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TMI Blog2020 (11) TMI 441X X X X Extracts X X X X X X X X Extracts X X X X ..... l under any of these categories and import of gold by him was prohibited and therefore the gold bars were prohibited goods in terms of section 2(33). Improperly imported goods are liable for confiscation under Section 111 Gold which is a restricted item for import but which was imported without fulfilling the conditions for import is a prohibited good in terms of Section 2(33) and hence it was also liable for confiscation under Section 111(d) of the Customs Act as asserted by the Revenue. It is undisputed that Section 111 (i) (l) and (m) are also applicable in this case as the gold was found concealed in the package and it was not included in the declaration and the goods which were declared namely UPS do not correspond to goods which were imported namely UPS with gold bars inside them. Therefore, the smuggled gold bars are liable for confiscation under Section 111 (d) also although it will not make material difference because the gold was anyway confiscated under a same section invoking three other clauses. Penalty u/s 112 and 114A of Customs Act - HELD THAT:- A penalty under Section 112 cannot be imposed if a penalty is imposed under Section 114A. Both sides argued that s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... imposed under Section 114A, no penalty should be imposed under Section 114AA also upon them - HELD THAT:- The penalty is for knowingly or intentionally making signing, using or causing to be made signed or used any declaration statement or document in the assessment of any business for the purposes of the Act. The section does not say that it has to be made directly before the customs officers. In this case, the courier agency has no means of declaring the nature of goods or the name of the importer except on the basis of information and material provided by the importer. Shri Amanullah provided wrong information in the course of business under the Act. Therefore, his action is squarely covered by Section 114AA. The penalty imposed under Section 114AA and the penalty imposed under Section 114A are not mutually exclusive and penalty cannot be imposed simultaneously under both these sections. Appeal allowed in part. - Customs Appeal No. 52084 of 2019 and 52121 of 2019 - FINAL ORDER No. 51622-51623/2020 - Dated:- 10-11-2020 - MR. DILIP GUPTA, PRESIDENT AND MR. P.V. SUBBA RAO, MEMBER (TECHNICAL) Shri Sunil Kumar, Authorised Representative for the Department Shri V.S. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... i Amanullah as well as to the courier company M/s FedEx. Shri Amanullah was called upon to explain as to why : a) the impugned seized Gold Bars weighing 12000 gms valued at ₹ 3,56,64,000/- (Three Crore Fifty Six Lakh Sixty Four Thousand only) found to be concealed in the consignments covered under AWB no. 811609150526 and 811609150515 imported by Shri Amanullah alias Ashwini Kumar, 30B, 70/02, Shan-e-ilahi Apartment, Zakir Nagar (Jamia Nagar), New Friends Colony, New Delhi 110 025 should not be confiscated under Section 111 of the Customs Act, 1962. b) the eight UPS and the packing material used to conceal the Gold Bars weighing 12000 grams should not be confiscated under Section 118 and Section 119 of the Customs Act, 1962. c) penalty should not be imposed on the importer Shri Amanullah alias Ashwini Kumar under Section 112(a), 114A and Section 114AA of the Customs Act, 1962. 6. M/s FedEx, the courier, was asked as to why penalty should not be imposed upon them under Section 117 of the Customs Act for their negligence. 7. Paragraph 25 of this show cause notice indicated that it was being issued under Section 28 and Section 124 of the Customs Act, 1962 witho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ving the market value of ₹ 3,56,64,000/- under the provisions of Section 111 (i), (l) (m) of the Customs Act, 1962. I order redemption of the impugned goods on payment of ₹ 50 lakhs (Rupees Fifty Lakhs only). (ii) I order confiscation of the computer UPS and the packing material used to conceal the 12000 gms. of gold under Section 118 and Section 119 of the Customs Act, 1962, however, I give an option to the importer Shri Ashwini Kumar Alias Amanullah to redeem the said confiscated goods i.e. eight UPS and the packing material on payment of redemption fine of ₹ 50,000/- (Rupees Fifty Thousand only) under Section 125 of the Customs Act, 1962, alongwith payment of appropriate Customs duty under Section 28 of the Customs Act, 1962 as well as applicable interest under Section 28AA of the Customs Act, 1962. (iii) I do not impose a penalty on Shri Amanullah alias Ashwini Kumar, 3-B, 70/02, Shan-e-ilahi Apartment, Zakir Nagar (Jamia Nagar), New Friends Colony, New Delhi 110 025 under Section 112(a) of the Customs Act, 1962. (iv) I impose a penalty of ₹ 1,35,70,152/- (Rupees One Crore Thirty Five Lakhs and Seventy Thousand One Hundred Fifty Two only) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nce penalty is imposed under Section 114A no penalty should be imposed under Section 114AA (d) allow him to exercise the option of payment of fine and penalty under Section 28(5) and 28(6) of the Act. (e) alternatively quash the impugned order and remand the matter for re-adjudication including determination of the duty payable and penalty imposable. 