AI Drafter - (New and Powerful) 
Generate professional replies, appeals, opinions to Show Cause Notices, assessment orders, audit objections, and other legal communications using TaxTMI's AI Drafter. 
TaxTMI 
TaxTMI 
2026 (4) TMI 1684
X X X X Extracts X X X X
X X X X Extracts X X X X
....g the impugned order as the same is passed de hors the statutory provisions, the writ petition would be maintainable. 3. The brief facts leading to filing of the present writ petition are as under: 3.1 The petitioner, who is dealing in the business of embroidery machines was subjected to investigation along with other persons for smuggling of gold in the form of paste. 3.2 On the intervening night of 28/29.04.2023, the Special Operation Group (SOG), Surat Police intercepted a car bearing registration No. GJ-03-BA-5838 near S.K. Nagar Chokdi, Surat. There were two passengers who had arrived from Surat International Airport in Air India Express Flight No. IX-172 dated 28.04.2023 and upon interception and personal search conducted by the SOG Police, gold in paste form weighing 7158 grams in total, comprising 3582 grams was recovered from one Shri Fenil Rajeshbhai Mavani and 3576 grams was recovered from Shri Nirav Ramnikbhai Davariya who had arrived from Sharjah. 3.3 There were other two persons who were the occupants of the vehicle from whom nothing was recovered. Upon completion of the panchnama, the said four individuals were arrested. After the production of such indiv....
X X X X Extracts X X X X
X X X X Extracts X X X X
....tta in the case of Gopal Saha vs. Union of India., [2016] 69 taxmann.com 325 (Calcutta). 4.3 Mr. Hardik Vora, learned advocate has submitted that, in fact, as per sub-clause-(ii), the goods referred in the said clause are a dutiable goods and hence the penalty ought to have been imposed under sub-clause(ii) since the gold falls in such category. Thus, it is urged that the impugned Order-in-Original is required to be quashed and set aside. 5 In response to the aforesaid submissions, learned Senior Standing Counsel Mr. Shukla has submitted that, in fact, the act i.e. smuggling of gold in paste form by the petitioner falls under both the provisions of Clauses (a) and (b) of Section 112 of the Act. It is submitted that while issuing show-cause notice, the competent authority had specifically highlighted the act of the petitioner and the nature of its contravention and hence, the petitioner was called upon to submit his explanation for the violation of the provisions of the Act. 5.1 It is submitted that in the reply by the petitioner to the show-cause notice, no contention was raised by him alleging any violation of the provisions of the Act. While referring to the Division Ben....
X X X X Extracts X X X X
X X X X Extracts X X X X
....r is higher: PROVIDED that where such duty as determined under sub-section (8) of section 28 and the interest payable thereon under section 28AA is paid within thirty days from the date of 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 penalty so determined." 6.1 Keeping in mind the aforementioned provision, we may, at this stage, refer to the contents of the show-cause notice which has been issued to the petitioner along with various other persons who are found to have indulged in smuggling of gold in paste form. This appears to be a wide spread racket of smuggling the gold in India. The relevant role of the petitioner in the impugned show-cause notice issued under Section 124 of the Act dated 22.05.2024 is as under: "49.6 Shri Vishal Dhirubhai Gabani: It appears that Shri Vishal Dhirubhai Gabani was an active syndicate member of group involved in smuggling of gold paste through Surat International airport and arranged around 2,75,000 Dirhams in UAE in April-23 to buy the gold for Shri Baldev Manshukbhai Sakhereliya. He was w....
X X X X Extracts X X X X
X X X X Extracts X X X X
....rty Six Lakh Forty Seven Thousand Four Hundred and Eighty Five only) (market value) is apt as per Section 112 of the Customs Act, 1962. As per the wordings of the provision of Section 112 of the Customs Act, 1962, I hold that the penalty at higher side which is equal to the value of the subject goods is to be invoked in subject matter." 6.4 We may, at the outset, first deal with the contentions raised by the petitioner relating to Clauses (a) and (b) prescribed under Section 112 of the Act. On a bare perusal of the alleged contravention, we find that the role of the petitioner in smuggling the gold would be covered in both the Clauses of Section 112 of the Act i.e. (a) and (b). The word "or" implies that a person can be liable under either clause depending on his/her role. So far as Section 112(a) of the Act is concerned there are two classes of persons liable for penalty there under, one a person who does or omits to do any act which renders the goods liable for confiscation and the other is a person who abets the doing of any act or omission to do any act which renders the goods liable for confiscation under Section 111 of the Act. It thus attempts to bring in persons who are ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ed goods prevention and disposal thereof, more fully described in Sections 11 and 11A of the Act, are also to be treated as prohibited. Goods imported from outside of the territory waters of the country, against any prohibition or restriction under the Customs Act, 1962 or any other law, time being in force, are to be treated as prohibited goods. 52. There is one thing to state that gold is not one of the enumerated prohibited goods and another, to state that goods are not permitted to be brought into the country, by smuggling, which, means any act or omission which would render such goods liable to confiscation under section 111 or section 113. There may not be total prohibition for import of goods, but if import is not done lawfully, in other words against any prohibition or restriction, which are inbuilt in the Customs Act, 1962 or any other law for the time being in force, then such goods should fall within the definition of Section 2(33) of the Act. 53. A conjoint reading Sections 2(33), 11 or 11A of the Act and other provisions in the Customs Act, 1962, and any other law, for the time being in force, would also make it clear that importation of goods, define....
X X X X Extracts X X X X
X X X X Extracts X X X X
....finition of prohibited goods, in terms of Section 2(33) of the Customs Act, 1962. 57. If there is a fraudulent evasion of the restrictions imposed, under the Customs Act, 1962 or any other law for the time being in force, then import of gold, in contravention of the above, is prohibited. For prohibitions and restrictions, Customs Act, 1962, provides for machinery, by means of search, seizure, confiscation and penalties. Act also provides for detection, prevention and punishment for evasion of duty. 58. The expression, 'subject to prohibition in the Act and any other the law for the time being in force.' in Section 2(33) of the Customs Act, has wide cannotation and meaning, and it should be interpreted, in the context of the scheme of the Act, and not to be confined to a narrow meaning that gold is not an enumerated prohibited good to be imported into the country. If such narrow construction and meaning have to be given, then the object of the Customs Act, 1962, would be defeated. 59. The Provisions in the Customs Act, 1962, dealing with prohibition/restriction or any other law for the time in force, have to be read into Section 2(33) of the Act. S....
X X X X Extracts X X X X
X X X X Extracts X X X X
....al setting aside the imposition of penalty under Rule 173Q of the Central Excise Rules, 1944. The Tribunal has set aside the order of the Commissioner on the ground that neither the show cause notice nor the order of the Commissioner specified which particular clause of Rule 173Q had been allegedly contravened by the appellant. We are of the view that the finding of the Tribunal is correct. Rule 173Q contains six clauses the contents of which are not same. It was, therefore, necessary for the assessee to be put on notice as to the exact nature of contravention for which the assessee was liable under the provisions of the 173Q. This not having been done the Tribunal's finding cannot be faulted. The appeal is, accordingly, dismissed with no order as to costs." 6.8 The Supreme Court in reference to Rule 173Q of the Central Excise Rules, 1944, appears to upheld the decision of the Tribunal by recording that since Rule 173Q contains six clauses the contents of which are not same, the assessee was required to put to notice on the exact nature of contravention for which the assessee was liable. In the instant case, while issuing show-cause notice, the respondent authorities have exactl....