TMI Blog2016 (9) TMI 879X X X X Extracts X X X X X X X X Extracts X X X X ..... etion has to be in conformity with the purpose for which, it is conferred, object sought to be achieved and reasons to be recorded. When discretion is exercised under Section 125 and if any challenge is made under Article 226 of the Constitution of India, the twin test, to be satisfied is "relevance and reason". In the light of the judgments of the Hon'ble Apex Court and applying the same to the facts of this case and 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, it is held that the discretion exercised by the competent authority, to deny release, is in accordance with law. Decided in favor of revenue. - C.M.A. No. 1631 of 2008 - - - Dated:- 23-8-2016 - S. Manikumar And D. Krishna Kumar, JJ. For the Appellant : Mr.V.Sundareswaran For the Respondent : Mr.M.Abdul Nazeer JUDGMENT ( Judgement of this Court was made by S. Manikumar, J. ) Civil Miscellaneous Appeal is directed against the Final Order No.455 of 2007, dated 20.04.2007, passed by Customs, Excise and Service Tax Appellate Tribunal (CESTAT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ds totally valued at ₹ 41,117/- (CIF) seized along with the abovesaid 111 gold bits, should not be confiscated under Section 111(d)(i)(l) and (m) of the Customs Act, 1962, and (iv) Why personal penalty under Section 112(a) of the Custom Act, 1962, should not be imposed on Shri.Paraman Sinnasamy. 5. Though the 1st respondent had acknowledged the show cause notice on 03.01.2000, no reply was received till 02.03.2000, and hence, the adjudicating authority granted, personal hearing on 15.03.2000. After hearing the 1st respondent and considering the material on record, Clause 3 of the Foreign Trade (Exemption from application of rules in certain cases) Order, 1993, issued under Foreign Trade (Development and Regulation) Act, 1992, r/w. Customs Notification No.171/94, dated 30.09.1994 (as amended), provisions of the Customs Act, 1962, the Commissioner of Customs, Madras-1, the adjudicating authority, has passed an Order-in-Original No.31 of 2000, dated 31.03.2000, by which, he had ordered absolute confiscation of 111 gold bits weighing 2548.3 grams, valued at ₹ 10,34,355/- (MV), under Section 111(d)(i)(l) and (m) of the Customs Act, 1962, r/w. Section 3(3) of the For ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r the Tribunal finding that under Section 125 of the Customs Act, 1962, the appellant ought to have been given the option of redemption against payment of fine, when Section 125(1) of the Act, also incorporated a word, Maypertaining prohibited goods, an option of confiscation power to be exercised by the officer concern, is correct in law 12. Supporting the substantial questions of law, Mr.V.Sundareswaran, learned counsel appearing for the appellant, reiterated the averments, extracted supra, and placing reliance on the decisions in Gyanchand Jain v. Assistant Collector of Central Excise, Madras reported in 1986 (25) ELT 163 (Mad.), Garg Woollen Mills (P) Ltd., v. Addl. Collector of Customs, New Delhi reported in 1998 (104) ELT 306 (SC) and T.Elavarasan v. Commissioner of Customs (Airport), Chennai reported in 2011 (266) ELT 167 (Mad.), submitted that, on the facts and circumstances of the instant case, when gold is attempted to be smuggled, and when violations of Notification No.171/94, dated 30.09.1994 (as amended), was apparent on the face of record, gold seized is liable to be confiscated. He further submitted that when the adjudicating authority, has considered the provis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lease the same, in favour of the respondent, is wholly erroneous and contrary to the scheme of the Act. 16. Learned counsel for the appellant further submitted that when it is the categorical case of the department that the intention of the 1st respondent was to smuggle gold bits, prohibited under law, besides commission of offences, directions of CESTAT, Madras, to exercise discretion under Section 125 of the Customs Act, 1962, in favour of the 1st respondent, amounts to the Tribunal, exercising the jurisdiction, which the Customs Act, 1962, has conferred on the adjudicating authority. Inasmuch as there is a categorical allegation of attempt to smuggle gold and to that effect, there are sufficient material on record, allowing the importer to redeem gold and other goods, on payment of fine, would amount to granting bonanza or profits to an illegal attempt of import, which the Tribunal has failed to consider. 