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TMI Blog2011 (5) TMI 393X X X X Extracts X X X X X X X X Extracts X X X X ..... In this case, vide Final Order No. 518 519/2009 dated 3-4-2009 the Tribunal converted the impugned order of absolute confiscation of the goods into one of confiscation with option of redemption on payment of a fine of Rs. 3,80,000/- and reduced the penalty imposed to Rs. 10,000/-. The penalty imposed on Shri Abdul Malik was reduced to Rs. 2,500/-. 2. The present application by the Revenue is for Rectification of Mistake apparent oh record, on the ground that the order directing release of gold on fine and penalty was not at all possible at that stage, as the gold has been disposed of. The prayer therefore, is for direction to return the sale proceeds of the gold after realization of duty, fine and penalty. Although, none is present today on behalf of the respondents, on the earlier dates of hearing, the Ld. Counsel for the respondents relied upon the decision of the Hon ble Bombay High Court in the case of Shabir Ahmed Abdul Rehman v. UOI - 2009 (235) E.L.T. 402 (Bom.) to contend that only the fine and penalty amounts can be deducted from the sale proceeds of disposed, gold and the duty thereby would not be deducted there from. We find that the operation of the Hon ble Bombay ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stroyed or abandoned goods is provided under Section 23 and (iii) power to grant exemption from duty by a notification is provided under Section 25 of the Act. The present case does not fall within the scope of abatement, remission or exemption. 8. The entire scheme of the Customs Law is required to be kept in view while dealing with the exceptional claim of the respondents to refund the sale proceeds without deducting the duty amount so that no violence is done to the scheme of the Customs Law, which is in force for over a hundred years, initially under the Sea Customs Act of 1878 and thereafter under its successor Customs Act of 1962. The provisions of the Customs Act, 1962, referred to in the preceding paragraphs 6 7 outline the scheme of levy of customs duty on imported goods. In subsequent sections, the Act deals with two other situations, (i) where the goods are left uncleared and (ii) where the goods are confiscated. 9. The goods which are not cleared from customs control after importation are required to be sold. Section 150(2) provides how the sale proceeds has to be allocated. It reads as follows :- 150 (2). The proceeds of any such sale shall be applied- (a) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2) of section 115, such fine shall not exceed the market price of the goods confiscated, less in the case of imported goods the duty chargeable thereon. (2) Where any fine in lieu of confiscation of goods is imposed under sub-section (1), the owner of such goods or the person referred to in sub-section (1), shall, in addition, be liable to any duty and charges payable in respect of such goods. 12. As in the case of regularly imported goods and in the case of uncleared goods, the law provides for charging of duty in the case of confiscated goods also. The scheme of the Customs Law does not provide for not charging duty on goods which enter the domestic territory of India irrespective of whether the goods are cleared for home consumption after regular assessment, or whether the goods remain uncleared and are subsequently sold by auction, or whether the goods are confiscated for any infraction and are subsequently disposed by the customs authorities by sale. Even jetsam and flotsam which come floating to the Indian shore have to be charged to duty as stipulated under Section 21 of the Customs Act. Once the scheme of Customs Law as enacted by the Parliament is understood, it becom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ine payable to get possession of the goods is in the nature of recompense to the State and is distinct and different from the duty. 17. These decisions of the Hon ble Bombay High Court lay down the law that whether the confiscated goods are redeemed or not, and whether the fime is paid or not, the duty has to be recovered in terms of Section 125(2). The language of the said section also makes it clear that the duty is payable by the owner of the confiscated goods or where such owner is not known, by the person from whose possession or custody such goods have been seized. 18. The decision of the Hon ble Bombay High Court in the case of Shabir Ahmed (supra), was cited by the Ld. Advocate for the respondents on an earlier date of hearing without bringing it to the notice of the Bench that the refund of the sale proceeds without deducting duty there from ordered under the said decision has been subsequently stayed by the Hon ble Supreme Court vide UOI v. Shabir Ahmed Abdul Rehman - 2010 (253) E.L.T. A142 (S.C.). The decision of the Hon ble Bombay High Court in Shabir Ahmed (supra) has been rendered without taking note of the precedent decisions of the same High Court in the case of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the element of duty. Only the sale proceeds minus duty is what represents the value of the confiscated goods. As held in Poona Health Services (supra) The fine is in the nature of recompense to the State where instead of the goods vesting in the State in terms of Section 126, the law itself provides that the person entitled to the goods liable for confiscation can be given an option to take the goods on payment of fine . The proviso to Section 125(1) states that the fine shall not exceed the market price of the goods confiscated less duty chargeable thereon. By paying the fine, the respondents are recompensing the State and the fact that the fine can at the most be equal to the market price less the duty means they can only get the sale proceeds minus the duty by paying the fine. 21. After all, the sale price is only the cum-duty price. If the duty element from the sale proceeds is also given to the respondents, they would be unjustly enriched as they would be refunded the duty which they have not paid. Section 27 of the Act allows refund of duty which is paid by a person or which is borne by a person. In the instant case, the respondents have neither paid the duty nor have born ..... X X X X Extracts X X X X X X X X Extracts X X X X
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