TMI Blog2012 (5) TMI 67X X X X Extracts X X X X X X X X Extracts X X X X ..... h caution; nice discernment, and judgment directed by circumspection; deliberate judgment; soundness of judgment; a science or understanding to discern between falsity and the truth, between wrong and right, between shadow and substance, between equity and colourable glosses and pretences, and not to do according to the will and private affections of persons. When it is said that something is to be done within the discretion of the authorities, that something is to be done according to the rules of reason and justice, not according to private opinion; according to law and not humour. It is to be not arbitrary, vague and fanciful, but legal and regular. And it must be exercised within the limit, to which an honest man, competent to the discharge of his office ought to confine himself. the findings or reasoning given by the tribunal is not in consonance with the provisions of Section 125 of the Act. We have, therefore, two options. One is to remand the matter to the tribunal for fresh consideration or pass appropriate orders in consonance with the statutory language and to do justice. We are inclined to accept the second course in the present case as delay is not in the interest ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... u Trading Company was a dummy entity and actual controlled and managed by Achievers International and its partner Vineet Gupta. (b) Naveen Kumar, the so-called proprietor was not conducting business or aware of the activities of Neeru Trading Company. He was merely a name giver. (c) Naveen Kumar admitted in his statement that he was a matriculate and a Villager, who was made to sign papers etc. by and at behest of Vineet Gupta. He was less than 18 years of age when the bank account in the name of Neeru Trading Company on asking of Achievers International/ Vineet Gupta was opened. (d) Vineet Gupta was instrumental in procuring registration of Neeru Trading Company and obtaining the Importer/Exporter Code Certificate (IEC Certificate, for short) issued by the Directorate General of Foreign Trade (DGFT, for short), which enabled imports in the name of Neeru Trading Company. The declarations made to obtain the IEC code and for imports in the name of Neeru Trading Company were false and wrong. Achievers International/Vineet Gupta was involved in making the said false and wrong declarations. (e) Achievers International/Vineet Gupta had forged and fabricated signatures of Nave ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... went into the question whether the aforesaid goods imported were prohibited goods within the meaning of Section 2(33) of the Customs Act, 1962 (Act, for short) and it was held that same were prohibited goods liable to be confiscated under section 111(d) of the Act. The Commissioner (Adjudication) also examined the question and held that the goods should not be released on payment of redemption fine under Section 125 of the Act. By the order in original, the Commissioner (Adjudication) directed that the entire consignment of DVD-Rs/CD-Rs consisting of 45,00,000 and 7,80,000 pieces of DVD-Rs/CD-Rs having assessable value of Rs.1,87,18,330/- and Rs.34,71,362/- respectively should be absolutely confiscated under Section 111(d) read with Section 125 of the Act. Penalty of Rs.30 lacs each (total Rs.60 lacs) was personally imposed on Vineet Gupta under the said Act for violating Sections 112(a) and 114AA of the Act. Penalty of Rs.50,000/- was also imposed on Naveen Kumar, under Section 112(a) of the Act. 9. By the impugned order passed by the tribunal, it has been held as under:- 6.1 We have carefully considered the submissions from both sides and perused the records. Shri Vineet Gup ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (a) when there is a penalty imposed under section 114AA. Therefore penalty under 112(a) is set aside in full. Considering the entire facts and circumstances of the case, the penalty imposed under114AA on Shri Vineet Gupta, partner is reduced from Rs.30 lakhs to Rs.10 lakhs (Rupees Ten Lakhs only). (emphasis supplied) 10. In the appeal filed by Achievers Internationals, they have challenged the order of the tribunal on the ground that the redemption fine imposed is exorbitant in the absence of any finding arrived at by the Commissioner (Adjudication) regarding imposition of said fine and as the goods in question were not prohibited goods. It is submitted that the tribunal is not an adjudicating officer under Section 125 of the Act for the purpose of imposing redemption fine. We need not refer to the issues in detail as the counsel for Achiever International has not disputed and denied the finding that Vineet Gupta, partner of Achiever International was the de facto importer and had imported the consignment using the IEC certificate and showing that the import had been made by Neeru Trading Company. Even before the tribunal, Achievers International/Vineet Gupta, it is apparent, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is answered in favour of the Revenue:- (5) What should be the quantum of fine under Section 112(a) of the Customs Act, 1962? 13. Section 125 of the Act reads as under:- 125. Option to pay fine in lieu of confiscation- (1) Whenever confiscation of any goods is authorised by this Act, the officer adjudging it may, in the case of any goods, the importation or exportation whereof is prohibited under this Act or under any other law for the time being in force and shall in the case of any other goods, give to the owner of the goods [ or, where such owner is not known the person from whose possession or custody such goods have been seized,"] an option to pay in lieu of confiscation such fine as the said officer thinks fit: Provided that, without prejudice to the provisions of the provision to sub- section (2) of section 115, such fine shall not exceed the price of the goods confiscated, less in the case of imported goods 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 su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er Section 11(1). In fact, the said aspect is no longer res integra, in view of the decisions of the Supreme Court in Sheikh Mohd. Omer vs. Collector of Customs, Calcutta Ors. (1970) 2 SCC 728, Toolsidass Jewraj vs. Addl. Collector of Customs (1991) 2 SCC 443 and Om Prakash Bhatia vs. Commissioner of Customs, Delhi (2003) 6 SCC 161. As the first two decisions have been considered in the Om Prakash Bhatia s case (supra), we are referring to the facts of the said case. In the said case, the appellant engaged in export of garments and had substantially over invoiced the export consignment. The Commissioner of Customs had imposed redemption fine of Rs.10 lacs and Rs.20 lacs and also held that no draw back was admissible after recording that the market value was less than the amount of drawback claimed. Before the Supreme Court, the appellant gave up the claim of duty draw back but contended that the goods were not prohibited goods and, therefore, Section 113(d) which deals with confiscation of goods improperly exported was not applicable. The Supreme Court rejected the said contention holding:- 8. The aforesaid section empowers the authority to confiscate any goods attempted to be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... prohibition imposed by any law for the time being in force in this country‟ is liable to be confiscated. Any prohibition‟ referred to in that section applies to every type of prohibition‟. That prohibition may be complete or partial. Any restriction on import or export is to an extent a prohibition. The expression any prohibition‟ in Section 111(d) of the Customs Act, 1962 includes restrictions. Merely because Section 3 of the Imports and Exports (Control) 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. 