17. To sustain the impugned order of CESTAT, dated 20.04.2007, Mr.M.Abdul Nazeer, learned counsel appearing for the respondent submitted that the voluntary statement, dated 18.09.1999, of the 1st respondent, narrated in the sequence of events, which led to seizure of 111 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... other law for the time being in force. Negatively, Section 2(33) of the Act, also states that goods are not prohibited goods, when import or export of which, does 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. The expression subject to any prohibition under this Act or any other law for the time being in force and compliance of the conditions, subject to which, the goods are permitted to be imported or exported, are the determining factors, to understand and to give effect to the meaning of the words, prohibited goods. 40. Literal interpretation of the words, prohibited goods and the contention that gold is not notified and therefore, to be released, would cut down the wide ambit of the inbuilt prohibitions and restrictions in the Customs Act, 1962 and any other law for the time being in force. (i) In Poppatlal Shah v. State of Madras reported in AIR 1953 SC 274, the Supreme Court held that, It is settled rule of construction that to ascertain the legislative intent all the constituent parts of a statute are to be taken together and each word, phrase and senten ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the light which each contributes that the meaning must be determined. Among them is the rule that that sense of the words is to be adopted which best harmonises with the context and promotes in the fullest manner the policy and object of the legislature. The paramount object, in construing penal as well us other statutes, is to ascertain the legislative intent and the rule of strict construction is not violated by permitting the words to have their full meaning, or the more extensive of two meanings, when best effectuating the intention. They are indeed frequently taken in the widest sense, sometimes even in a sense more wide than etymologically belongs or is popularly attached to them, in order to carry out effectually the legislative intent, or, to use Sir Edward Cole's words, to suppress the mischief and advance the remedy. (vii) In Commissioner of Sales Tax v. M/s.Mangal Sen Shyamlal reported in 1975 (4) SCC 35 = AIR 1975 SC 1106, the Apex Court held that, A statute is supposed to be an authentic repository of the legislative will and the function of a court is to interpret it according to the intent of them that made it . From that function the court is. not to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... isolation. Statutes have to be construed so that every word has a place and everything is in its place. (xi) In Balram Kumawat v. Union of India reported in 2003 (7) SCC 628, the Supreme Court held that, Contextual reading is a well-known proposition of interpretation of statute. The classes of a statute should be construed with reference to the context vis-a-vis the other provisions so as to make a consistent enactment of the whole statute relating to the subject-matter. The rule of ex visceribus actus should be resorted to in a situation of this nature. (xii) In State of Gujarat v. Salimbhai Abdulgaffar Shaikh reported in 2003 (8) SCC 50, the Supreme Court held that, Broadly speaking, therefore, an appeal is a proceeding taken to rectify an erroneous decision of a Court by submitting the question to a higher Court....... ........It is well settled principle that the intention of the legislature must be found by reading the Statute as a whole. Every clause of Statute should be construed with reference to the context and other clauses of the Act, so as, as far as possible, to make a consistent enactment of the whole Statute. It is also the duty of the Cou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... act or omission which will render such goods liable to confiscation under section 111 or section 113. Chapter IV of the Act, deals with prohibition on importation and exportation of goods. Section 11 deals the power to prohibit importation or exportation of goods and the said Section is extracted hereunder: (1) 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. (2) The purposes referred to in sub-section (1) are the following:- (a) the maintenance of the security of India; (b) the maintenance of public order and standards of decency or morality; (c) prevention of smuggling; (d) prevention of shortage of goods of any description; (e) conservation of foreign exchange and the safeguarding of balance of payments; (f) prevention of injury to the economy of the country by the uncontrolled import or export of gold or silver; ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... officer may serve on the owner of the goods an order that he shall not remove, part with, or otherwise deal with the goods except with the previous permission of such officer. (1A) The Central Government may, having regard to the perishable or hazardous nature of any goods, depreciation in the value of the goods with the passage of time, constraints of storage space for the goods or any other relevant considerations, by notification in the Official Gazette, specify the goods