, awarding of an amount of Rs.53,45,000/- towards payment of compounding amount is per se contrary to the guidelines which have been issued by the State Government in this regard where according to the provisions of Section 134 (1) (b) of the Act, the rate for fixing the compoundable offense is 5% of the total value of the goods. It was also the contention of the learned counsel for the petitioner that the authority concerned also has erred in as much as not appreciating the fact that in the appeal before the Tribunal, the value of the product itself has got substantially reduced and therefore the amount payable under compounding of the offense also needs to be re-worked. Thus, prayed for issuance of an appropriat....
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....should not be entertained at this juncture, as petitioner is bound by his own conduct and therefore the writ petition should be rejected with heavy costs. 17. It was the further contention of the learned counsel for the respondent-Department that if at all, if the petitioner is aggrieved; he ought to have availed the remedy available under the provisions of law. 18. Having heard the contentions put forth on either side and on perusal of records, from the narration of facts as is evident from the preceding paragraphs, what is apparent is that in July, 2022, i.e. more than a year back, the petitioner was issued with a notice of prosecution under Section 135(1)(b) read with Section 135(1)(ii) of the Act. Based upon the said notice, the petitioner herein accepting the option of compounding of offence has filed an application before the respondent No.4 seeking for compounding of the offence under Section 137(3) of the Act. The said application was duly signed by the petitioner himself and the matter thereafter was pending consideration before the respondent No.4 for almost about thirteen (13) months. All through this period also, the petitioner did not thought it proper for challe....
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....ompounding amount in the course of compounding of the various offences under the various provisions of the Act. So far as the rate applicable for quantifying the compounding amount in respect of an offence under Section 135(1)(b), the compounding amount is up to 5% of the market value of the goods subject to minimum of Rs.1,00,000/-. Though the learned counsel for the respondent-Department does not dispute the issuance of the Circular No.27 of 2015, however, submitted that the proceedings were as per the note sheets on the basis of which the notice of prosecution was initiated. 22. Under the said circumstances, since it is mandatory for the Department to have adhered to the guidelines laid down in the said Circular No.27 of 2015 and which stood modified and clarified on various occasions from time to time, it was not justifiable for the authorities concerned to have ignored the said guidelines and imposed unreasonable penalty as has been done in the instant case. Once when there is an upper gap limit of 5%, there was no power conferred with the authorities concerned with which the said amount could have been raised. At the same time, the notice having been issued only under Sect....