2016 (8) TMI 530 - HC - Customs

Release of gold smuggling seizure prohibited goods or not - gold certified to be of foreign origin liable to confiscation voluntary admitted that gold smuggled and sold without invoices and received gold bars in consideration search of various buyers to whom smuggled gold sold - Provisional release of goods under Section 110-A of the Customs Act, 1962 Held that - the discretion exercised by the competent authority, to deny provisional release, is in accordance with law. When there is a prima case of smuggling, for which, action for confiscation is taken, such proceedings taken should be allowed, to reach its logical end, and not to the stiffed, by any provisional release provisional release not allowed. Prohibited goods - If there is a fraudulent evasion of the restrictions imposed, under the Customs Act, 1962 or any other law for the time being in force, then import of gold, in contravention of the above, is prohibited. For prohibitions and restrictions, Customs Act, 1962, provides for machinery, by means of search, seizure, confiscation and penalties. Act also provides for detection, prevention and punishment for evasion of duty. The expression, subject to prohibition in the Act and any other the law for the time being in force. in Section 2(33) of the Customs Act, has wide cannotation and meaning, and it should be interpreted, in the context of the scheme of the Act, and not to be confined to a narrow meaning that gold is not an enumerated prohibited good to be imported into the country. If such narrow construction and meaning have to be given, then the object of the Customs Act, 1962, would be defeated. Appeal dismissed decided against appellant.

Summary

Issues Involved:
1. Legality of the seizure of gold.
2. Applicability of Section 110-A of the Customs Act, 1962 for provisional release.
3. Definition and scope of "prohibited goods" under Section 2(33) of the Customs Act, 1962.
4. Compliance with procedural requirements and statutory conditions for import.
5. Authority and discretion of customs officials in provisional release of seized goods.
6. Judicial precedents and their applicability to the case.

Detailed Analysis:

1. Legality of the Seizure of Gold:
The court examined the facts that led to the seizure of 5541.92 grams of gold from the appellant's business premises. The gold was seized based on intelligence reports and voluntary statements from individuals involved in smuggling gold from Singapore. The Directorate of Revenue Intelligence (DRI) contended that the gold was smuggled without payment of customs duty, making it liable for confiscation under the Customs Act, 1962.

2. Applicability of Section 110-A of the Customs Act, 1962 for Provisional Release:
The appellant sought provisional release of the seized gold under Section 110-A of the Customs Act, 1962. The court noted that Section 110-A allows for provisional release of seized goods pending adjudication, but it is discretionary and not mandatory. The court emphasized that the word "may" in Section 110-A indicates that the release is subject to the adjudicating authority's discretion and not an absolute right of the appellant.

3. Definition and Scope of "Prohibited Goods" under Section 2(33) of the Customs Act, 1962:
The court discussed the definition of "prohibited goods" under Section 2(33) of the Customs Act, 1962, which includes goods whose import or export is subject to any prohibition under the Act or any other law for the time being in force. The court emphasized that any restriction on import or export is considered a prohibition. The court referred to the Supreme Court's ruling in Om Prakash Bhatia v. Commissioner of Customs, Delhi, which held that any goods imported contrary to any prohibition imposed by or under the Act or any other law are liable for confiscation.

4. Compliance with Procedural Requirements and Statutory Conditions for Import:
The court highlighted that the import of gold is subject to specific conditions, such as declaration upon arrival and payment of customs duty. The court noted that the appellant failed to comply with these conditions, making the gold liable for confiscation under Sections 111(d) and 111(l) of the Customs Act, 1962. The court also referred to various judicial precedents that reinforced the necessity of complying with statutory conditions for import.

5. Authority and Discretion of Customs Officials in Provisional Release of Seized Goods:
The court emphasized that the discretion to grant provisional release under Section 110-A lies with the adjudicating authority. The court noted that the DRI had established a prima facie case of smuggling, and the appellant had not discharged the burden of proving that the seized gold was not smuggled. The court held that the adjudicating authority's decision to deny provisional release was in accordance with the law and the objectives of the Customs Act, 1962.

6. Judicial Precedents and Their Applicability to the Case:
The court referred to several judicial precedents, including decisions in N.K.Bapna v. Union of India, Union of India v. Lexus Exports Pvt. Ltd., Om Prakash Bhatia v. Commissioner of Customs, Delhi, and others. The court noted that these precedents supported the view that goods imported in violation of statutory conditions are liable for confiscation and that provisional release is not an absolute right. The court also emphasized that the adjudicating authority must consider the statutory provisions, restrictions, and prohibitions while deciding on provisional release.

Conclusion:
The court concluded that the appellant had not made out a case for interference with the order impugned. The court held that the discretion exercised by the adjudicating authority in denying provisional release was in accordance with the law and the objectives of the Customs Act, 1962. The writ appeal was dismissed, and no costs were awarded.