2018 (9) TMI 1453 - HC - Customs

Smuggling - Contraband item - Gold - who is the owner of Gold - the first respondent was not able to establish either before the Adjudicating Authority or before the Tribunal that he was lawfully entitled to possess the gold seized from him. Whether the Tribunal could have remanded the matter to the Commissioner with a direction to exercise discretion in a particular manner especially when it has been clearly established on facts that the gold was smuggled into the country that the first respondent was the career of the gold and that he had no documents or explanation as to how he was entitled to be in possession of the gold? Held that - There is no room for remanding the matter to the Commissioner for a fresh consideration as the facts clearly show that no discretion can be exercised in favour of the first respondent - reliance placed in the case of COMMISSIONER OF CUSTOMS (AIR) VERSUS P. SINNASAMY THE CUSTOMS EXCISE SERVICE TAX APPELLATE TRIBUNAL 2016 (9) TMI 879 - MADRAS HIGH COURT where it was held that the discretion ought not have been exercised in favour of a smuggler giving an option to redeem the goods and that the Tribunal ought not to have interfered with the order passed by the Competent Authority who had denied the release of the goods. During the pendency of this appeal the 80 gold bars were sold by the Department through the State Bank of India and that the amount has been credited to the account of the Government of India. Appeal allowed - decided in favor of Revenue.

Summary

Issues:
1. Tribunal's authority to remand the matter for exercising discretion in granting an option to redeem confiscated goods.
2. Applicability of the decision in the case of P.Chinnasamy Vs. Commissioner of Customs, Chennai.
3. Exercise of discretion in favor of a smuggler for redemption of goods.

Analysis:

Issue 1:
The appeal raised substantial questions of law regarding the Tribunal's decision to remand the matter to the Authorities for exercising discretion in granting an option to redeem confiscated goods under Section 125 of the Customs Act, 1962. The Commissioner of Customs had ordered absolute confiscation of gold seized from the first respondent, who failed to prove lawful possession or import of the gold. The Tribunal, referring to a previous case, allowed the appeal and remanded the case for reconsideration. However, the High Court, citing precedent, emphasized that discretion should not favor smugglers and upheld the Commissioner's decision of absolute confiscation without granting redemption option.

Issue 2:
The second question involved the applicability of the decision in the case of P.Chinnasamy Vs. Commissioner of Customs, Chennai. The Tribunal, in the present case, followed the principles laid down in the aforementioned case and remanded the matter for consideration of granting an option to redeem the confiscated gold. However, the High Court, in line with the Division Bench's ruling in the P.Chinnasamy case, reiterated that discretion should not be exercised in favor of smugglers, especially when the facts clearly indicate smuggling and lack of lawful entitlement to the seized goods.

Issue 3:
The final issue pertained to the exercise of discretion in favor of a smuggler for redemption of goods. The Division Bench's judgment highlighted that the exercise of discretion under Section 125 of the Customs Act must align with the purpose and objectives of the Act, especially in cases involving smuggling and contraband. In the current scenario, where the first respondent failed to establish lawful possession of the gold and admitted to smuggling, the High Court concluded that no discretion could be extended to him for redemption. The Court upheld the absolute confiscation of the gold and dismissed the Tribunal's decision to remand the case for reconsideration.

In conclusion, the High Court allowed the tax case appeal filed by the Revenue, setting aside the Tribunal's order and answering the substantial legal questions in favor of the Revenue. The judgment emphasized the importance of upholding strict measures against smuggling activities and reiterated that discretion should not be granted to individuals involved in smuggling contraband goods.