2012 (9) TMI 823 - AT - Customs

Penalty - smuggling of foreign currency or gold biscuits into India. - confiscation of gold biscuits Held that - Appellant from whose possession the gold biscuits were seized is the person physically associated with the contraband - There is preponderance of evidence on record to indicate that Haris was carrying the gold biscuits at the instance of the appellant for a monetary consideration - appellant also could not adduce evidence of licit nature of the goods. Hence he can be held to have rendered the goods liable to confiscation under Section 111(d) of the Act - quantum of penalty can be reduced

Issues Involved:
1. Absolute confiscation of 34 gold biscuits.
2. Imposition of penalty on the appellant.
3. Connection between the appellant and the smuggling of gold biscuits.
4. Applicability of the Government's liberalized policy on the import of gold.
5. Quantum of penalty imposed.

Issue-Wise Detailed Analysis:

1. Absolute Confiscation of 34 Gold Biscuits:
The gold biscuits of foreign origin were seized from an individual, Shri V. Haris, by officers of the Special Customs Preventive Unit. The biscuits were concealed inside a cylindrical cloth cover tied around his abdomen. Haris could not produce valid documents to prove licit import, leading to the seizure under a mahazar. The Commissioner of Customs issued a show-cause notice for confiscating the gold biscuits under Section 111(d) and Section 121 of the Customs Act. The original authority ordered absolute confiscation, which was upheld by the Commissioner (Appeals). The appellate tribunal sustained the absolute confiscation, noting that the concealment of the gold biscuits indicated smuggling. The tribunal cited the Hon'ble Madras High Court's decision in Samynathan Murugesan and the Hon'ble Supreme Court's judgment in Om Prakash Bhatia to support the view that the gold was a prohibited item and thus subject to absolute confiscation.

2. Imposition of Penalty on the Appellant:
A penalty of Rs. 3.6 lakhs was imposed on the appellant under Section 112 of the Customs Act. The appellant contested the penalty, arguing there was no evidence connecting him to the smuggling of the gold biscuits. However, the tribunal found preponderance of evidence indicating that Haris was carrying the gold biscuits at the instance of the appellant. The appellant admitted to giving Rs. 3 lakhs to Haris and arranging another Rs. 2 lakhs through Chalad Nazer. The tribunal upheld the penalty but reduced the quantum from Rs. 3.6 lakhs to Rs. 1 lakh, considering it disproportionate to the value of the goods.

3. Connection Between the Appellant and the Smuggling of Gold Biscuits:
The appellant was linked to the smuggling through statements recorded under Section 108 of the Customs Act. Haris stated that he was transporting the gold biscuits from Mumbai as instructed by the appellant and that the money for purchasing the gold was supplied by the appellant. The appellant admitted to giving money to Haris and being in constant telephonic communication with a supplier in Mumbai. The tribunal concluded that the appellant was involved in the smuggling operation and upheld the penalty imposed.

4. Applicability of the Government's Liberalized Policy on the Import of Gold:
The appellant argued that the absolute confiscation was not warranted due to the liberalized policy on gold import. However, the tribunal noted that there were still restrictions on the import of gold under the liberalized policy, which amounted to a prohibition under Section 111 of the Customs Act. The tribunal referenced the Hon'ble Kerala High Court's decision in Kerala Commercial Corporation and Others and the Hon'ble Calcutta High Court's ruling in Uma Shankar Verma to support this view, thereby justifying the absolute confiscation.

5. Quantum of Penalty Imposed:
The appellant challenged the quantum of the penalty as excessive. The tribunal agreed that the penalty of Rs. 3.6 lakhs was disproportionate to the value of the goods (Rs. 17,42,840/-). Considering the facts and circumstances, the tribunal reduced the penalty to Rs. 1 lakh, deeming it more appropriate.

Conclusion:
The tribunal upheld the absolute confiscation of the gold biscuits and the imposition of the penalty on the appellant. However, it reduced the quantum of the penalty from Rs. 3.6 lakhs to Rs. 1 lakh. The appeal was disposed of accordingly, with the operative part of the order pronounced in court on 11-8-2011.

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