2019 (1) TMI 986 - HC - Customs

Maintainability of application before Settlement Commission - Jurisdiction - third proviso to Section 127B read with Section 123(2) of the Customs Act - gold was detected and seized from her person - burden to prove smuggled gold - Held that - The decision in Ram Niwas Verma 2015 (9) TMI 197 - DELHI HIGH COURT has analysed various judgments including the previous judgment in Ashok Kumar Jain 2013 (8) TMI 317 - DELHI HIGH COURT . The Court held that by virtue of Section 123(2), jurisdiction of the Commission is barred on account of the third proviso to Section 127B(1), in cases involving or concerning smuggling of gold or watches. The plain reading of Ashok Kumar Jain 2013 (8) TMI 317 - DELHI HIGH COURT that was relied upon by the respondent assessee, shows that the Court had not considered the impact of Section 123(2) upon the jurisdiction of the Settlement Commission in the light of the third proviso to Section 127B. A conjoint reading of these two provisions clearly bears out that the jurisdiction of the Commission to settle cases involving goods referred to in Section 123(2) is excluded. This court is of the opinion that the impugned order cannot be sustained which is hereby set aside - The matter is remitted to the concerned Adjudicating Officer, who shall proceed further and issue notice in the proceedings to be held thereunder.

Summary

Issues:
1. Jurisdiction of Settlement Commission under Section 127B of the Customs Act in relation to goods covered under Section 123(2).
2. Interpretation of the third proviso to Section 127B(1) read with Section 123 of the Customs Act.
3. Impact of relevant case laws on the Settlement Commission's jurisdiction in settling cases involving gold smuggling.

Issue 1: Jurisdiction of Settlement Commission under Section 127B in relation to goods covered under Section 123(2):
The Customs Authorities challenged the Settlement Commission's decision, arguing that the Commission could not have entertained the application related to gold smuggling under Section 123(2) of the Customs Act. The respondent, a former United Nations official, was found carrying undeclared gold bars at the airport. The Union of India contended that Section 123(1) shifts the burden of proof for seized goods believed to be smuggled, including gold. The Division Bench's decision emphasized that the Settlement Commission lacked jurisdiction to settle cases involving goods covered under Section 123(2), such as gold. The respondent, however, relied on previous judgments and the Settlement Commission's orders in support of their application.

Issue 2: Interpretation of the third proviso to Section 127B(1) read with Section 123 of the Customs Act:
The court analyzed the provisions of Section 123 and Section 127B of the Customs Act. The third proviso to Section 127B(1) restricts the Settlement Commission's jurisdiction concerning goods covered under Section 123, including gold. The court referred to various judgments, including the decision in Ram Niwas Verma, which affirmed the jurisdictional limitation on the Settlement Commission in cases involving gold smuggling. The court highlighted that the law clearly excludes the Commission's jurisdiction in settling cases related to goods specified in Section 123(2).

Issue 3: Impact of relevant case laws on the Settlement Commission's jurisdiction in settling cases involving gold smuggling:
The court examined the impact of previous case laws on the Settlement Commission's jurisdiction in gold smuggling cases. It noted that the decision in Ram Niwas Verma correctly interpreted the law, emphasizing the exclusion of the Commission's jurisdiction in such cases. The court distinguished the reliance on the judgment in Ashok Kumar Jain, stating that it did not consider the effect of Section 123(2) on the Settlement Commission's jurisdiction under the third proviso to Section 127B(1). Consequently, the court set aside the impugned order and remitted the matter to the Adjudicating Officer for further proceedings.

This detailed analysis of the judgment highlights the key legal issues surrounding the Settlement Commission's jurisdiction under the Customs Act concerning cases involving gold smuggling and the interpretation of relevant provisions and case laws.