18. Thereafter, reference was made to Section 18 of the Foreign Exchange Regulation Act, 1973 and it was observed that the said provision ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he term prohibited goods in Section 2(33) is much wider than the goods stipulated in Section 11(1). The tribunal has recorded and held that Vineet Gupta, partner of Achievers International is a de facto and true owner of the goods but the same were imported in the name of M/s Neeru Trading Company, a proprietorship of Naveen Kumar. The IEC certificate of Neeru Trading Company was used. The tribunal has, however, recorded that they were not able to envisage any favourable purpose as to why Achievers International which also has IEC Certificate, had resorted to import the DVD-Rs/CD- Rs in the name of the dummy entities. The reason was known to Achievers International and no one else. They should have given an explanation and the onus was on them. Reasons for setting up and making imports through a dummy concern can be many, but all of them will be negative or involve illegality in some form or the other. It is apparent from the impugned order and the reasoning given by the tribunal that this aspect has been noticed but its relevancy and importance has been ignored. The reasoning given by the tribunal in fact records and states that this aspect was unclear and had not been satisfacto ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lacs imposed, therefore, would be less than 20% of the market value of the consignment. Section 125 of the Act stipulates that the redemption fine cannot exceed the market value. It is therefore a mandatory requirement that before permitting the redemption on payment of fine, the market value of the goods should be ascertained and assessed. (see Mohan Meakins Ltd. v. CCE, (2000) 1 SCC 462). Proviso to Section 125 stipulates that the fine shall not exceed the price of the goods confiscated less import duty chargeable thereon. The said aspect has not been examined and considered by the tribunal in the impugned order. The market value and the conduct, are the two relevant and important considerations while exercising the discretion under Section 125 of the Act. 24. We are aware that this court is not a court of fact which can examine or re-consider the factual findings recorded by the tribunal. We have, therefore, carefully elucidated and examined the order of the tribunal and reasoning given therein to examine and consider whether the order imposing redemption fine of Rs.40 lacs can be treated as perverse i.e. an order passed excluding and ignoring admissible and relevant material ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cedural requirements before a decision is taken whether to act and how to act. Moreover, there may be a discretion whether to exercise a power, but no discretion as to the mode of its exercise; or a duty to act when certain conditions are present, but a discretion how to act. Discretion may thus be coupled with duties. 9. Discretion, in general, is the discernment of what is right and proper. It denotes knowledge and prudence, that discernment which enables a person to judge critically of what is correct and proper united with caution; nice discernment, and judgment directed by circumspection; deliberate judgment; soundness of judgment; a science or understanding to discern between falsity and the truth, between wrong and right, between shadow and substance, between equity and colourable glosses and pretences, and not to do according to the will and private affections of persons. When it is said that something is to be done within the discretion of the authorities, that something is to be done according to the rules of reason and justice, not according to private opinion; according to law and not humour. It is to be not arbitrary, vague and fanciful, but legal and regular. And it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his case. Halsbury (Vol. 1, 4th Edn. para 33 at p. 35) puts the matter succinctly thus: A public body endowed with a statutory discretion may legitimately adopt general rules or principles of policy to guide itself as to the manner of exercising its own discretion in individual cases, provided that such rules or principles are legally relevant to the exercise of its powers, consistent with the purpose of the enabling legislation and not arbitrary or capricious. Nevertheless, it must not disable itself from exercising a genuine discretion in a particular case directly involving individual interests, hence it must be prepared to consider making an exception to the general rule if the circumstances of the case warrant special treatment. These propositions, evolved mainly in the context of licensing and other regulatory powers, have been applied to other situations, for example, the award of discretionary investment grants and the allocation of pupils to different classes of schools. The amplitude of a discretionary power may, however, be so wide that the competent authority may be impliedly entitled to adopt a fixed rule never to exercise its discretion in favour of a particular class ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ousand 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 (i) and (iii), to a penalty not exceeding the duty sought to be evaded on such goods or the difference between the declared value and the value thereof or [five] thousand rupees, whichever is the highest. 29. A reading of the two provisions show that they refer to different violations. In a given case, it is possible that only one provision may be attracted and in another case both provisions may be violated. When both provisions are violated, penalty under the two Sections can be imposed. There is no provision/section in the Act, which states that should penalty under one Section be imposed, penalty under the second provision should be waived. Of course, if the violations have taken place in the course of the same transaction or are a part of the same transaction and are interconnected, the quantum of penalty imposed can be appropriately modulated an ..... X X X X Extracts X X X X X X X X Extracts X X X X
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