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TMI Blog2016 (8) TMI 530X X X X Extracts X X X X X X X X Extracts X X X X ..... rohibited. 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. - Writ Appeal No. 377 of 2016 - - - Dated:- 28-7-2016 - S. Manikumar And D. Krishnakumar, JJ. For the Appellant : Mr.Joseph Prabhakar For the Respondents : Mr.V.Sundareswaran Mr.A.P.Srinivas, for R2 and R3 JUDGMENT S. Manikumar, J. Writ appeal is directed against the order made in W.P.No.18833 of 2013 dated 17.11.2014, by which, the writ court has declined to issue a mandamus to the 1st respondent to release ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce, Chennai, gold seized is liable for confiscation, in terms of the provisions of the Customs Act, 1962. 6. The Directorate of Revenue Intelligence, Chennai, has further stated that Mr.R.Mahaveer, in his voluntary statements dated 19.03.2013 and 25.03.2013 respectively has stated that he had smuggled gold jewellery from Singalpore, with the help of his Burma Bazaar operators, namely Mr.Karuppaswamy, Mr.Ali, Mr.Malar and Mr.Praveen, who had engaged in different carriers, to smuggle gold jewellery from Singapore, in small quantities (50 to 300 gms), through different airports in India; that his Burma Bazar operators would collect his gold jewellery from these carriers and hand over the same to him; that he would pay a commission of ₹ 140/- to 150/- per gm, to these Burma Bazaar operators; that his main suppliers in Singapore are, Kin Leon, Simon and Chia of G J Jewellery. According to the department, Mr.R.Mahaveer has further stated that he had sold these smuggled gold jewellery to various jewellery shops and brokers of different cities, namely M/s.Khazana Jewellery, Chennai, M/s.Saravana Stores, Chennai, M/s.Malabar Jewellery, Chennai, M/s.Saravana Selvarathinam Jewellery, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .T.Shameem and paid Mr.R.Mahaveer, in terms of equivalent quantity of gold bars (24 carat) as per Mr.Shameem's instructions. 9. The Directorate of Revenue Intelligence, has further submitted that Mr.T.Shameem, Manager of M/s.Focus Jewel Arcade Private Limited, Coimbatore, in his voluntary statement dated 27.03.2013 given before the Senior Intelligence Offier, DGCEI, Coimbatore inter alia stated that Mr.R.Mahaveer of M/s.Mundhra Jewellers, Chennai approached him during October 2012 with sample of gold jewellery of Singapore origin and requested to purchase the same from him; that he agreed to place orders for procurement of the said Singapore origin gold jewellery, as the price quoted for the said gold jewellery of Singapore origin by Mr.Mahaveer was less than the market price; that he received two consignments of gold jewellery of Singapore origin of 608.290 gms and 1688.625 gms covered under Invoice No.MJ/2012-13/Credit 1 dated 09.10.2012 and MJ/2012-13/Credit 3 dated 22.02.2013 respectively; that apart from the above consignments, he also received gold jewellery of Singapore origin ranging from 800 gms to 1400 gms, on 5 occasions around the time without any bill; that, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Customs Act, 1962, should not be ordered. The 1st respondent has also submitted that Section 110-A of the Customs Act, 1962 prescribes a reasonable time limit of six months from the date of seizure to complete the investigation and issue show cause notice. On the date of filing of counter affidavit, investigation was under progress and that therefore, the Directorate of Revenue Intelligence, Chennai has stated that investigation would be completed within the said time limit and show cause notice will be issued to the appellant/petitioner, as well as to others, making it answerable to the Adjudicating Authority, namely, the Commissioner of Customs (Seaport - Import). In the above said circumstances, the Directorate of Revenue Intelligence, Chennai has stated that the appellant can approach the Adjudicating Authority, Commissioner of Customs (Seaport Import). For the above said reasons, he has prayed for dismissal of the writ petition. 12. Materials on record disclose that subsequently, a show cause notice dated 16.09.2013 has been issued by the Additional Director General of Directorate of Revenue Intelligence, Chennai to the appellant, as well as 18 other noticees, as to why ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... further submitted that import of gold is not prohibited. He further submitted that Chapter IV of the Customs Act, 1962 deals with prohibitions on importation and exportation of goods. According to him, as per Section 11, if the Central Government is satisfied that it is necessary so to do for any of the purposes specified in sub-section (2), it may, by notification in the Official Gazette, prohibit either absolutely or subject to such conditions (to be fulfilled before or after clearance) as may be specified in the notification, the import or export of goods of any specified description. 