2016 (6) TMI 1343 - Commission - Customs

Smuggling - high value gold jewellery (studded with diamonds) - Baggage Rules - Jurisdiction of Settlement Commission to allow re-export of the clandestinely smuggled goods - Section 127B of the Customs Act, 1962 Held that - It is noteworthy that since 26-10-1989, while Section 123(2) contained gold and manufactures thereof items diamonds and manufactures thereof were deleted and this position has remained so till date - The applicants further drawing attention to the seized goods, both from the person of Ms. Vihari Sheth and from the business premises of Shri. Jiten Sheth, state that as per Department s valuation, value of gold in the total value of seized jewellery is around 8% showing pre-eminence of diamonds in the value of ornaments seized. The jewellery has to be treated as manufacture of diamonds and out of the ambit of Section 123(2). In CCE, New Delhi v. Connaught Plaza Restaurant (P) Ltd. Case 2012 (12) TMI 149 - SUPREME COURT , Hon ble Apex Court held that the common parlance test was the extension of general principle of interpretation of statute for deciphering mind of law maker. It was an attempt to discover intention of legislature from language used by it, keeping in mind, that language is at best imperfect instrument for expression of actual human thoughts. Maintainability of application - Held that - The Bench observes from the SCN that Revenue has not proposed any alternative classification of the goods in the SCN and therefore it cannot be said that the issue before Commission involves interpretation of classification under Customs Tariff Act, 1975 and therefore bar as laid down under proviso to Section 127B(1) would not be applicable to the instant case - the Bench finds that the objections raised by Revenue relating to maintainability of the applications filed by the applicants are not sustainable and hence rejected. The Bench upholds the allegations levelled against Ms. Vihari Sheth and Shri Jiten Sheth in the SCN dated 27-1-2014 relating to premeditated acts to smuggle dutiable goods into the country without payment of appropriate duties, and to facilitate its sale. The Bench holds that the goods totally valued at ₹ 2.45 crores and ₹ 2.05,21,000/- respectively are liable for confiscation under the provisions invoked in the SCN and Ms. Vihari Sheth and Mr. Jiten Sheth liable to penalties under the provisions invoked in the SCN. The Bench settles the case of the applicants under Section 127C(5) of the Customs Act, 1962 - The immunities to the applicant/co-applicant are granted under Section 127H(1) of the Act.

Summary

Issues Involved:
1. Smuggling of high-value diamond-studded gold jewelry.
2. Seizure and confiscation of goods under the Customs Act, 1962.
3. Applicability of Section 123 of the Customs Act, 1962.
4. Jurisdiction of the Settlement Commission.
5. Penalties and fines under the Customs Act, 1962.
6. Immunity from prosecution.

Issue-Wise Detailed Analysis:

1. Smuggling of High-Value Diamond-Studded Gold Jewelry:
The case involved the interception of a passenger, Mrs. Vihari Rajesh Sheth, at Mumbai Airport, who was found smuggling high-value diamond-studded gold jewelry concealed in her inner garments. The seized jewelry was valued at ?2.45 crores. Investigations revealed that the smuggling was part of a syndicate involving her uncle, Mr. Jiten Sheth, who owned a jewelry showroom in Mumbai. The jewelry was smuggled from Singapore and sold in India without declaring it to customs, thus evading duty.

2. Seizure and Confiscation of Goods Under the Customs Act, 1962:
The seized jewelry and a wristwatch were confiscated under Sections 111(d), 111(m), and 111(l) of the Customs Act, 1962. The jewelry was found to be unaccounted for in the stock statement of the showroom owned by Mr. Jiten Sheth. The seizure was based on the reasonable belief that the goods were smuggled.

3. Applicability of Section 123 of the Customs Act, 1962:
The key argument was whether the seized goods fell under Section 123, which shifts the burden of proof to the person from whom the goods were seized. The applicants argued that diamond-studded jewelry should be classified as "manufactures of diamonds" and not "manufactures of gold," thus not falling under Section 123. The Commission agreed with this argument, noting that the legislative history showed that "manufactures of diamonds" were excluded from Section 123 since 1989.

4. Jurisdiction of the Settlement Commission:
The Revenue argued that the Settlement Commission could not entertain the application because the goods were covered under Section 123 and no Bill of Entry or Shipping Bill was filed. The Commission, however, held that diamond-studded jewelry did not fall under Section 123 and that the application could be entertained. The Commission also noted that the applicants made a full and true disclosure of the duty liability and were willing to settle the case.

5. Penalties and Fines Under the Customs Act, 1962:
The Commission imposed penalties on both applicants. Mrs. Vihari Rajesh Sheth was fined ?37.5 lakhs and ordered to pay a duty of ?88,32,250/-. Mr. Jiten Sheth was fined ?30 lakhs and ordered to pay a duty of ?73,97,821/-. Both were also liable for interest on the duty amount.

6. Immunity from Prosecution:
The Commission granted immunity from prosecution under the Customs Act, 1962, subject to the payment of the adjudged dues. The order emphasized that the immunities would be void if it was found that the applicants had concealed any material facts or obtained the order by fraud or misrepresentation.

Order:
The goods seized from Mrs. Vihari Rajesh Sheth were ordered to be confiscated, with an option to redeem them on payment of a fine and duty. Similarly, the goods seized from Mr. Jiten Sheth's showroom were also ordered to be confiscated, with an option to redeem them on payment of a fine and duty. The Commission granted full immunity from prosecution under the Customs Act, 1962, upon payment of the adjudged dues. The order also included a provision for the withdrawal of immunities if it was later found that the applicants had concealed material facts or obtained the order by fraud.