2023 (2) TMI 678 - HC - Customs

Absolute Confiscation - gold - packing material - prohibited goods or not - discretion vested with the appropriate authority to grant/extend the option of payment of fine in lieu of confiscation under Section 125 of Customs Act, in case of prohibited goods - HELD THAT - This Court finds that the language of Section 125 of the Act confers discretion on the adjudicating authority. The adjudicating authority is obliged to address the question as to whether the discretion should be exercised in favour of the assessee having regard to the facts and circumstances of the case. In HARGOVIND DAS K. JOSHI VERSUS COLLECTOR OF CUSTOMS 1987 (1) TMI 107 - SUPREME COURT the Supreme Court held that the adjudicating authority, before ordering confiscation, must first address itself on the question of exercising its discretion to give an option of redemption to the assessee. The twin tests for exercise of discretion under Section 125 are relevance and reason - The discretion has to be exercised in conformity with the purpose for which it has been conferred and the object which it seeks to achieve. Reasons must be recorded in support of it. In the exercise of discretion, non-consideration or non-application of the mind to the relevant factors would not only render the exercise manifestly erroneous, but would also warrant judicial interference. The power to give an option to the importer to redeem the prohibited goods upon payment of fine is a power coupled with the duty and in any event it should be exercised fairly and reasonably and not arbitrarily and capriciously, there must be at least an application of mind to the discretion in terms of Section 125 of the Act. There is no reference whatsoever to any of orders which according to the petitioner was passed by the Respondents herein under similar circumstances wherein the benefit of the option under Section 125 of the Act was extended to similarly placed importers. While it is true that the Appellate Authorities may or may not agree with the submissions of the petitioner, it is rudimentary that quasi-judicial authorities ought to apply their mind to the issues raised and material on record before arriving at a conclusion - The 1st and the 2nd Respondents by not dealing with the submission as to the nature of gold imported viz., non-compliance would result in the same being treated as prohibited and not restricted goods, for it has a direct impact on the nature of right available under Section 125 of the Act. The 1st and 2nd Respondents have not dealt with the orders passed under similar circumstances nor the case laws relied upon, thereby vitiating the order. The impugned order is set aside and the matter is remanded back to the 1st Respondent to re-adjudicate the revision application filed by the petitioner as expeditiously as possible, after affording an opportunity of hearing to the petitioner - Petition allowed by way of remand.

Summary

Issues Involved:
1. Legality of the interception and seizure of gold.
2. Whether the gold is considered prohibited or restricted goods.
3. Applicability of Section 125 of the Customs Act regarding the option to pay a fine in lieu of confiscation.
4. Consistency in the application of discretion by authorities in similar cases.

Detailed Analysis:

1. Legality of the Interception and Seizure of Gold:
The petitioner, intercepted at Tiruchi International Airport, was found carrying 1147.2 grams of gold jewelry valued at Rs. 35,48,651/-. The Directorate of Revenue Intelligence (DRI) officers, acting on specific intelligence, followed and intercepted the petitioner and six other passengers. The petitioner admitted to carrying the gold for monetary consideration, not declaring it, and being aware that smuggling gold is an offense. Statements were obtained under Section 108 of the Customs Act, and a show cause notice was issued for confiscation under Sections 111(d) and 111(i) of the Act.

2. Whether the Gold is Considered Prohibited or Restricted Goods:
The petitioner argued that the gold was not prohibited but restricted, and mere non-declaration does not render it prohibited. The authorities, however, treated the gold as prohibited due to non-compliance with import regulations. The appellate and revisional authorities upheld this view, emphasizing that non-compliance with import conditions renders the goods prohibited under Section 2(33) of the Act and relevant judgments.

3. Applicability of Section 125 of the Customs Act Regarding the Option to Pay a Fine in Lieu of Confiscation:
The petitioner contended that under Section 125 of the Act, the option to pay a fine in lieu of confiscation should be mandatory for non-prohibited goods and discretionary for prohibited goods. The authorities rejected this, citing the petitioner's criminal intent to evade customs duty. The court highlighted that the adjudicating authority must address whether the discretion to offer the option of paying a fine should be exercised, considering the facts and circumstances.

4. Consistency in the Application of Discretion by Authorities in Similar Cases:
The petitioner cited previous cases where similar importers were granted the option to pay a fine. The court noted that the appellate and revisional authorities failed to address these precedents and the petitioner's argument regarding the nature of the gold as restricted rather than prohibited. The court emphasized the importance of consistency in fiscal matters and the need for quasi-judicial authorities to apply their minds to all issues and materials before arriving at a conclusion.

Conclusion:
The court found non-application of mind by the appellate and revisional authorities regarding the discretion under Section 125 of the Act and the nature of the gold as restricted or prohibited. The impugned order was set aside, and the matter was remanded to the first respondent for re-adjudication, ensuring an opportunity for the petitioner to be heard. The writ petition was disposed of with this direction, and no costs were imposed.