14. Shri Amanullah had also filed Writ Petition (C) 8149/2019 in the Hon ble High Court of Delhi mainly on the ground that the amount of Customs duty has not been prescribed in the impugned order-in-original and therefore no penalty can be imposed under Section 114A. The Hon ble High Court was pleased to dispose of this writ petition on 29/07/2017 as follows: We have perused of order-in-original dated 10/05/2017 passed by the Commissioner of Customs (Air Cargo Custom, New Delhi). We see no reason to entertain this writ-petition mainly with the following reasons : (a) the value of the goods narrated on more than one occasion in the order-in-original and the rate of duty is ad valorem. Hence, the customs duty can be arrived at without going into, any more details; (b) the order-in-original is an appealable order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f 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. (3) Where the fine imposed under sub-section (1) is not paid within a period of one hundred and twenty days from the date of option given thereunder, such option shall become void, unless an appeal against such order is pending. 17. Learned Departmental Representative argued that since import of gold is prohibited under the Foreign Trade (Development and Regulation) Act, 1992 except by banks authorized by Reserve Bank of India or those organization who have been permitted by DGFT and Shri Amanullah is neither a bank nor has been permitted by DGFT to import gold, the imported gold squarely falls under the category of prohibited goods. Learned Departmental Representative further argued that the mode of import of gold was also clearly improper. Courier Imports and Exports (Clearance) Regulations, 1998 expressly prohibit import of gold through couriers. Had he declared the imported goods as gold, the courier agency could not have filed a bill of entry at all. Shri Amanullah concealed the gold bars in UPS and declared to the courier ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iv. whether the Commissioner has committed an error in allowing the redemption of the confiscated gold under Section 125 on payment of redemption fine and applicable duty since gold is a prohibited item for import as per Section 2(33); v. whether the Commissioner has erred in allowing redemption of gold to Shri Amanullah in the absence of a claim of ownership as alleged by the Department; vi. Whether Shri Amanullah is entitled to the benefit of Section 28 (5) and 28 (6) as claimed by him; and vii. whether commissioner has erred in imposing penalty under both Section 114A and 114AA as asserted by Shri Amanulla. 20. Section 111(d) provides for confiscation of any goods which are imported or attempted to be imported or are brought within the Indian customs waters for the purpose of being imported, contrary to any prohibition imposed by or under this Act or any other law for the time being in force . Import , with its grammatical variations and cognate expressions, means bringing into India from a place outside India [Section 2(23)]. Thus, bringing any goods into India is an import whether through legal channels or by smuggling. Prohibited goods means any goods the im ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the provisions of section 32, other than goods inadvertently unloaded but included in the record kept under sub-section (2) of section 45; (h) any dutiable or prohibited goods unloaded or attempted to be unloaded in contravention of the provisions of section 33 or section 34; (i) any dutiable or prohibited goods found concealed in any manner in any package either before or after the unloading thereof; (j) any dutiable or prohibited goods removed or attempted to be removed 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 wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onfiscation under section 111, shall be liable,- (i) in the case of goods in respect of which any prohibition is in force under this Act or any other law for the time being in force, to a penalty not exceeding the value of the goods or five thousand rupees, whichever is the greater; (ii) in the case of dutiable goods, other than prohibited goods, to a penalty not exceeding the duty sought to be evaded on such goods or five