16. Learned counsel for the appellant, further submitted that import of gold is not a prohibited good either under Section 2(33) or under Section 11 of the Customs Act, 1962. Referring to Section 110(1) of the Customs Act, 1962, learned counsel for the appellant submitted that if the proper officer has reason to believe that any goods are liable to confiscation under the Customs Act, 1962 he may seize such goods. Added further, he submitted that as per Section 110(1A) of the Customs Act, 1962, the Central Government may, having regard to the perishable or hazardous nature of any goods, depreciat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eason to believe that any goods are liable to confiscation under this Act, he may seize such goods. Despite section 110(1-A) of the Act, which empowers the proper officer to dispose of the goods, and when they are not released, according to him, taking note of the difficulties, in the matter of release of goods, until the adjudication is finalised, by Act 2006 with effect from 13.07.2006, Section 110-A has been inserted, which reads thus: Any goods, documents or things seized under section 110, may, pending the order of the adjudicating authority, be released to the owner on taking a bond from him in the proper form with such security and conditions as the adjudicating authority may require. Contending interalia that the very insertion of Section 110-A of the Customs Act, 1962, between Section 110, which deals with seizure of goods, documents and things, and Section 111 of the Act, which deals with confiscation of improperly imported goods, etc., it is the contention of the learned counsel for the appellant that the intention of the Legislature is to provisionally release the goods, taking note of the delay, pendency of the adjudication proceedings and perishable nature ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o appellant furnishing a bank guarantee for the duty, on the entire amount of gold seized from the appellant. 22. Placing reliance on M/s.R K Enterprises vs. Commissioner of Customs, Chennai and others reported in 2015-TIOL-2733-HC-MAD-CUS, learned counsel for the appellant further submitted that considering the prayer for provisional release, court has to consider the interest of the importer viz-a-viz that of the revenue and by doing so, the following factors have to be considered: (i) Whether the goods are prohibitory goods; (ii) Whether the goods require specific licence; and (iii) Whether goods are contra band According to him, when gold is not a prohibitory good, in terms of Section 2(33) of the Customs Act, 1962, read with the notifications cited supra, provisional release, should be ordered. 23. Per contra, taking this court through the show cause notice dated 16.09.2013, as to how 5541.92 grams of gold were seized from the business premises of the appellant, confession statements Mr.R.Mahaveer and others, recorded during investigation and summarised in the show cause notice dated 16.09.2013, Mr.A.P.Srinivas, learned counsel for the second respondent submi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing reliance on the decision of the Hon'ble Apex Court in N.K.Bapna vs. Union of India reported in 1992 (60) ELT 13 SC (LB), learned counsel for the respondents submitted that in the reported case, the department permitted bonding of the goods. It was the case of the department that goods were smuggled. Subsequently, the goods were clandestinely removed. On the above facts, the appellant therein contended that no confiscation of the goods can be ordered. However, the Hon'ble Supreme Court, held that reading of the section 111(j) makes it clear that to arrive at a conclusion as to whether the goods are liable for confiscation or not and not to the actual confiscation of the goods which have been clandestinely removed. In the light of the above, Mr.A.P.Srinivas, learned counsel for the respondents contended that the goods which are not assessed to duty are liable for confiscation, and therefore, the seizure effected and the consequential adjudicatory proceedings have to be concluded and till such time, provisional release should not be ordered. 26. Refuting the arguments of the appellant that ultimately, even if the adjudicating authority arrives at a conclusion that goods ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Bhatia vs. Commissioner of Customs, Delhi, Mr.A.P.Srinivas, learned counsel for the 2nd respondent submitted that even over invoicing of the goods for export, has been held as prohibited. 28. Placing reliance on Commissioner of Customs (AIR), Chennai -1 vs. Samynathan Murugesan reported in 2009 (247) ELT 21 (Mad)(DB), learned counsel for the 2nd respondent submitted that the decision in Omprakash Bhatia's case has been followed, giving effect to the meaning of the word 'prohibition' and on appeal, Samynathan Murugesan case has been confirmed by the Hon'ble Supreme Court. On the aspect as to how the meaning of the word 'prohibition' in the Act is understood, reference was also made to a decision of Commissioner of Customs, Chennai vs Brinda Enterprises reported in 2010 (262) ELT 239 (Mad)(DB). 