2004 (8) TMI 616 - AT - Customs

Export - Baggage, Passenger baggage - Prohibited goods - Confiscation - EXIM Policy, Importer-Exporter Code Number - Penalty

Issues Involved:
1. Confiscation of diamonds.
2. Imposition of penalty.
3. Compliance with EXIM Policy and Export Baggage Rules.
4. Applicability of Importer Exporter Code (IEC) requirement.
5. Interpretation of "prohibited goods" under Customs Act.
6. Grant of redemption fine under Section 125 of the Customs Act.

Detailed Analysis:

1. Confiscation of Diamonds:
Mrs. Molok Boloky appealed against the confiscation of diamonds seized from her possession. The diamonds were found concealed in a pickle jar in her checked-in baggage. The Commissioner relied on various provisions of the EXIM Policy 2002-2007 and the Handbook of Procedure, concluding that the diamonds were not bona fide personal baggage and were subject to confiscation under Section 113(d) and (e) of the Customs Act. The Tribunal upheld the confiscation, stating that the diamonds, valued at over Rs. 1.61 crores, could not be considered bona fide baggage and were concealed without proper declaration under Section 77 of the Customs Act.

2. Imposition of Penalty:
The Commissioner imposed a penalty on the appellant, which was contested as being excessive. The Tribunal agreed that the penalty was on the higher side and reduced it to Rs. Five Lakhs but upheld the decision to impose a penalty due to the nature of the violation.

3. Compliance with EXIM Policy and Export Baggage Rules:
The Commissioner found that the appellant violated several provisions of the EXIM Policy and Export Baggage Rules. The Tribunal noted that the appellant did not comply with the necessary export procedures, including the requirement to file a shipping bill and obtain clearance from Customs under Sections 50 and 51 of the Customs Act.

4. Applicability of Importer Exporter Code (IEC) Requirement:
The appellant argued that the lack of an IEC number should not render the export illegal. However, the Tribunal referred to Section 7 of the Foreign Trade Act, which mandates an IEC number for any import or export. The Tribunal found that the appellant, being an Iranian national, did not possess an IEC number and thus violated the requirement, making the export of diamonds prohibited.

5. Interpretation of "Prohibited Goods" Under Customs Act:
The appellant contended that diamonds are neither prohibited nor dutiable goods and should not be confiscated under Section 113(d) of the Customs Act. The Tribunal referred to the Supreme Court's judgment in Om Prakash Bhatia v. CC, Delhi, which clarified that goods not complying with prescribed conditions are considered prohibited. The Tribunal concluded that the diamonds, being exported without fulfilling statutory conditions, were prohibited goods under Section 113(d) and (e) of the Customs Act.

6. Grant of Redemption Fine Under Section 125 of the Customs Act:
The appellant argued that even if the diamonds were liable for confiscation, they should not be absolutely confiscated, and a redemption fine should be granted. The Tribunal disagreed, stating that Section 125 allows for absolute confiscation of prohibited goods without the option for redemption. The Tribunal found no reason to interfere with the Commissioner's decision on absolute confiscation but modified the penalty amount.

Conclusion:
The Tribunal upheld the confiscation of diamonds and the imposition of a penalty, albeit reducing the penalty amount. The decision emphasized compliance with EXIM Policy, Export Baggage Rules, and the mandatory requirement of an IEC number for exportation. The Tribunal interpreted "prohibited goods" as those not meeting statutory conditions and supported absolute confiscation under Section 125 of the Customs Act.

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