or class of goods which shall, as soon as may be after its seizure under sub-section (1), be disposed of by the proper officer in such manner as the Central Government may, from time to time, determine after following the procedure hereinafter specified. (1B) Where any goods, being goods specified under sub-section (1A), have been seized by a proper officer under sub-section (1), he shall prepare an inventory of such goods containing such details relating to their description, quality, quantity, mark, numbers, country of origin and other particulars as the proper officer may consider relevant to the identity of the goods in any proceedings under this Act and shall make an application to a Magistrate f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e; (e) any dutiable or prohibited goods found concealed in any manner in any conveyance; (f) any dutiable or prohibited goods required to be mentioned under the regulations in an import manifest or import report which are not so mentioned; (g) any dutiable or prohibited goods which are unloaded from a conveyance in contravention of 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ter; (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 (ii) 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. 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 omissio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e confiscated under this Act, such goods shall thereupon vest in the Central Government. (2) The officer adjudging confiscation shall take and hold possession of the confiscated goods. ............ 53. ..........One of the important aspects to be taken note by the authorities while exercising their powers under Section 125 of the Act is whether, import of goods is prohibited, within the meaning of Section 2(33) of the Customs Act, 1962 and where, in the Customs Act or any other law for the time being in force, such prohibition is mentioned? what are all the things to be prohibited and whether the goods imported or exported are in contravention of the subject matters, enumerated in the Customs Act, 1962 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. ............. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... relied on by the respondents, for the purpose that the goods, clandestinely imported into the country, for evading the assessment of duty, are liable for confiscation. 57. In Union of India v. Lexus Exports Pvt. Ltd., reported in 1994 (71) ELT 348 (SC), a learned single Judge directed release of the seized goods. On appeal by the revenue, a Hon'ble Division Bench directed export of the goods, during the pendency of adjudicatary proceedings. While testing the correctness of the same, the Hon'ble Supreme Court, at Paragraphs 2 and 3, held as follows: 2. We fail to appreciate how this intervention could have been made 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 loo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 for import or export of goods are not complied with, it would be considered to be prohibited goods. This would also be clear from Section 11 which empowers the Central Government to prohibit either 'absolutely' or 'subject to such conditions' to be fulfil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d 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 behalf. The effect of interpretation of the words prohibited goods was considered inOm Prakash Bhatia Vs. Commissioner of Customs (2003 (6) SCC 161) and in paragraph No.10 of the said judgment the Supreme Court held as follows: 10. From the aforesaid definition, i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 stay abroad; the quantity of gold imported shall not exceed 10 Kg, per passenger import duty on gold shall be paid in convertible foreign currency; there will be no restriction on sale of such imported gold. A person shall be deemed to be of Indian ori ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 is not an enumerated prohibited item and thus, can be imported, but when such import is subject to restrictions, including the necessity to declare the goods on arrival at the Customs Station and make payment of duty at the rate prescribed, release of the smuggled ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d fulfilled the conditions of import or export, any restriction on import or export, which is also to be treated as prohibition. 68. In Fast Track Traders v. Commissioner of Customs (Seaport Imports), Tuticorin reported in 2012 (286) ELT 681 (Mad.), there was mis-declaration of goods. Finding that there was a false declaration, a Hon'ble Division Bench of this Court held that when the condition is violated, the authorities can definitely have the recourse under law. 69. In Ashish Kumar Chaurasia v. Commissioner, CESTAT reported in 2015 (325) ELT 250 (All.), 79 silver ingots of foreign orgin, were recovered from the premises of the appellant therein. On the facts and circumstances of the case, the Allahabad High Court held that the appellant therein has failed to prove that the seized silver ingots were not smuggled goods and in such circumstances, upheld the levy of penalty, and ordered for confiscation. In the instant case, adjudicatary proceedings are pending. 