29. Placing reliance on the decision in Abdul Razak vs Union of India reported in 2012 (275) ELT 300 (Ker)(DB), learned counsel for the respondents submitted that the very aspect, as to whether gold is a prohibited item or not, and when importers are aware of the restriction, including the necessity to declare the goods on arrival at the customs station and to ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch in other places and statements given, have been extracted in the foregoing paragraphs. A show cause notice, dated 16.09.2013, has been issued by the Directorate of Revenue Intelligence to the appellant and 18 others, calling upon them, as to why, the seized gold jewellery, should not confiscated, under Section 111(d) and Section 111(l) of the Customs Act, 1962 and penalty should not be imposed on them, under Section 112 of the Customs Act, 1962. 36. Before the issuance of the show cause notice, the appellant has filed W.P.No.18833 of 2013, praying for a direction to the Directorate of Revenue Intelligence, to release the seized gold. Subsequently, vide order in M.P.No.1 of 2013, dated 05.08.2013, Commissioner of Customs (Import), Chennai and the Commissioner of Customs (AIR), Chennai, have been impleaded as respondents 2 and 3. 37. Taking note of the fact that a show cause notice, dated 16.09.2013, has been issued to many noticees, reply affidavit, dated 18.11.2013 of the appellant, the Writ Court was not inclined to issue any direction to the respondents, solely at the instance of the appellant, who is one among the 19 noticees. So saying, the Writ Court has issued a dire ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... considered in the light of the general purpose and object of the Act itself. (ii) It is well settled that a statute must be read as a whole and one provision of the Act should be construed with reference to other provisions in the same Act, so as to make a consistent enactment of the whole statute. Such a construction has the merit of avoiding any inconsistency or repugancy either within the statute or between a Section or other parts of the statute. [Ref. Raj Krishna v. Bonod Kanungo reported in AIR 1954 SC 202]. (iii) In The State of Bihar v. Hira Lal Kejriwal reported in AIR 1960 SC 47, the Supreme Court, at Paragraph 6, held that, To ascertain the meaning of a section it is not permissible to omit any part of it: the whole section should be read together and an attempt should be made to reconcile both the parts. ......The first part gives life to that Order, and, therefore, the acts authorised under that Order can be done subsequent to the coming into force of the Ordinance. ......The second part appears to have been enacted for the purpose of avoiding this difficulty or, at any rate, to dispel the ambiguity. (iv) In State of W.B., v. Union of India reported in A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the maxim, ut res magis valiat quam pereat , lest the intention of the legislature may go in vain or be left to evaporate into thin air. (viii) If the words are precise and unambiguous, then it should be accepted, as declaring the express intention of the legislature. In Ku.Sonia Bhatia v. State of U.P., and others reported in 1981 (2) SCC 585 = AIR 1981 SC 1274, the Supreme Court held that a legislature does not waste words, without any intention and every word that is used by the legislature must be given its due import and significance. (ix) In Balasinor Nagrik Co-operative Bank Ltd., v. Babubhai Shankerlal Pandya reported in 1987 (1) SCC 606, the Supreme Court, at Paragraph 4, held as follows: It is an elementary rule that construction of a section is to be made of all parts together. It is not permissible to omit any part of it. For, the principle that the statute must be read as a whole is equally applicable to different parts of the same section. .......It also provides for the manner of the exercise of such power. .......... Sub-section (1) of Section 36 is made subject to the fulfilment of the conditions prerequisite, (x) In the case of Reserve Bank of I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e legislature and to ascertain the purpose of Statute and give full meaning to the same. The different provisions in the Statute should not be interpreted in abstract but should be construed keeping in mind the whole enactment and the dominant purpose that it may express. (xiii) In A.N.Roy Commissioner of Police v. Suresh Sham Singh reported in AIR 2006 SC 2677, the Apex Court held that, It is now well settled principle of law that, the Court cannot change the scope of legislation or intention, when the language of the statute is plain and unambiguous. Narrow and pedantic construction may not always be given effect to. Courts should avoid a construction, which would reduce the legislation to futility. It is also well settled that every statute is to be interpreted without any violence to its language. It is also trite that when an expression is capable of more than one meaning, the Court would attempt to resolve the ambiguity in a manner consistent with the purpose of the provision, having regard to the great consequences of the alternative constructions. (xiv) In Visitor Amu v. K.S.Misra reported in 2007 (8) SCC 594, the Supreme Court held that, It is well settled ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ltural product or the product of fisheries; (h) maintenance of standards for the