thousand rupees, whichever is the greater; (iii) in the case of goods in respect of which the value stated in the entry made under this Act or in the case of baggage, in the declaration made under section 77 (in either case hereafter in this section referred to as the declared value) is higher than the value thereof, to a penalty not exceeding the difference between the declared value and the value thereof or five thousand rupees, whichever is the greater; (iv) in the case of goods falling both under clauses (i) and (iii), to a penalty not exceeding the value of the goods or the difference between the declared value and the value thereof or five thousand rupees, whichever is the highest; (v) in the case of goods falling both under clauses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... such increase in the duty or interest takes effect: Provided also that where any penalty has been levied under this section, no penalty shall be levied under section 112 or section 114. 24. Thus, a penalty under Section 112 cannot be imposed if a penalty is imposed under Section 114A. Both sides argued that section 114A cannot be applied without determining the amount of duty payable under Section 28. Section 114A provides for penalty or short levy or non-levy of duty in certain cases under Section 28. Section 28, which is section for demand of duty has been invoked in para 25 of the show cause notice but the amount of duty has not been quantified in it. The Show Cause Notice invoked both Section 114A and section 112. The argument of both the sides is that the amount of duty also should have been determined and specified in the order in original which without which no penalty could have been imposed under Section 114A. This was the exact argument taken by Shri Amanullah in the Writ Petition before the Hon ble High Court of Delhi in this very case. The Hon ble High Court of Delhi has dismissed the writ petition holding that the value of goods has been mentioned more than ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , it is hereby declared that in cases where an order under sub-section (1) has been passed before the date on which the Finance Bill, 2018 receives the assent of the President and no appeal is pending against such order as on that date, the option under said sub-section may be exercised within a period of one hundred and twenty days from the date on which such assent is received . 26. A plain reading of the above section shows that the Adjudicating Authority has no discretion in respect of goods which are not prohibited goods and he is bound to give an option of redemption. In case of prohibited goods, such as, the gold in this case, the Adjudicating Authority may allow redemption or may not allow redemption. There is no bar on the Adjudicating Authority allowing redemption of prohibited goods. The reason for such discretion left to the adjudicating authority is evident. In case of prohibited goods, the nature of the goods and the nature of the prohibition vary and cases have to be dealt with exercising discretion. For instance, spurious drugs, arms, ammunition, food which does not meet the food safety standards, etc. are harmful to the society if released to the owner and they ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (a) In RE: Ashok Kumar Verma [2019 (369) ELT 1677 (GOI)] (b) Atul Automations Pvt Ltd [2019 (365) ELT 46 (SC)] 30. We have examined all these case laws. In the case of Abdul Razak (supra), the appellant claimed that he has a right to redemption of the seized gold whose import was subject to restrictions which he did not fulfil. Hon ble High Court of Kerala held that the appellant had no such right and this position was upheld by the Hon ble Supreme Court. Relevant paragraphs of the judgment are as follows: 5 . Before us learned counsel for the appellant contended that Section 125 does not provide for confiscation of goods other than prohibited goods, and according to him, importers conduct has no significance for considering whether the option exercised by importers to release the goods on payment of redemption fine and duty should be allowed or not. While the learned counsel for the appellant relied on the provisions of the Foreign Trade (Development and Regulation) Act, 1992, and Foreign Trade (Exemption from Application of Rules in Certain Cases) Order, 1993 to contend that gold is not a prohibited goods which can be released on payment of redemption fine and du ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... edemption. This order of the CESTAT was challenged by the Revenue in the Hon ble High Court of Madras who allowed Revenue s appeal and set aside the order of the CESTAT. The judgment of the Hon ble High Court of Madras was upheld by the Hon ble Apex Court. 