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TMI Blog2022 (2) TMI 1081X X X X Extracts X X X X X X X X Extracts X X X X ..... rverse. Section 2(33) of the Customs Act defines the term 'prohibited goods' as to mean 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 but would not include any such goods in respect of which the conditions subject to which the goods are permitted to be imported or exported have been complied with - Import of an item which is not prohibited or restricted but is subjected to import duty and in which case duty may not have been paid is vastly different from categorising the item as prohibited or restricted so as to fall within the ambit of Section 2(33) of the Customs Act. Section 112 of the Act pertains to penalty for improper importation of goods. Section 125 on the other hand pertains to option to pay fine in lieu of confiscation. As noted sub-section (1) of Section 125 comes in two parts. Whenever confiscation of goods is authorized under the Act, as per sub-section (1) of Section 125 the adjudicating officer has a discretion to offer redemption fine in lieu of confiscation in case of goods importation or exportation whereof is prohibited. In all other cases there is a statutory manda ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 23.09.2012 which records all these details and further records that the passenger had submitted a declaration form to the custom authorities in which he had not made a declaration of any of these goods. 3. Based on these facts a show-cause notice came to be issued to the petitioner why the seized articles i.e. gold and currency should not be confiscated and fine should not be imposed upon him in terms of the provisions of the Customs Act, 1962. The adjudicating authority after giving opportunity of hearing to the petitioner passed an order dated 11.12.2013. In this order he made absolute confiscation of 70 gold biscuits weighing 8164.800 gms valued at ₹ 2,51,89,735/-. He also confiscated Indian currency of ₹ 20,000/- and draft of ₹ 12 lacs for contravention of the Foreign Exchange Management (Export and Import of currency) Regulations, 2000. He imposed a penalty of ₹ 30 lacs. He imposed further penalty of ₹ 10 lacs for mis-declaration of the contents of the baggage. 4. Against the said order in original the petitioner preferred an appeal. The Commissioner of Appeals by his order dated 23.02.2015 confirmed the absolute confiscation of gold but r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... In writ jurisdiction the High Court would not interfere with findings of facts unless it is shown that the findings are perverse. 9. Proceeding on such basis, we may examine the legal position. Section 2(33) of the Customs Act defines the term 'prohibited goods' as to mean 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 but would not include any such goods in respect of which the conditions subject to which the goods are permitted to be imported or exported have been complied with. No notification issued by the Government of India is produced or brought to our notice which either prohibits import of gold or even makes the import subject to conditions. Import of an item which is not prohibited or restricted but is subjected to import duty and in which case duty may not have been paid is vastly different from categorising the item as prohibited or restricted so as to fall within the ambit of Section 2(33) of the Customs Act. 10. In essence if the petitioner had made a declaration of import of gold and offered the same to the custom duty, there is no provision under which he would have bee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... smuggle the gold was made the import of gold per se would not become prohibited. It was therefore contended that maximum penalty that could be imposed in terms of clause (2) of Section 112 was 10% of the duty sought to be evaded. This contention was negatived by the Division Bench making following observations:- 15. We may recall, the contention of the counsel for the petitioner in this respect was that the gold at the relevant time was freely importable. Import of gold was not prohibited. Case of the petitioner would therefore, fall under second clause of section 112 and penalty not exceeding 10% of the duty sought to be evaded would be the maximum penalty imposable. Such contention shall have to be examined in light of the statutory provisions noted above. As noted, section 111 of the Act provides for various eventualities in which the goods brought from a place outside India would be liable for confiscation. As per clause (d) of section 111, goods which are imported or attempted to be imported or are brought within the Customs quarters for import contrary to any prohibition imposed by or under the Act or any other law for the time being in force, would be liable for confis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mplied with. Condition of declaration of dutiable goods, their assessment and payment of customs duties and other charges is a fundamental and essential condition for import of dutiable goods within the country. Attempt to smuggle the goods would breach all these conditions. When clearly the goods are sought to be brought within the territory of India concealed in some other goods which may be carrying no duty or lesser duty, there is clear breach of conditions of import of goods though per se import of goods may not be prohibited. 17. In an elaborate judgment, Division Bench of Madras High Court in case of Malabar Diamond Gallery Ltd. (supra) has taken such a view. Interpretation of section 112 of the Customs Act in context of prohibition for import of goods came up for consideration before the Court. In the said case, the department had prior intelligence that the petitioner's consignment of gold jewellery to be smuggled into the country was to arrive from Singapore. On the basis of such information, the imported consignment of the petitioner was intercepted. The gold jewellery of foreign origin was seized. The authorised representative of the petitioner company also ad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thus held that the authorities below were therefore justified in invoking powers under Section 111 and 112 of the Customs Act. 14. Having said that, there are two areas in which we find that revisional authority has committed an error. First is of enhancing personal penalty under Section 112 of the Customs Act to ₹ 40 lacs. We may recall that the adjudicating authority had imposed penalty under Section 112 of the Act which was reduced to ₹ 5 lacs by the Commissioner of Appeals. In a revision petition filed by the Government of India the revisional authority could have restored the order of adjudicating authority but could not have enhanced the penalty over and above what was imposed by the adjudicating authority without specific show-cause notice having been issued to the petitioner which in the present case was not done. 15. The second area of concern is applicability of Section 125 of the Act. Sub-section (1) of Section 125 provides that whenever confiscation of any goods is authorised by the Act the officer adjudging it may in the case of any goods, the importation or exportation whereof is prohibited under the Act or under any other law for the time being in f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oods whose import is prohibited but no such option is available in respect of goods which can be imported, but because of the method of importation adopted, become liable for confiscation......... 16. This view may seem incongruent with the view expressed by Gujarat High Court in case of Bhargavraj Rameshkumar Mehta (supra) which we have also followed in this judgment but flavours of Section 112 and 125 of the Customs Act are entirely different. Section 112 of the Act pertains to penalty for improper importation of goods. Section 125 on the other hand pertains to option to pay fine in lieu of confiscation. As noted sub-section (1) of Section 125 comes in two parts. Whenever confiscation of goods is authorized under the Act, as per sub-section (1) of Section 125 the adjudicating officer has a discretion to offer redemption fine in lieu of confiscation in case of goods importation or exportation whereof is prohibited. In all other cases there is a statutory mandate on the adjudicating officer to offer such redemption fine. If the interpretation of Section 112 and 125(1) is not reconciled as above, this latter portion of sub-section (1) of Section 125 which covers all cases exce ..... X X X X Extracts X X X X X X X X Extracts X X X X
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