classification, grading or marketing of goods in international trade; (i) establishment of any industry; (j) the prevention of serious injury to domestic production of goods of any description; (k) protection of human, animal or plant life or health; (l) the protection of national treasures of artistic, historic or archaeological value; (m) conservation of exhaustible natural resources; (n) protection of patents, trademarks and copyrights; (o) prevention of deceptive practices; (p) carrying on of foreign trade in any goods by the State, or by a Corporation owned or controlled by the State to the exclusion, complete or partial, of citizens of India; (q) the fulfilment of obligations under the Charter of the United Nations for the maintenance of international peace and security; (r) implementation of any treaty, agreement or convention with any country; (s) the compliance of imported goods with any laws which are applicable to similar goods produced or manufactured in India; (t) prevention of dissemination of documents containing any matter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... correctness of the inventory so prepared; or (b) taking, in the presence of the Magistrate, photographs of such goods, and certifying such photographs as true; or (c) allowing to draw representative samples of such goods, in the presence of the Magistrate, and certifying the correctness of any list of samples so drawn. (1C) Where an application is made under sub-section (1B), the Magistrate shall, as soon as may be, allow the application. (2) Where any goods are seized under sub-section (1) and no notice in respect thereof is given under clause (a) of section 124 within six months of the seizure of the goods, the goods shall be returned to the person from whose possession they were seized : Provided that the aforesaid period of six months may, on sufficient cause being shown, be extended by the Commissioner of Customs for a period not exceeding six months. (3) The proper officer may seize any documents or things which, in his opinion, will be useful for, or relevant to, any proceeding under this Act. (4) The person from whose custody any documents are seized under sub-section (3) shall be entitled to make copies thereof or take extracts there fr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from a customs area or a warehouse without the permission of the proper officer or contrary to the terms of such permission; (k) any dutiable or prohibited goods imported by land in respect of which the order permitting clearance of the goods required to be produced under section 109 is not produced or which do not correspond in any material particular with the specification contained therein; (l) any dutiable or prohibited goods which are not included or are in excess of those included in the entry made under this Act, or in the case of baggage in the declaration made under section 77; (m) any goods which do not correspond in respect of value or in any other particular with the entry made under this Act or in the case of baggage with the declaration made under section 77 in respect thereof, or in the case of goods under transhipment, with the declaration for transhipment referred to in the proviso to sub-section (1) of section 54; (n) any dutiable or prohibited goods transited with or without transhipment or attempted to be so transited in contravention of the provisions of Chapter VIII; (o) any goods exempted, subject to any condition, from duty or any p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... declared value and the value thereof or five thousand rupees, whichever is the highest. 47. Smuggling in relation to any goods is forbidden and totally prohibited. Failure to check the goods on the arrival at the customs station and payment duty at the rate prescribed, would fall under the second limb of section 112(a) of the Act, which states omission to do any act, which act or omission, would render such goods liable for confisaction under Section 111 of the Act. Sub section (b) to Section 111 of the Act covers the persons involved. 48. Section 123 of the Act, deals with burden of proof in certain cases and the same is extracted hereunder: (1) where any goods to which this section applies are seized under this Act in the reasonable belief that they are smuggled goods, the burden of proving that they are not smuggled goods shall be - (a) in a case where such seizure is made from the possession of any person, - (i) on the person from whose possession the goods were seized; and (ii) if any person, other than the person from whose possession the goods were seized, claims to be the owner thereof, also on such other person; (b) in any other case, on t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ding bullion, ingot, coin, ornament, crude jewellery, the provisional release is permissible, pending adjudication proceedings and that the appellant has every right to seek for such release and need not wait till the out of the adjudication proceedings. Notification in Circular No.22/2004-Cus, dated 03.03.2004, dealing with the delay in release of consignments due to classification disputes, seizure and provisional release thereof, is extracted hereunder: I am directed to say that the trade has represented to the Board that the items involved in classification disputes should not be withheld but should be released by resorting to provisional assessment. 