32. In the case of Ashok Kumar Verma (supra) relied upon by the Learned Counsel, the issue pertained to baggage decided in a Revision Application by the Additional Secretary, Department of Revenue. Matters pertaining to personal baggage, rebate on exports and drawback do not fall in the purview of CESTAT [by proviso to section 129A (1) of the Customs Act] and no appeal against the order of Commissioner (Appeals) in such cases lies with the CESTAT. Instead, a revision application can be filed before the Government of India to decide such an application. The passenger in this case had not only not declared the gold but had ingeniously concealed the gold by converting it into a wire and stuffing it in the beading of the stroller bag. The gold was absolutely confiscated by the Commissioner (Appeals). Holding that the unusual method of concealment of the gold does not make a difference, GOI set aside the absolute confiscation of go ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly convinced that unusual method of concealment of gold is a very relevant factor for determining the quantum of fine and penalty, it does not agree with the Commissioner (Appeals) that the gold had become prohibited only because of its unusual method of smuggling by changing the form of gold into wire and concealing the same in beading of his stroller bag even when the gold is not notified as prohibited goods under Section 11 of the Customs Act, 1962 or any other law. Prohibited goods is a distinct class of goods which can be notified by the Central Government only and the goods cannot be called as prohibited goods simply because it was brought by any person in violation of any legal provision with the intention to evade payment of customs duty. There is a clear difference between the prohibited goods and general regulatory restrictions imposed under the Customs Act or any other law with regard to importation of goods. While prohibited goods are to be notified with reference to specified goods only which are either not allowed at all or allowed to be imported on specified conditions only, regulatory restrictions with regard to importation of goods is generally applicable irrespect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uty only and if the same was imported unauthorisedly the option to owner of the gold is to be given for redemption of the confiscated gold on payment of fine. In fact the Commissioner (Appeals), Delhi and the Government of India have consistently held the same view in a large number of cases that gold is not prohibited goods as it is not specifically notified by the Government. For example, the Commissioner (Appeals) in his Order-in-Appeal No. CC(A)Cus/D-I/Air/629/2016, dated 4-7-2016 in the case of Mohd. Khalid Siddique has clearly held that gold is not prohibited as it is not notified by the Government as prohibited goods. Therefore, the Commissioner (Appeals) has taken a totally different stand by upholding absolute confiscation of gold in this case. Accordingly the Commissioner (Appeals) should have provide an option to the applicant under Section 125 of the Customs Act, 1962 to redeem the confiscated goods on payment of customs duties, redemption fine and penalty and because it was not done so earlier, the Government now allows the applicant to redeem the confiscated gold within 30 days from the date of issuance of this order on payment of customs duty, fine of ₹ 4,50,00 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reduced as also the penalty under Section 112(a) of the Customs Act was reduced including that on the Director also. The penalty under Section 114AA was done away with. 4 . In the appeal preferred by the Revenue, the High Court held that the MFDs correctly fell in the category of other wastes under Rule 3(1)(23) of the Waste Management Rules read with Part B and Part D of Schedule III Item B1110 dealing with used Multi-Function Printer and Copying Machines. Adverting to the provisions of the Foreign Trade Act and the Foreign Trade Policy framed thereunder, it was held that the MFDs were not prohibited but restricted items for import. Section 11(8) and (9) of the Foreign Trade Act provided for confiscation and redemption of goods imported without authorisation upon payment of market value. The order for release of the goods was upheld subject to execution of a simple bond without sureties for 90% of the enhanced assessed value, with further liberty to the Director General of Foreign Trade (hereinafter referred to as the DGFT ), along with directions. 5 . Shri Maninder Singh, Learned Senior Counsel appearing for the appellant submitted that import of the MFDs witho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve considered the submissions on behalf of the parties. The MFDs were imported in October-November, 2016. They were detained by the customs authorities opining that the imports had been made in violation of the Foreign Trade Policy, 2015-2020 framed under Sections 3 and 5 of the Foreign Trade Act and the Wastes Management Rules. 