2015 (9) TMI 1197 - AT - Customs

Confiscation of seized diamonds under Section 111(d), (f), (i) and (m) - imposition of penalties - Smuggling - It is seen that in the context of section 111(d) or 113(d), in several precedents, the definition of prohibited goods as contained in section 2(33) of the Customs Act, 1962 has been applied liberally, including in Om Prakash Bhatia vs. Union of India, 2003 (7) TMI 74 - SUPREME COURT OF INDIA and Sheikh Mohd. Omer vs. Collector, 1970 (9) TMI 36 - SUPREME COURT OF INDIA . - Under section 125 of the Customs Act, unless the importation or exportation of goods is expressly prohibited , the Adjudication Authority is obliged to offer to the Owner the goods an option to pay fine in lieu of confiscation. Since the import of cut and polished diamonds is not expressly prohibited under Section11 of the Customs Act, 1962 or by any other statutory notification, we find merit in the ground that an option to redeem them on payment of fine in lieu of confiscation was mandatory. However, after conclusion of the hearing, on instructions, advocate for Ms. Kanchna informed that now she will not avail the option of redemption even if granted. Therefore, we are not interfering with the order of absolute confiscation. Since the courier parcel was in the name of his sister, considering the gravity and penal consequences and due to natural love and affection he initially accepted under pressure the ownership and importation of the seized courier parcel. He categorically stated that he was not concerned with the seized goods and as such he was not opposing the confiscation of the seized goods. However, he strongly opposed imposition of any penalty whatsoever on him under the provisions of the Customs Act, 1962. However, adjudication qua him was not completed with five weeks and thereafter he filed application for settlement as co-applicant, which was dismissed. No admission was made by these brothers even before the Settlement Commission. It is seen that his subsequent statements, which were also recorded under section 108, do not incriminate him or Nilesh Patel. These statements cannot be ignored. His explanation therefore seems plausible. The adjudicating authority has recorded that Ms. Kanchana appears to have been pressurized to file an affidavit giving untenable grounds such as non dutiability of the seized diamonds and conflicting reasons for sending concealed diamonds for collection by Jimmy who was not even known to Shri Bhargav Patel or his parents in India. We find that on the contrary she admitted her duty liability not only before Settlement Commission but also during the adjudication proceedings. There is no cogent evidence to show that she was so pressurized and this finding is based only on suspicion. There is no document or material or circumstantial evidence showing that Bhargava Patel had placed any order either verbal or written, or made compensatory payment, for the seized diamonds. In view of the above, we find that role of Mr. Bhargav Patel and Nilesh Patel in the smuggling of the diamonds under seizure is not established even on preponderance of probability and penalties imposed on them are set aside. - Decided partly in favour of appellants.

Summary

Issues Involved:
1. Confiscation of seized diamonds and imposition of penalties under the Customs Act, 1962.
2. Absolute confiscation vs. redemption of seized diamonds.
3. Role and liability of individuals involved in the importation of diamonds.

Issue-Wise Detailed Analysis:

Confiscation of Seized Diamonds and Imposition of Penalties under the Customs Act, 1962:
The case arises from a common show cause notice proposing the confiscation of 623.13 carats of cut and polished diamonds valued at Rs. 31,65,323.41 under Sections 111(d), (f), (i), and (m) of the Customs Act, 1962, and the imposition of penalties on the appellants. The appeals challenge the Order-in-Original dated 28.3.2013, which imposed penalties on Ms. Supaporn Vibbonwetwanich (Ms. Kanchana) and Mr. Nilesh B. Patel under Section 112(a) of the Customs Act, 1962, and directed absolute confiscation of the diamonds, erroneously identified as rough diamonds. The Tribunal had previously remanded the matter for de-novo adjudication, leading to the current impugned order.

Absolute Confiscation vs. Redemption of Seized Diamonds:
Ms. Kanchana challenged the absolute confiscation of the diamonds, arguing that the adjudicating authority was mandated to provide an option to redeem the goods under Section 125 of the Customs Act, 1962, as the diamonds were not prohibited goods. The Tribunal noted that the definition of "prohibited goods" under Section 2(33) should not be liberally applied in the context of Section 125. The Tribunal referenced precedents from the Andhra Pradesh High Court and Madras High Court, which held that goods not expressly prohibited must be given an option for redemption. The Tribunal agreed that an option to redeem the diamonds was mandatory but did not interfere with the order of absolute confiscation as Ms. Kanchana, through her advocate, declined the option of redemption.

Role and Liability of Individuals Involved in the Importation of Diamonds:
The Tribunal examined the involvement of Mr. Bhargav B. Patel and Mr. Nilesh B. Patel in the importation of the seized diamonds. The investigation revealed that the parcel containing the diamonds was sent from Bangkok by Ms. Kanchana without the knowledge of Mr. Bhargav Patel or his sister, the consignee, Ms. Shilpaben. Ms. Kanchana admitted to sending the parcel and mis-declaring its contents to evade customs duty. The Tribunal found no evidence that Mr. Bhargav Patel or Mr. Nilesh Patel had any involvement in the smuggling of the diamonds. The Tribunal noted that Mr. Bhargav Patel's statements, recorded under Section 108, did not incriminate him or his brother. The Tribunal concluded that the role of Mr. Bhargav Patel and Mr. Nilesh Patel in the smuggling was not established even on the preponderance of probability and set aside the penalties imposed on them.

Conclusion:
The appeal filed by Ms. Kanchana was dismissed, and the appeals filed by Mr. Bhargav B. Patel and Mr. Nilesh Patel were allowed. The Tribunal upheld the absolute confiscation of the diamonds but set aside the penalties imposed on Mr. Bhargav B. Patel and Mr. Nilesh Patel, finding no evidence of their involvement in the smuggling of the diamonds.