2. The matter has been examined by the Board. It may be mentioned that in case of classification disputes, by and large, option is given for provisional clearance/assessment, if the inquires are going to take time. However, the Board desires that a dispute or offending consignment should also not be held up unless its import/clearance is totally prohibited or banned under any law for the time being in force [E.g. PFA, CITES, Weight Measures Act, etc.] or where prosecution is contemplated. At most, samples should be draw ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2 or any other law for the time being in force, are prohibited goods? At this juncture, the authorities also duty bound to consider, as to whether, for the goods imported/exported, there is prohibition or restriction, in the Customs Act, 1962 or any other law for the time being in force. 54. If the contentions of the appellant have to be accepted, then all the goods seized and liable for confiscation have to be provisionally released, in terms of Section 110(1A) of the Customs Act, 1962, and in such circumstances, the very object of the Customs Act, 1962, would be defeated. Going through the notifications, we are of the view that the abovesaid notifications do not confer any absolute right to the appellant, to seek for provisional release of gold, alleged to have been smuggled. At this juncture, it is relevant to extract Paragraphs 41 and 42 in the show cause notice, dated 16.09.2013, issued by the Directorate of Revenue Intelligence, as to how, the gold came to be seized and liable for confiscation, 41. As per Section 111(d) of Customs Act, 1962, any goods which are imported or attempted to be imported or are brought within the Indian Customs waters for the purpose of bein ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s which may be complete or partial and even a restriction on import or export is to an extent a prohibition. Hence the restriction imposed on the import of gold jewellery through passenger baggage is to an extent a prohibition and any violation of the said conditions/restrictions would make the impugned goods viz., gold jewellery liable for confiscation under Section 111 of Customs Act, 1962. 55. In the light of the above, let us consider the decisions, relied on by the learned counsel appearing for both parties. 56. In N.K.Bapna v. Union of India reported in 1992 (60) ELT 13 (SC), the petitioner therein was the Managing Director of Company, engaged in the business of manufacture and production of plastic compounds, plastic films and sheets and plastic chemicals. A detention order was passed, under section 3(1) of the Conservation of Foreign Exchange Prevention of Smuggling Activities Act, 1974, with a view to prevent him from abetting the smuggling of goods. Consignment of Ethyle Hexanol (EHA) was transported to bonded warehouses, after assessment to duty in October-November, 1989 and subsequently, the goods were removed from the bonded warehouse, without the permission o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the High Court in a matter of this kind at that particular stage. Sri Chidambaram, learned senior counsel, however, submitted that respondents would in any event be entitled to have the goods released on payment of fine in lieu of confiscation even if there was such confiscation. He said that in that view of the matter even the prospect of an order of confiscation of the goods in the statutory adjudication need not detain the export as the respondents could always pre-empt confiscation by payment of fine in lieu thereof. 3. This submission looks attractive on the face of it but on closer scrutiny it is not as sound as it is attractive. The proceedings of seizure and confiscation are proceedings in rem. Until the culmination of the adjudication it is difficult to envisage any right on the part of the respondents from whom they are seized to export them on the basis of a future title they expect to acquire by payment of fine. Learned Counsel, however, says that it would earn foreign exchange for the country. But sanctity of legal proceedings cannot be whittled down on grounds of such expediency. 4. In the circumstances, we set aside both the orders of the learned Single ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons and in that context, Section 113(D) of the Act would be attracted, which states that, any goods attempted to be exported or brought within the limits of any customs area for the purpose of being exported, contrary to any prohibition imposed by or under this Act or any other law for the time being in force. and with reference to the word, prohibition imposed by or under the Act or any other law for the time being in force and also taking note of Section 2(33) of the Act, which defines prohibited goods , with the opening sentence of Section, starts that, any goods the import or export of which is subject to any prohibition under this Act or any other law for the time