2022 (7) TMI 373 - HC - Customs

Absolute Confiscation - Gold Bars - prohibited goods or not - foreign currencies - Recovery from specially designed cavities made in the shoes of the respondents - non-declaration in the disembarkation slip in contravention of Section 77 of the Act - whether there exists grounds for absolute confiscation of Gold Bars or an option of releasing Gold Bars on payment of redemption fine can be allowed? - non-addressing by the Commissioner (Appeals) of itself, in its final order, the findings recorded by the Adjudicating Authority relating to absolute confiscation - HELD THAT - Although as per the provisions contained in Section 2 (1) of the Act, the Commissioner (Appeals) or the Appellate Tribunal are not included within the definition of the term adjudicating authority and, therefore, they cannot exercise the powers vested in the officer adjudging but the power conferred by Section 128-A (3) (a) of the Act to modify the decision or order appealed against, is not at all curtailed by Section 2 (1) of the Act and thus, the Commissioner (Appeals) has not exceeded his jurisdiction while modifying the order passed by the adjudicating authority . In the order dated 27.08.2018, the Commissioner (Appeals) has held that the import of gold was not prohibited under the Foreign Trade Policy or any other law for the time being in force and, therefore, there is no sufficient ground for absolute confiscation of the gold. This finding has not been reversed by the Tribunal as the Tribunal has affirmed the order passed by Commissioner (Appeals). Nothing has been placed before this Court to establish that this finding of the Commissioner (Appeals) is wrong or erroneous and that gold falls within the category of prohibited goods - Therefore this appeal is decided on the factual premise that Gold does not fall within the category of prohibited goods . Section 125 of the Act deals with confiscation of two separate categories of goods. It provides that in the case of goods, the importation or exportation whereof his prohibited under the Act or under any other law for the time being in force, the Officer adjudicating may give an option to pay in lieu of confiscation such fine as the said officer thinks fit. However, in case of any other goods, the officer adjudicating shall give an option to pay in lieu of confiscation such fine as the said officer thinks fit. The Commissioner (Appeals) has held that the gold is not a prohibited item, it should be offered for redemption in terms of Section 125 of the Act and this finding has not been assailed by the Appellants in this Appeal. Thus, the Additional Commissioner, Customs (P.) Commissionerate, Lucknow had passed the order of confiscation of Gold without taking into consideration the fact that Gold is not a prohibited item and, therefore, it should be offered for redemption in terms of Section 125 of the Act and thus the Customs Excise Service Tax Appellate Tribunal, Allahabad has not committed any error in upholding the order dated 27.08.2018 passed by the Commissioner (Appeals) holding that Gold is not a prohibited item and, therefore, it should be offered for redemption in terms of Section 125 of the Act - appeal dismissed.

Summary

Issues Involved:
1. Validity of the Customs, Excise, and Service Tax Appellate Tribunal's decision to uphold the Commissioner (Appeals) order.
2. Legality of releasing smuggled gold on payment of redemption fine and reduction of the fine.

Issue-wise Detailed Analysis:

1. Validity of the Customs, Excise, and Service Tax Appellate Tribunal's decision to uphold the Commissioner (Appeals) order:

The appeal was filed under Section 130 of the Customs Act, 1962, challenging the Tribunal's decision to uphold the Commissioner (Appeals) order, which allowed the respondents to redeem confiscated gold upon payment of a fine. The original confiscation occurred after the respondents were intercepted with undeclared gold bars. The Commissioner (Appeals) held that gold is not a prohibited item under the foreign trade policy or any other law, and thus, it should not be absolutely confiscated but could be redeemed by paying a fine.

The Tribunal dismissed the appeal by the Commissioner of Customs, stating that the customs authorities failed to explain how the gold was not detected at the airport. The Tribunal also partly allowed the respondents' appeal by reducing the redemption fine and penalty.

The High Court examined Section 125 of the Customs Act, which provides for the option to pay a fine in lieu of confiscation. The Court noted that the Commissioner (Appeals) has the power to modify the adjudicating authority's order under Section 128A(3)(a) of the Act. The Court found that the Commissioner (Appeals) acted within his jurisdiction in modifying the order of absolute confiscation to an order allowing redemption of the gold upon payment of a fine. The Court emphasized that the object of the Act is not to confiscate goods but to recover customs duty.

The Court concluded that the Commissioner (Appeals) correctly held that gold is not a prohibited item and should be offered for redemption. The Tribunal did not err in upholding this decision. Therefore, the High Court answered the first substantial question of law in favor of the respondents and upheld the Tribunal's decision.

2. Legality of releasing smuggled gold on payment of redemption fine and reduction of the fine:

The second substantial question of law was abandoned by the appellant during submissions. Therefore, the Court did not address this issue in detail. The focus remained on whether the Commissioner (Appeals) had the authority to modify the adjudicating officer's order and whether the Tribunal correctly upheld this modification.

Conclusion:

The High Court dismissed the appeal, affirming that the Commissioner (Appeals) had the authority to modify the adjudicating officer's order and that gold, not being a prohibited item, should be offered for redemption. The Tribunal's decision to uphold the Commissioner (Appeals) order was found to be correct. The appeal lacked merit, and no costs were awarded.