2009 (4) TMI 77 - HC - Customs

Smuggling - In the customs declaration form respondent had not declared the gold ornaments carried by him false statements given - CC ordered absolute confiscation of the gold jewellery and a TV set and penalty - officer had considered the mode of concealment and the fact that respondent was not an eligible passenger and had rightly held that absolute confiscation is warranted - Tribunal was not right in remanding the matter with a direction to the Commissioner to invoke the power u/s 125 for redemption of the goods on payment of fine

Issues Involved
1. Whether the Tribunal was right in remanding the matter with a direction to the Commissioner to invoke the power under Section 125 of the Customs Act for redemption of the goods on payment of fine.

Detailed Analysis

Issue 1: Tribunal's Direction to Invoke Section 125 of the Customs Act
The substantial question of law raised in this appeal concerns whether the Tribunal was correct in remanding the matter to the Commissioner with a direction to invoke the power under Section 125 of the Customs Act for redemption of the goods on payment of a fine.

Facts of the Case
The respondent, an Indian passport holder, had been working in Singapore and brought gold ornaments to India in 2005. Upon arrival at Chennai Airport, the Customs Officer intercepted and seized the gold jewellery and a TV set, suspecting concealment. The respondent was arrested, remanded to judicial custody, and detained under COFEPOSA. The Commissioner of Customs ordered absolute confiscation of the gold jewellery and TV set, imposing a penalty of Rs. 2,00,000/-. The Tribunal remanded the matter for fresh adjudication, allowing the respondent an opportunity to redeem the goods, against which the present appeal was filed.

Arguments by Appellant
The appellant's counsel argued that the respondent was not an "eligible passenger" as defined under the Explanation to notification 31/2003-Cus. dated 01-03-2003, which allows import of gold by passengers who have stayed abroad for not less than six months. The respondent's stay in Singapore from 19-04-2005 to 12-07-2005 was less than six months, making him ineligible. Additionally, the respondent attempted to smuggle gold by concealing it in a TV set and failed to declare it in the customs form, violating Sections 11 and 77 of the Customs Act. The gold was thus 'prohibited' as the respondent did not meet the conditions for concessional duty import.

Arguments by Respondent
The respondent's counsel contended that gold is a restricted, not prohibited item, and the officer was mandated to offer an option to pay a fine in lieu of confiscation. He cited the case of Shaik Jamal Basha Vs. Government of India, arguing that the goods were not prohibited and the officer should have exercised discretion under Section 125 of the Customs Act.

Legal Provisions and Precedents
Section 2(33) of the Customs Act defines 'prohibited' goods as those whose import or export is subject to prohibition under any law. Section 11 empowers the Central Government to impose conditions on the import/export of goods. The Supreme Court in Om Prakash Bhatia Vs. Commissioner of Customs clarified that non-compliance with import conditions renders goods 'prohibited'. The exemption notification 31/2003 allows import of gold by eligible passengers under specific conditions, which the respondent did not meet.

Court's Analysis
The Court held that the respondent was not an eligible passenger as he did not stay abroad for the requisite six months. The gold was thus 'prohibited goods' as per the Supreme Court's interpretation in Om Prakash Bhatia. The Commissioner rightly ordered absolute confiscation, considering the concealment and ineligibility of the respondent. The Tribunal erred in remanding the matter for redemption under Section 125.

Conclusion
The substantial question of law was answered in favor of the appellant. The appeal was allowed, and the Tribunal's order was set aside. There was no order as to costs.

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