being in force , the Hon'ble Supreme Court, at Paragraph 9, held as follows: 9. From the aforesaid definition, it can be stated that (a) if there is any prohibition of import or export of goods under the Act or any other law for the time being in force, it would be considered to be prohibited goods; and (b) this would not include any such goods in respect of which the conditions, subject to which the goods are imported or exported, have been complied with. This would mean that if the conditions prescribed fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Kgs gold ornaments were recovered from a T.V. Set. Goods were claimed to be prohibited, as the petitioner therein did not belong to the category of persons, who could bring gold at concessional rate of duty. Contentions were made by the Revenue that goods were imported in violation of Import (Control) Order, 1955, read with Section 3(i) of Import and Export Control Act, 1947. Though in the above case, a contention was raised by the respondent that the gold is not a prohibited item and it was only a restricted item and therefore, there is a mandatory duty, on the part of the proper officer to give option to the person, guilty of adjudicatory proceedings to pay fine, in lieu of confiscation, taking note of the judgment in Shaik Jamal Basha v. Government of India reported in 1997 (91) ELT 277 (AP), the Hon'ble Division Bench of this Court, following Om Prakash Bhatia's case (cited supra), at Paragraphs 7, 9 and 10, held as follows: 7. Section 11 empowers the Central Government to prohibit either absolutely or subject to such conditions to be fulfilled before or after clearance the import or export of the goods of any specified direction by issuing a notification in this b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ol) Act, 1947, uses three different expressions prohibiting , restricting or otherwise controlling , we cannot cut down the amplitude of the word any prohibition in Section 111(d) of the Act. Any prohibition means every prohibition. In other words all types of prohibitions. Restriction is one type of prohibition. From item (I) of Schedule I, Part IV to Import Control Order, 1955, it is clear that import of living animals of all sorts is prohibited. But certain exceptions are provided for. But nonetheless the prohibition continues. Therefore, if we apply this judgment to the notification, the notification contemplates import of gold subject to certain conditions. The relevant paragraphs of Import trade control order are extracted as follows: Import of Gold permitted as Baggage. Import of gold in any form, including ornaments but excluding ornaments studded with stones or pearls, is allowed to be imported as part of baggage by passengers of Indian origin or a passenger holding a valid passport issued under the Passport Act subject to the following conditions: that the passenger importing the gold is coming to India after a period of not less than six months of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ine and duty. Even though gold as such is not a prohibited item and can be imported, such import is subject to lot of restrictions including the necessity to declare the goods on arrival at the Customs Station and make payment of duty at the rate prescribed. There is no need for us in this case to consider the conditions on which import is permissible and whether the conditions are satisfied because the appellant attempted to smuggle out the goods by concealing the same in emergency light, mixie, grinder and car horns etc. and hence the goods so brought is prohibitory goods as there is clear violation of the statutory provisions for the normal import of gold. Further, as per the statement given by the appellant under Section 108 of the Act, he is only a carrier i.e. professional smuggler smuggling goods on behalf of others for consideration. We, therefore, do not find any merit in the appellant's case that he has the right to get the confiscated gold released on payment of redemption fine and duty under Section 125 of the Act. 63. On the facts and circumstances, the dictum laid down by the Kerala High Court in Abdul Razak's case (cited supra), is that even though gold ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion. Matter went upto the Tribunal, which remanded the same, for a decision, which ultimately landed up in the High Court. After considering the rival contentions therein, and Om Prakash Bhatia's case (cited supra), at Paragraph 20, a Hon'ble Division Bench of this Court, held as follows: 20. If we employ the meaning of the word prohibition as was done in Om Prakash Bhatia's case we have to hold that the imported druid was Prohibited goods since the respondent is not an eligible passenger as he did not satisfy the conditions. The impugned order deserves to be set aside. In view of the above decision, the order, dated 30.04.2008 consequent to the order of remand also is set aside. Since we are of the opinion that the conclusion of the Tribunal was wrong and the order of remand was also erroneous. 