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2023 (3) TMI 900 - CESTAT MUMBAICompounding of offence - restricted goods or prohibited goods - import of Gold - Application for Compounding of Offence in terms of Section 137(3) of the Customs Act, 1962 read with the Customs (Compounding of Offences) Rules, 2005, rejected - denial by resorting to the definition of ‘prohibited goods’ as prescribed under Section 2(33) ibid - HELD THAT:- It is true that an application for compounding can be rejected but only due to the reasons mentioned under proviso to Section 137 ibid and for no other reason whatsoever. But the learned Chief Commissioner failed to appreciate that the expression used in the proviso to Section 137(3) is prohibited items whereas for rejecting the application he relied upon the definition of prohibited Goods as prescribed u/s. 2(33) ibid. Gold is freely importable and therefore can such a good will become prohibited merely because it was imported illegally without prior permission? In my view the answer is in negative. The learned Chief Commissioner has rejected the application merely on the ground that since the gold bars have been imported illegally therefore the definition of ‘prohibited goods’ as per sec.2(33) gets attracted and the gold bars becomes prohibited goods for which no compounding application is maintainable. According to me, learned Chief Commissioner has misdirected himself by looking into the definition of ‘prohibited goods’ as prescribed u/s. 2(33) of Customs Act, 1962 because Section 137(3)(ii) ibid only talks about prohibit items and specifically mentioned that it has no application if the goods involved are prohibited items for import and export in the ITC (HS) Classification of Export and Import Items of the Foreign Trade Policy - The definition of prohibited goods prescribed u/s. 2(33) by any stretch cannot be applied into the provision of Section 137 (3)(c)(ii) ibid. The learned Chief Commissioner failed to appreciate that Section 2 ibid itself begins with the words ‘unless context otherwise requires’. The Hon’ble Supreme Court in the matter of Commr. of Customs vs. Atul Automations Pvt. Ltd.[2019 (1) TMI 1324 - SUPREME COURT] rejected the submission raised by revenue that Multi-Function Devices although were a restricted and not prohibited item but absence of necessary authorization under the Foreign Trade Police would give it the character of a prohibited item and has laid down that there exists a fundamental distinction between what is prohibited and what is restricted. So when ‘restricted goods’ in absence of proper authorization cannot be treated as ‘prohibited’ then the gold bars herein are on a much better footing as its freely importable. The only reason given by the learned Chief Commissioner for rejecting the application is that the goods involved herein becomes prohibited goods by importing in violation of the conditions imposed for their import, therefore the application is not maintainable which, is totally contrary to the legal position and the language of the statute. The application is restored to the file of the learned Chief Commissioner for adjudication on merits after giving sufficient opportunity of hearing to both sides - Appeal allowed.
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