2013 (10) TMI 1305 - CGOVT - Customs

Confiscation of goods - Non declaration of commercial quantity of diamonds imported in India - Import of diamonds for making jwellery - Held that - The said goods imported through Baggage being in commercial quantity, not declared before customs and found concealed, would fall in the category of smuggled goods . Further the importation is in violation of Sections 77 and 79 of Customs Act, Section 3(3)/11 of the Foreign Trade (Development & Regulation) Act, 1992, para 2.20 of the Foreign Trade Policy (2009-14), and Rule 3 of Foreign Trade (Exemption from Application of Rules in Some Cases) Order, 1993. There is therefore, a prohibition in law for the import of goods except in compliance with the Foreign Trade Policy. Non-compliance of these provisions renders the goods (prohibited goods) liable for confiscation under Section 111 of the Customs Act, 1962. - importation or exportation could be subject to certain prescribed conditions, to be fulfilled before or after clearance of goods. If the conditions are not fulfilled, it may amount to prohibited goods in terms of Sections 2(33), 111(d) and 113(d) of the Customs Act, 1962. - benefit of exemption was not available as the goods were attempted to be smuggled into India. As per Customs Tariff the diamonds attract duty and hence said goods are classifiable under heading 9803. The goods were liable to confiscation for violation of provision of law - Decided against assessee.

Summary

Issues Involved:
1. Legality of the confiscation of diamonds.
2. Imposition of redemption fine and penalty.
3. Applicability of customs duty and exemption under Notification No. 21/2002-Cus.
4. Violation of principles of natural justice.
5. Classification of diamonds as bona fide baggage.

Detailed Analysis:

1. Legality of the Confiscation of Diamonds:
The applicant arrived at CSI Airport, Mumbai, and opted for the green channel. Upon screening, suspicious images led to the discovery of 217 pieces of assorted polished diamonds valued at Rs. 7,80,982/-. The adjudicating authority confiscated the diamonds under Section 111(d)(I) & (m) of the Customs Act, 1962, allowing redemption on payment of a fine of Rs. 2,00,000/- and imposing a penalty of Rs. 75,000/- under Section 112 of the Customs Act, 1962. The applicant's appeal to the Commissioner (Appeals) was rejected, leading to the current revision application.

2. Imposition of Redemption Fine and Penalty:
The applicant challenged the confiscation, fine, and penalty, arguing that the diamonds were not "prohibited goods" and were exempt under Notification No. 21/2002-Cus., thus attracting nil duty. The government noted that the applicant failed to declare the diamonds, violating Sections 77 and 79 of the Customs Act, 1962, and other relevant provisions. The diamonds, being in commercial quantity and undeclared, were classified as smuggled goods, justifying the confiscation and penalties imposed.

3. Applicability of Customs Duty and Exemption under Notification No. 21/2002-Cus.:
The applicant contended that the diamonds, classified under Chapter 71 of the Customs Tariff Act, 1975, were exempt from duty under Notification No. 21/2002-Cus. The government, however, emphasized that the exemption applies to legally imported goods, not smuggled ones. The diamonds, imported without declaration and in breach of customs regulations, did not qualify for the exemption. The cited case laws, including Associated Cement Companies Ltd. v. Commissioner of Customs, were distinguished as they involved declared goods, unlike the undeclared diamonds in this case.

4. Violation of Principles of Natural Justice:
The applicant argued that the impugned order violated natural justice principles, as comments from the department were not shared with her. The government reviewed the records and upheld the adjudicating authority's actions, noting that the applicant had an opportunity to present her case during the personal hearing.

5. Classification of Diamonds as Bona Fide Baggage:
The applicant claimed the diamonds were inherited and not commercial goods, thus qualifying as bona fide baggage. However, the government found the diamonds were in commercial quantity and not bona fide household goods or personal effects. The import through baggage mode without declaration violated customs regulations, rendering the goods liable for confiscation under Section 111 of the Customs Act, 1962.

Conclusion:
The government upheld the confiscation of the diamonds, the imposition of redemption fine, and the penalty, rejecting the revision application. The diamonds were classified as smuggled goods due to non-declaration and commercial quantity, disqualifying them from the claimed exemptions. The order-in-appeal was affirmed, and the revision application was dismissed.