2018 (8) TMI 1540 - AT - Customs

Principles of Natural Justice - Smuggling - Gold Jewellery - prohibited goods or not? - non-declaration to the Customs authorities - Absolute Confiscation - penalty - Held that - The strict provisions of Section 124 of the Customs Act have not been complied with as no show-cause notice was given to the appellants - even if a show-cause notice is waived, even then, a oral show-cause notice and an opportunity of hearing should be granted to the affected party, if the goods are liable for absolute confiscation. Whereas in this case, the goods have been absolutely confiscated without issuing the show-cause notice - Further, the appellants are not frequent flyers as per their travel documents and they were wearing the jewellery in a usual manner and have not concealed in a manner that it cannot be detected by ordinary means. The gold is not a prohibited item. It can be imported only with certain conditions as prescribed under Exim Policy as well as guidelines laid down by the RBI. Te order of absolute confiscation is not sustainable in law - the order of absolute confiscation in both the cases is set aside and an option given to the appellant to redeem the goods on payment of redemption fine and penalty u/s 112(a) and Section 114AA of CA. Appeal allowed in part.

Summary

Issues:
- Violation of principles of natural justice in passing the impugned order
- Confiscation of gold jewellery under Customs Act provisions
- Imposition of penalties under Sections 112(a) and 114AA of the Customs Act

Violation of Principles of Natural Justice:
The appellants contended that the impugned order violated natural justice principles as they were not heard in person and were not issued a show-cause notice after their statement was obtained under coercion. The learned counsel argued that Section 124 of the Customs Act mandates oral notice and an opportunity for a personal hearing, which was not provided in this case. Citing various decisions, the appellants emphasized the necessity of due process in confiscation cases.

Confiscation of Gold Jewellery:
The Customs officers intercepted the appellants at the airport and found undeclared gold jewellery in their possession, leading to confiscation under Customs Act provisions. The appellants were found to have smuggled gold without declaring it to evade customs duty. The original authority ordered absolute confiscation of the impugned goods and imposed penalties under Sections 112(a) and 114AA of the Act. The Commissioner(Appeals) upheld this decision, leading to the appeals before the Tribunal.

Imposition of Penalties:
The learned counsel argued that the impugned goods did not qualify as smuggled items, and the appellants, being unaware of certain regulations, deserved leniency. They highlighted that the gold jewellery was not concealed in a manner to avoid detection, unlike typical smuggling methods. The AR defended the impugned order, stating that the appellants admitted to concealing the gold to evade customs duty. However, the Tribunal found that the strict provisions of Section 124 were not followed, and the appellants were not habitual offenders. Therefore, the order of absolute confiscation was deemed unsustainable in law.

Judgment:
The Tribunal set aside the order of absolute confiscation and provided the appellants with the option to redeem the goods on payment of redemption fines. A redemption fine of &8377; 3 lakhs was imposed on one appellant and &8377; 2 lakhs on the other. The penalties under Sections 112(a) and 114AA were upheld for both appellants. The Tribunal concluded that while penalties were justified, absolute confiscation was not sustainable in this case due to the circumstances and nature of the goods involved.