67. From the decisions in Samyanathan Murugesan's case (cited supra), Abdul Razak's case (cited supra) and Brinda Enterprises's case (cited supra), it is manifestly clear that the adjudicating authorities/Courts have to consider two aspects, viz., (1) eligibility of the passengers to import the goods; and (2) whether such passengers had fulfilled the condi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3 and 14, a learned single Judge of this Court held as follows: 13. Further, when the goods were confiscated under Section 111(d) and 111(I) of the Customs Act, 1962, the question of provisional release under Section 110 of the Customs Act, 1962, does not arise. Therefore, this Court is of view that only after the completion of adjudication process, the adjudicating authority would decide whether the goods confiscated under Section 111(d) and 111(1) of the Customs Act, 1962, could be released or not. 14. Accordingly, the respondent, who is the adjudicating authority, is directed to complete the adjudication, after affording an opportunity of personal hearing to the petitioner, within a period of eight weeks from the date of receipt of a copy of this order. The petitioner shall cooperate with the adjudicating authority to complete the adjudication as aforestated. 71. In Commissioner of Customs (Prev.), Mumbai v. M.Ambalal Co., reported in 2010 (260) ELT 487 (SC), after referring to the expression, dutiable goods , duty , import , imported goods , importer and smuggling , etc., the Hon'ble Supreme Court explained the object of the Act and as to how, the words, sm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct or omission which will render such goods liable to confiscation under Section 111 or Section 113 of the Act. 8) Section 11 of the Act enables the Central Government to prohibit importation or exportation of goods either absolutely or subject to conditions as specified in the notification, the import or export of the goods of any specified description. Section 11A to 11G speaks of detention of illegally imported goods and prevention of the disposal thereof. Section 12 of the Act is the charging Section. Under this Section, the duty is leviable on all imported goods. Valuation of the imported goods is done as provided under Section 14 of the Act. Section 25 of the Act empowers the Central Government to issue notifications exempting generally either absolutely or subject to such conditions as specified in the notification, goods of any specified description from the whole or any part of the Customs Act leviable thereon. The definition of imported goods has to be read along with Section 111 of the Act which deals with goods brought from place outside India. Section 111 of the Act provides for confiscation of goods and conveyances and imposition of penalties. Section 111(d) of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n note of. As noted above, `imported goods' for the purpose of this Act is explained by a conjoint reading of Section 2(25), Section 11, Section 111 and Section 112. Reading these Sections together, it can be found that one of the primary purposes for prohibition of import referred to the latter is the prevention of smuggling [See Section 11(2)(c)]. Further, in the light of the objects of the Act and the basic skeletal framework that has been enumerated above, it is clear that one of the principal functions of the Act is to curb the ills of smuggling on the economy. In the light of these findings, it would be antithetic to consider that `smuggled goods' could be read within the definition of `imported goods' for the purpose of the Act. In the same light, it would be contrary to the purpose of exemption notifications to accord the benefit meant for imported goods on smuggled goods. 72. Following an earlier decision of this Court in W.P.No.21194 of 2013, dated 08.10.2014, in a decision in R.K.Enterprises v. The Commissioner of Customs reported in 2015-TIOL-2733-HC-MAD-CUS, a learned single Judge held that while considering the prayer for provisional release, the foll ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed in the second part of Section 2(33) uses the expression any such goods . Therefore, it appears that the Customs Act recognizes only two types of goods namely: (1) those that are prohibited; and (2) those that are not prohibited. The Act also recognizes the fact that even prohibited goods could be imported or exported subject to certain conditions. If those conditions are fulfilled, prohibited goods would automatically become non-prohibited goods. While considering Sections 111 and 125(1) of the Customs Act, 1962, the Court held thus, 15. Section 11 of the Act empowers the Central Government, by Notification in the official gazette, to prohibit either absolutely or subject to such conditions to be fulfilled before or after clearance of the import or export of goods of any specified description. The expression illegal import is defined in Section 11A(a) of the Customs Act, 1962 to mean the import of any goods in contravention of the provisions of the Customs Act or any other law for the time being in force. 