2021 (10) TMI 1237 - AT - Customs

Smuggling - Gold - Absolute confiscation - option was not given to the appellant for redemption as per Section 125 of the Customs Act, 1962 - levy of penalty u/s 112(a) (b) of the Customs Act, 1962 - HELD THAT - The Commissioner (Appeals) in the impugned order, has referred to a decision of Hon ble Kerala High Court in the case of COMMISSIONER OF CUSTOMS, KERALA VERSUS OM PRAKASH KHATRI, DHIRAJ KUMAR DEVASI, SURENDRA SINGH RAO AND PANNA GOLD IMPEX LTD 2019 (3) TMI 457 - KERALA HIGH COURT which thereafter was upheld by the Hon ble Apex Court in OM PRAKASH KHATRI VERSUS COMMISSIONER 2019 (11) TMI 796 - SC ORDER - it was held in the case that The appellant was unable to explain the source of the gold which was confiscated. In the circumstances, we find no merit in the civil appeals, which are accordingly dismissed. The above decision may not come in the way of a legitimate owner if the source of gold is established. The Order-in-Original does not record as to any such queries or any answer thereto from the appellant, and hence it is necessary in the first place to ascertain if the appellant can explain the sources before the adjudicating authority and if not, then the ratio of the Supreme Court judgment in OM PRAKASH KHATRI VERSUS COMMISSIONER 2019 (11) TMI 796 - SC ORDER would apply. An attempt was made before this forum by the appellant by filing a copy of the tax invoice, to which learned DR objected to seriously, contending that firstly the same was not furnished before the lower authorities and secondly, the said document is clearly an afterthought, with no signature of the buyer. Case remitted back to the file of adjudicating authority who having failed in the first instance to offer redemption option, shall now offer the same to the appellant, and then it is for the appellant to clear the test prescribed by the Apex court - the matter is restored to the file of adjudicating authority who shall pass a fresh order - appeal allowed by way of remand.

Summary

Issues:
- Whether the impugned order correctly upheld absolute confiscation without offering redemption option under Section 125 of the Customs Act, 1962.
- Whether penalty imposed under Section 112(a) & (b) of the Customs Act, 1962 is justified.

Analysis:
1. The primary issue in this case pertains to the correctness of the impugned order upholding absolute confiscation without providing the appellant with the option for redemption as per Section 125 of the Customs Act, 1962. The Order-in-Original noted that the appellant claimed the gold did not belong to her but to her neighbor and that she had no intention to smuggle it. However, the authority still ordered absolute confiscation and imposed a penalty under Section 112(a) & (b). The impugned Order-in-Appeal upheld these findings.

2. Section 125 of the Customs Act, 1962 allows for the option to pay a fine in lieu of confiscation. The Tribunal highlighted that the statute mandates the officer to extend this option to the person from whom the goods were seized if the goods are not prohibited items. The failure to offer this option, as required by law, constitutes arbitrariness and cannot be sustained. The Tribunal emphasized that the gold, in this case, was not a prohibited item, and hence, the redemption option should have been provided.

3. The Tribunal referred to a decision by the Hon'ble Kerala High Court, subsequently upheld by the Supreme Court, which emphasized the necessity for the legitimate owner to establish the source of confiscated goods. In this case, the appellant attempted to provide a tax invoice as evidence, but objections were raised regarding its authenticity and timing. The Tribunal directed the adjudicating authority to allow the appellant the opportunity to establish the source of the gold and to consider the precedents set by the Kerala High Court and the Apex Court.

4. Consequently, the Tribunal set aside the impugned order and remitted the matter back to the adjudicating authority. The authority was instructed to offer the redemption option to the appellant and allow her to provide evidence regarding the source of the gold. The fresh order to be passed should consider the precedents cited and the appellant's submissions. The appeal was allowed by way of remand, emphasizing the importance of following due process and statutory provisions.

This detailed analysis of the judgment showcases the Tribunal's meticulous examination of the legal provisions, precedents, and procedural fairness in the context of the issues raised in the case.