2015 (12) TMI 1578 - HC - Customs

SEZ unit - Release of confiscated 12 kgs of gold bars - confiscation of gold bars - imposition of penalties - SEZ - mandatory intimation under the Trade Facilitation Notice No.02/07 dated 3.3.2007 to be sent to the Department - Whether the failure on the part of the passenger to adhere to the rules provided in Rule 29(5) of the SEZ Rules, 2006 and in the absence of valid permit or authorization, the detention of gold bars justified? - opportunity of being heard - applicability of section 51 - Held that - the implication of section 51 of the SEZ Act is that anything inconsistent to the provisions of the SEZ Act will not be considered. As stated above, there is also a discrepancy relating to issuance of detention receipt. Since there was no case made out for confiscation of the goods as per Rule 29(5) of the SEZ Rules, earlier show cause notice was dropped. If at all any proceedings to be initiated, that can be initiated only under the provisions of the SEZ Act and Rules. Also, the unit is a SEZ unit, section 51 applicable. Non consideration of CCTV footage by the Appellate Authority - Held that - the CCTV footage was concealed by the Appellate Authority for the reasons best known to them. Though the burden lies upon the passenger to establish his defence, the Appellate Authority ought to have considered the said electronic evidence also, before penalising the Petitioner. Production of scientific and electronic evidence in court as contemplated under Section 65B of the Evidence Act is of great help to the adjudicating authority. The charges levelled against were dropped, after considering the implication of Section 51 of the SEZ Act and also the electronic evidence of CCTV footage. Further, there is also a statutory compliance provided under Section 128A(3) of the Customs Act, which the Appellate Authority failed to comply with. Hence, the matter deserves reconsideration and re adjudication, as long as the SEZ Act and the Rules and the Acts relied on by the Respondents are inconsistent with each other. Petition disposed off - matter remanded - opportunity of being heard to be provided to the petitioner.

Summary

Issues Involved:
1. Implementation of the lower adjudicating authority's order.
2. Violation of principles of natural justice.
3. Compliance with SEZ Rules and Customs Act.
4. Validity of the Appellate Authority's order.
5. Examination of electronic evidence (CCTV footage).

Issue-wise Detailed Analysis:

1. Implementation of the Lower Adjudicating Authority's Order:
The Petitioner sought a direction to the Customs Authorities to implement the order of the lower adjudicating authority dated 12.3.2015, which had dropped all charges against the Petitioner and their employee, and to quash the order of the Appellate Authority dated 12.8.2015, which had ordered confiscation of 12 kgs of gold bars and imposed penalties.

2. Violation of Principles of Natural Justice:
The Petitioner contended that the Appellate Authority's order was in violation of the principles of natural justice and Section 128A(3) of the Customs Act, 1962, which mandates that an appellant must be given a reasonable opportunity to be heard. The Petitioner argued that no notice was given before passing the confiscation order and imposing penalties, thus violating natural justice principles.

3. Compliance with SEZ Rules and Customs Act:
The Customs Authorities detained the gold bars under Rule 29(5) of SEZ Rules, 2006, due to the lack of prior intimation by the Petitioner's employees. The lower adjudicating authority had dropped the charges, noting that the Petitioner had complied with SEZ Rules and was allowed to import gold duty-free. However, the Appellate Authority overturned this decision, leading to the current dispute.

4. Validity of the Appellate Authority's Order:
The Appellate Authority's decision to confiscate the gold bars and impose penalties was challenged on grounds of non-application of mind and procedural errors. The lower adjudicating authority had considered all evidence, including CCTV footage and SEZ provisions, and found no grounds for confiscation. The Appellate Authority, however, did not consider these aspects adequately, leading to a flawed decision.

5. Examination of Electronic Evidence (CCTV Footage):
The lower adjudicating authority had relied on CCTV footage showing the Petitioner's employees declaring the gold bars at the first available opportunity and not attempting to smuggle them. The Appellate Authority failed to consider this electronic evidence, which is admissible under Sections 65A and 65B of the Indian Evidence Act, 2000. The Supreme Court has emphasized the importance of electronic evidence in legal proceedings.

Conclusion:
The High Court set aside the Appellate Authority's order and remanded the matter for reconsideration, directing the Appellate Authority to pass fresh orders after giving the Petitioner an opportunity to be heard. The Court emphasized the need to comply with SEZ Rules, consider electronic evidence, and adhere to principles of natural justice. The Petitioner's compliance with SEZ provisions and the procedural lapses by the Customs Authorities were highlighted as significant factors in the decision.