16. What is to be done if goods are improperly imported into or exported outside India, is spelt out in Chapter XIV. Section 111, which makes certain goods li ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tatutory provisions in the Customs Act, 1962 or any other law for the time being in force and in all cases, whether there is either total prohibition or restriction, in the light of the judgmnet of the Apex Court in Om Prakash Bhatia's case, such goods should fall within the definition of Prohibited goods. When import is in contravention of statutory provisions, in terms of Sections 11 or 11A of the Customs Act, 1962 or any other law, for the time being in force and when such goods squarely fall within the definition illegal import , or the other provisions in the statute, dealing with prohibition/restriction, the same are to held as, prohibited goods and liable for confiscation. 77. As rightly contended by Mr.A.P.Srinivas, learned counsel for the respondents that under Section 123 of the Customs Act, 1962, if the importer fails to discharge the burden that the goods seized from him, were not smuggled, then there is a strong reason for the proper officer to seize such goods. Smuggling is nothing but importing goods clandestinely, without payment of duty and such goods would squarely fall within the definition of Prohibited goods , under Section 2(33) of the Act. 78. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y and having regard to the prohibitions/restrictions in the Act and the conditions to be complied with, in terms of Section 2(33) of the Act, it cannot be contended by the appellant, that de hors the prohibition/restriction in the Customs Act, 1962 or any other law for the time being in force, provisional release of the goods, liable for confiscation, is automatic. While considering the right of an importer or any person, covered under Section 112 of the Act, for provisional release, the authority is mandated to consider, what is prohibition and restriction in the Customs Act, 1962 and any other law for the time being in force and the decision in Om Prakash Bhatia's case (cited supra) the same. 82. In the case on hand, admittedly, statements have been recorded, under Section 108 of the Customs Act and a search has been conducted in many places. Though it is the contention of the appellant that the gold seized from the business premises are purchased from his sister concern, under Invoice, per contra, it is the case of the respondents that during enquiry, it was found that there are prima facie material to arrive at the conclusion that gold has been smuggled into the country ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to release of the goods, pending orders of the adjudicating authority, then the Legislature would have used the word, shall , instead of word, may . In the case on hand, considering the material on record, the respondent-adjudicating authority, has decided not to order provisional release, pending adjudication. 86. 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. 87. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fine in lieu of confiscation under Section 125 of the Customs Act, 1962 and such expected or anticipated right, cannot give rise to a cause for issuance of any mandamus sought for, under Section 110A of the Act and on the facts and circumstances of the case, when provisional release, sought for, is denied by the authorities, by filling a counter affidavit, contending that there is a prima facie case of smuggling. 91. If Courts have to consider the prayer sought for, under Section 110A of the Act, on the presumption that such rights are likely to be granted in future, under Section 125 of the Act, by the competent authority, then we would be exceeding in our jurisdiction. At the stage, when provisional release is either ordered or denied, discretion exercised by the authority, is administrative in nature. 92. Objective satisfaction, at the stage of provisional release, casts a duty on the authority, to consider, as to whether, there are prohibitions/restrictions in the Customs Act, 1962, or any other law for the time being in force and whether he is bound to exercise his discretion, satisfying principles of fairness, reasonableness and whether, it is in accordance with the ob ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , impose penalty, initiate prosecution and pending conclusion of the adjudicating proceedings, may order provisional release. At the time, when discretion is exercised under Section 110A and if any challenge is made under Article 226 of the Constitution of India, the twin test, to be satisfied is relevance and reason . Testing the discretion exercised by the authority, on both subjective and objective satisfaction, as to why, the goods seized, cannot be released, when smuggling is alleged and on the materials on record, we are of the view 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. 96. Going through the material on record, and in the light of the decisions considered, in particular, Om Prakash Bhatia's case (cited supra), we are of the considered view that the discretion exercised by the competent authority, considering the objects of the Customs Act, 1962, or any other law for the time being in force, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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