1994 (1) TMI 110 - CGOVT - Customs

Summary

Issues Involved:
1. Non-declaration of dutiable goods.
2. Confiscation and penalty for non-declared goods.
3. Applicant's plea for release of goods and reduction of penalty.
4. Application of Section 125 of the Customs Act, 1962.
5. Discretionary power of the adjudicating authority in granting redemption fine.
6. Liberalization of gold import policy and its impact on confiscation.
7. Quantum of redemption fine and personal penalty.

Detailed Analysis:

1. Non-declaration of Dutiable Goods:
The applicant arrived from Bahrain and was intercepted at Trivandrum Airport. Upon examination, authorities found one VCR and 42 foreign gold biscuits weighing 4893 grams, valued at Rs. 13,70,040 (CIF) and Rs. 19,57,200 (MVS), along with foreign currency. The applicant initially admitted to non-declaration to evade duty but later retracted, claiming he had shown the items to the customs officer.

2. Confiscation and Penalty for Non-declared Goods:
The original authority rejected the applicant's plea, holding that if the applicant had shown the biscuits, he should have insisted on paying the duty. The goods were absolutely confiscated, and a penalty of Rs. 50,000 was imposed. The applicant's appeal was also rejected.

3. Applicant's Plea for Release of Goods and Reduction of Penalty:
The applicant argued that he made a correct declaration and that the customs officers fabricated the case for a reward. He emphasized that he had the necessary foreign currency to pay the duty and that there was no concealment attempt. He also pointed out discrepancies in the departmental evidence and argued that the confiscation was motivated by the reward system.

4. Application of Section 125 of the Customs Act, 1962:
The Government noted that once goods are confiscated, Section 125 comes into play, requiring the adjudicating authority to grant an option of redemption fine for non-prohibited goods. The exercise of this power must be fair and reasonable, not arbitrary or capricious.

5. Discretionary Power of the Adjudicating Authority in Granting Redemption Fine:
The Government referred to the case of Kamlesh Kumar v. Collector of Customs, emphasizing that even after liberalization, the import of gold is prohibited except under specific conditions. The adjudicating authority must decide fairly and reasonably whether to grant an option to redeem based on the nature of the prohibition and the extent of the violation.

6. Liberalization of Gold Import Policy and Its Impact on Confiscation:
The Government acknowledged the significant change in the prohibition on gold import due to liberalization. Previously, private individuals, including NRIs, were not allowed to import gold. Now, NRIs can import up to 5 kgs of gold under specific conditions. Absolute confiscation without considering the circumstances and the nature of the violation would be harsh for entitled persons.

7. Quantum of Redemption Fine and Personal Penalty:
The Government found it unreasonable to absolutely confiscate gold valued at Rs. 18 lacs for an attempt to evade duty of Rs. 1.10 lacs. The case was viewed as an attempt to evade duty rather than concealment. The Government decided to grant an option of redemption with a fine, considering the applicant was otherwise entitled to bring in the gold. A higher fine was warranted due to the quantity of gold. The gold was allowed to be released on a redemption fine of Rs. 4.00 lacs plus duty to be paid in foreign exchange. The VCR was also allowed to be redeemed on a redemption fine of Rs. 5,000. The personal penalty of Rs. 50,000 was upheld.

Similar Case Reference:
The judgment also referenced a similar case involving Shri Sheikh Abdullah, where the applicant paid duty on 5 biscuits only, attempting to evade duty on the remaining 37 biscuits. The Government allowed redemption of the 37 biscuits on a higher fine of Rs. 5 lacs plus duty in foreign exchange, with the personal penalty of Rs. 50,000 upheld.

Conclusion:
The Government concluded that absolute confiscation of gold for mere duty evasion was excessively harsh. The applicant was allowed to redeem the gold and VCR upon payment of specified fines and duties. The personal penalty was maintained to deter future violations.