2023 (9) TMI 1263 - AT - Customs

Absolute Confiscation - penalty u/s 114AA of FA - concealment of gold bars shoes and socks - restricted goods or prohibited goods - HELD THAT - The sections under which the gold has been held liable for confiscation are the sections in which the goods become prohibited for the reason of misdeclaration or any other violation of the provisions of Custom Act,1962. Thus adjudicating authority has held that the gold does not fall under the category of prohibited goods for the reasons of prohibition imposed under Custom Act or any other law, but the confiscation is for the case of non-declaration or miss-declaration of the same to the Customs Authorities by the passenger in an appropriate manner - in such cases the gold could have been allowed to be redeemed by the appellant on payment of redemption fine. In the case of COMMISSIONER OF CUSTOMS (PREVENTIVE) , JODHPUR VERSUS MEHBOOB 2022 (2) TMI 1391 - RAJASTHAN HIGH COURT Hon ble Rajasthan High Court has analyzed the various provisions of the Customs Act. The appellant should have been given an option to redeem the goods against the redemption fine. Accordingly, the absolute confiscation made as per the impugned order will have to be modified to the extent of allowing the goods to be redeemed on payment of redemption fine of Rs.5 lakhs (Rupees Five Lakhs Only). In case appellant redeems the goods he is also required to pay Customs duties as applicable as per Section 125 (2) of the Customs Act. Since the case under consideration is a case where the goods sought to be imported as baggage, the applicable rate of duty will be the baggage rate of duty, which is much higher than the normal rate of duty applicable to the same goods. Penalty u/s 114AA of CA - HELD THAT - From the plain reading of Section 114AA it is evident that penalty under this section can be imposed on a person who intentionally makes, signs or uses, or causes to be made, signed or used, any declaration, statement or document which is false or incorrect in any material particular for the transaction of any business under the Customs Act, 1962 - In the present case nothing has been brought on record by which it can be said that the appellant had made or caused to be made any declaration/ used or caused to be used any statement or document which is false or incorrect. In the present case the appellant carrying the Gold has in fact not made any declaration to the Custom Authorities as required under the Custom Act, 1962. No document etc., which has been produced by him which has been produced by him was found to be materially wrong. As the ingredients for invocation provisions of Section 114AA are absent in the present case penalty under the said section is not justified - the penalty imposed under Section 114AA of the Customs Act is set aside. The impugned order modified to the extent of setting aside the absolute confiscation and allowing the option to redeem the confiscated gold bars against payment of redemption fine of Rs 5,00,000/- (Rupees Five Lakhs) along with the baggage rate of duty as applicable and setting aside the penalty imposed under Section 114AA. Appeal allowed in part.

Summary

Issues Involved:
1. Absolute confiscation of gold bars.
2. Confiscation of packing material.
3. Imposition of penalty under Section 112(b) of the Customs Act.
4. Imposition of penalty under Section 114AA of the Customs Act.

Summary:

1. Absolute Confiscation of Gold Bars:
The Commissioner ordered the absolute confiscation of 15 gold bars weighing 1749.60 grams valued at Rs. 48,37,644/- under Section 111(i), (l) & (m) of the Customs Act, 1962. The appellant argued that the gold, not being prohibited goods, should have been allowed an option for redemption fine. The Tribunal held that the reliance on a 1993 Circular was misplaced as the gold is not subject to any restriction except for duty payment. The Tribunal cited various cases, including *Yakub Ibrahim Yusuf* and *Mohini Bhatia*, supporting the option for redemption fine. The Tribunal modified the order to allow the appellant to redeem the gold on payment of a redemption fine of Rs. 5,00,000/- along with the applicable baggage rate of duty.

2. Confiscation of Packing Material:
The Commissioner ordered the confiscation of packing materials (shoes and socks) used for concealing the gold under Section 119 of the Customs Act, 1962. This part of the order was not challenged by the appellant and was upheld by the Tribunal.

3. Imposition of Penalty under Section 112(b):
The Commissioner imposed a penalty of Rs. 5,00,000/- on the appellant under Section 112(b) of the Customs Act, 1962. The appellant did not challenge this part of the order, and it was upheld by the Tribunal.

4. Imposition of Penalty under Section 114AA:
The Commissioner imposed a penalty of Rs. 4,00,000/- under Section 114AA of the Customs Act, 1962. The Tribunal found that the appellant did not make any false declaration or use any false document, which is a prerequisite for invoking Section 114AA. The Tribunal cited cases like *Ismail Ibrahim* and *Jitender Singh*, which held that penalties under Section 114AA are not justified if no false declaration or document is used. Consequently, the penalty under Section 114AA was set aside by the Tribunal.

Conclusion:
The appeal was allowed to the extent of modifying the order to permit the redemption of the confiscated gold bars on payment of a redemption fine and setting aside the penalty under Section 114AA. The confiscation of packing materials and the penalty under Section 112(b) were upheld.