2009 (10) TMI 389 - AT - Customs

Baggage- The officers detained the gold chain with diamonds-studded pendant under the reasonable belief that the same had been attempted to be smuggled into India and hence liable to confiscation under the Customs Act. We set aside the Commissioner s order and allow this appeal by way of remand, directing the ld. Commissioner to pass fresh speaking order on all questions of law and facts involved in this case, after giving to the appellant a reasonable opportunity of adducing evidence and also of being personally heard. We make it clear that a reasonable opportunity of cross-examining the witnesses concerned, is also part of the opportunity of adducing evidence. In the nature of this case, we trust, the Ld. Commissioner will pass orders as early as possible. At any rate, the order shall be passed within a period of 3 months from the date of receipt of a certified copy of this order. Held that- We make it clear that a reasonable opportunity of cross-examining the witnesses concerned, is also part of the opportunity of adducing evidence. In the nature of this case, we trust, the Ld. Commissioner will pass orders as early as possible. At any rate, the order shall be passed within a period of 3 months from the date of receipt of a certified copy of this order.

Issues Involved:
1. Legality of interception and seizure of jewellery.
2. Applicability of Baggage Rules 1998.
3. Validity of the appellant's claim of personal jewellery.
4. Requirement for cross-examination of witnesses.
5. Determination of the correct time of interception.
6. Validity of the purchase invoice for the jewellery.
7. Confiscation and penalty under Customs Act.

Detailed Analysis:

1. Legality of Interception and Seizure of Jewellery:
The appellant was intercepted by the Air Intelligence Unit at Mumbai Airport after clearing the Green Channel. Upon search, a gold chain with a diamond-studded pendant was recovered, which the appellant claimed as personal jewellery worth US$ 25,000. The officers detained the jewellery under the belief that it was being smuggled into India, making it liable for confiscation under the Customs Act. The appellant admitted to the possession and non-declaration of the jewellery, believing it did not require declaration.

2. Applicability of Baggage Rules 1998:
The appellant, a US citizen of Indian origin, claimed the jewellery as "used personal effect" under Rule 7 of the Baggage Rules 1998, which allows duty-free clearance for tourists. The Commissioner of Customs misapplied Rule 6, which is meant for Indian residents returning from abroad, not tourists. The Tribunal found that Rule 7 should have been considered, as the appellant was a tourist as defined under Rule 2(iii) of the Baggage Rules 1998.

3. Validity of the Appellant's Claim of Personal Jewellery:
The appellant argued that the jewellery was personal and used, thus qualifying for duty-free clearance under Rule 7. However, the Commissioner did not properly examine this claim. The Tribunal noted that the jewellery must be shown to be "personal effect" as reasonably required for the appellant's tour to India, referencing the definition from the erstwhile Baggage Rules 1994.

4. Requirement for Cross-Examination of Witnesses:
The appellant's request to cross-examine the Customs officers and panch witnesses was denied by the Commissioner, who reasoned that the primary issue was the duty liability of the jewellery. The Tribunal disagreed, emphasizing the importance of cross-examination to verify the facts recorded in the panchanama, especially regarding the time and stage of interception.

5. Determination of the Correct Time of Interception:
The appellant contested the time of interception noted in the panchanama, arguing that his flight landed at 22:04 hrs, making it impossible for him to be intercepted at 22:00 hrs. The Commissioner dismissed this discrepancy as minor. The Tribunal, however, found this issue crucial and noted the need for accurate recording of interception time, suggesting that cross-examination could clarify the facts.

6. Validity of the Purchase Invoice for the Jewellery:
The appellant produced an invoice dated 22-10-1989 from a New York trader to prove the purchase of the jewellery. The Commissioner and the SDR found the invoice unauthenticated and unreliable. The Tribunal allowed the appellant to produce valid documentary proof of lawful acquisition in the remand proceedings.

7. Confiscation and Penalty under Customs Act:
The Commissioner ordered absolute confiscation of the jewellery under Sections 111(d), (l), and (m) of the Customs Act and imposed a penalty of Rs. 12 crores under Section 112(a). The appellant contested this, arguing that the jewellery was neither prohibited nor restricted and was exempt from duty. The Tribunal set aside the Commissioner's order, directing a fresh adjudication considering all legal and factual questions.

Conclusion:
The Tribunal remanded the case, directing the Commissioner to pass a fresh order after giving the appellant a reasonable opportunity to present evidence and cross-examine witnesses. The Tribunal emphasized the need for a thorough examination of the applicability of Rule 7 of the Baggage Rules 1998 and the validity of the appellant's claim of personal jewellery. The order should be passed within three months from the receipt of the Tribunal's order.

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