8 . Clause 2.01 of the Foreign Trade Policy provides for prohibition and restriction of imports and exports. The export or import of restricted goods can be made under Clause 2.08 only in accordance with an authorisation/permission to be obtained under Clause 2.11. Photocopier machines/Digital multifunction Print and Copying Machines are restricted items importable against authorisation under Clause 2.31. Indisputably, the respondents did not possess the necessary authorisation for their import. The Customs authorities therefore, prima facie cannot be said to be unjustified in detaining the consignment. Merely because earlier on more than one occasion, similar consignments of the respondent or others may have been cleared by the Customs authorities at the Calcutta, Chennai or Cochin ports on payment of redemption fine, cannot be a justification simp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nerated indigenously within the country. 11 . Rule 13(2) provides the procedure for import of other wastes listed in Part D Schedule III. Item B1110 of the Schedule mentions used Multifunction Print and Copying Machines (MFDs). Entry 4(j) lists out five documents required for import of used MFDs. The respondents have been found to be substantially compliant in this regard and the requirement for the country of origin certificate has been found to be vague by the High Court. Form 6 has rightly been held to be not applicable to the subject goods. 12 . Rule 15 of the Waste Management Rules dealing with illegal traffic, provides that import of other wastes shall be deemed illegal if it is without permission from the Central Government under the Rules and is required to be re-exported. Significantly, the Customs Act does not provide for re-export. The Central Government under the Foreign Trade Policy has not prohibited but restricted the import subject to authorisation. The High Court, therefore, rightly held that the MFDs having a utility period, the Extended Producer Responsibility would arise only after the utility period was over. In any event, the E-waste Rules, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dicating authority the discretion to allow or not to allow redemption of prohibited goods. As far as gold, which is smuggled, is concerned, there appears to have been a gradual change in the approach of the Government. In the case of Ashok Kumar, Government of India allowed redemption of gold that was not only NOT Declared but ingeniously concealed in strolley bags. It has also been declared in this Revision order that GOI had consistently held the view that smuggled gold can be redeemed. 35. The amount of redemption fine under section 125 cannot be higher than the market value of the goods but no minimum amount is prescribed. In this case market value of the goods is ₹ 3,56,64,000/- and a redemption fine of ₹ 50 lakhs has been imposed in the impugned order. 36. Thus, we find that not only can the gold which is concealed in the consignment and not declared be allowed redemption under Section 125, the Government of India has now been consistently taking such a view allowing redemption of even gold which is concealed. We find that the impugned order of the Commissioner is consistent with the stand of the Government of India. We also find the amount of redemption fin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ame of the importer as well as the nature of goods were misdeclared by Shri Amanullah based on which the courier company FedEX filed the Bill of Entry. Shri Amanullah also used false identity documents in the name of Shri Ashwini Kumar. All these are matters of record and not disputed. 41. Learned Counsel argued that they had not made any declaration directly before the customs officers but had only submitted wrong information to the courier agency who, in turn, have filed a wrong declaration before the customs officers in the form of an incorrect courier bill of entry. Therefore, they are not covered by section 114AA. 42. We do not find any force in this argument. The penalty is for knowingly or intentionally making signing, using or causing to be made signed or used any declaration statement or document in the assessment of any business for the purposes of the Act. The section does not say that it has to be made directly before the customs officers. In this case, the courier agency has no means of declaring the nature of goods or the name of the importer except on the basis of information and material provided by the importer. Shri Amanullah provided wrong information in th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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