2023 (9) TMI 1471 - HC - Customs

Smuggling - Challenged the Order passed releasing the gold articles - Whether gold could be said to fall in the prohibited category as contemplated under Section 125 of the Act and thus not liable to be released on payment of redemption fine? - HELD THAT - We find that the gold bars had been deliberately concealed in 08 UPS machines and packing material and were sought to be imported through a courier. The gold bars weighed 12000 grams and had been valued at that time at approximately Rs. 3.56 crores. The import of gold is strictly regulated and is permitted only through certain identified agencies, who too must import the same in accordance with a restricted and regulated regime which stands created in terms of the various Circulars issued by Customs as well as the Reserve Bank of India. Hence, the Adjudicating Authority has clearly erred in directing the release of the seized articles on the payment of redemption fine. Thus, we find ourselves unable to sustain the order impugned. The appeal shall consequently stand allowed. The impugned order dated 10 November 2020 is hereby set aside.

Summary

Issues:
The appeal challenges the validity of the final order of the Customs, Excise & Service Tax Appellate Tribunal (CESTAT) which allowed the release of seized gold articles on payment of redemption fine u/s 125 of the Customs Act, 1962.

Details of the Judgment:

Issue 1: Interpretation of Section 125 of the Customs Act, 1962
The Court examined whether gold could be released on payment of redemption fine under Section 125 of the Act. Referring to the recent decision in Nidhi Kapoor vs. Principal Commissioner and Additional Secretary to the Government of India, the Court analyzed Section 2(33) of the Act to determine the scope of prohibited goods. It was concluded that goods imported in violation of conditions for import fall within the ambit of prohibited goods, allowing the Adjudicating Officer to exercise discretion in permitting release on payment of redemption fine.

Issue 2: Illegality in Release of Seized Gold
The Court found that the gold bars, concealed in UPS machines and packing material, were deliberately imported through a courier in violation of regulations. Import of gold is strictly regulated and permitted only through identified agencies in compliance with Circulars issued by Customs and the Reserve Bank of India. Considering the potential negative impact of illegal gold imports on the economy, the Court held that the Adjudicating Authority erred in directing the release of the seized articles on payment of redemption fine. The CESTAT's failure to interfere with the original order was deemed erroneous.

Decision:
The Court allowed the appeal, setting aside the impugned order and quashing the original order. The appellant was granted the opportunity to proceed further in accordance with the law. All pending applications were disposed of as a result of the judgment.