70. In Sheik Mohammed Rafique Ahmed v. Joint/Additional C.C., Airport, Chennai reported in 2016 (331) ELT 337 (Mad.), a learned single Judge considered a case, where a passenger was carrying gold chains ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as to how, the words, smuggled goodsshould be read within the definition of `imported goods' for the purpose of the Customs Act, 1962. At Paragraphs 6 to 8, 10, 13 and 14, the Hon'ble Supreme Court held as follows: 6) We may now briefly notice the scheme of the Act. The expression `dutiable goods', `duty', `import', `imported goods', `importer' and `smuggling' are defined in the following manner :- `Dutiable Goods' means any goods which are chargeable to duty and on which duty has not been paid. `Duty' means a duty of Customs and leviable under this Act. `Import', with its grammatical variations and cognate expressions, bring into India from a place outside India. `Imported goods' means any goods brought into India from a place outside India but does not include goods which have been cleared for home consumption. `Importer' means in relation to any goods at any time between their importation and the time when they are cleared for home consumption, includes any owner or any person holding himself out to be the importer. `Smuggling', in relation to any goods, means any act or omission which will ren ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es. Section 111(d) of the Act provides that any goods which are imported or attempted to be imported or are brought within Indian Custom 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, shall be liable for confiscation. Section 112 of the Act provides for penalties for improper importation of goods. ........... 10) It is settled law that the notification has to be read as a whole. If any of the conditions laid down in the notification is not fulfilled, the party is not entitled to the benefit of that notification. The rule regarding exemptions is that exemptions should generally be strictly interpreted but beneficial exemptions having their purpose as encouragement or promotion of certain activities should be liberally interpreted. This composite rule is not stated in any particular judgment in so many words. In fact, majority of judgements emphasize that exemptions are to be strictly interpreted while some of them insist that exemptions in fiscal Statutes are to be liberally interpreted giving an apparent impression that they are contradictory to each other. But this is only a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ional release, the following factors have been considered, viz., (i) whether the goods are prohibited goods; (ii) whether the goods require specific licence; and (iii) whether the goods are contraband, held that, if these three factors are not available, in a case, which comes up for consideration, then, this court has to safeguard the interest of the revenue and the interest of the importer can be considered by imposing conditions. On the facts and circumstances of the instant case before us to consider the prayer for provisional release of gold, Clauses (1) and (3) of the Conditions, stated supra, require consideration. 73. In City Office Equipments v. Commissioner of Customs (Seaport-Import), Chennai-I reported in 2015 (316) ELT 199 (Mad.), a Writ of Mandamus was sought for, directing the respondents therein to assess and permit the clearance of 129 packages of the so called second hand Digital Multifunction Print and Copying Machines, forming the subject matter of the Bill of Entry dated 26.5.2014, upon payment of applicable duties of customs. Insofar as the second hand goods are concerned, Paragraph 2.17 of the Foreign Trade Policy, prior to its amendment, stipulated that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h makes certain goods liable for confiscation, states that any prohibited goods brought into any bay or any goods which are imported contrary to any prohibition imposed or under the Customs Act, 1962 or any other law for the time being in force, are liable for confiscation. Under Section 112, the person guilty of improper importation of goods is also made liable for a penalty. But before confiscation, an adjudication is to take place in terms of the procedure prescribed under Section 122A. 74. No sooner goods are brought from outside, into the territorial waters of the country, they become imported goods. At this juncture, it has to be seen, as to whether, such goods are legally or illegally imported, whether they fall within Section 11 of the Customs Act, 1962, which defines, an illegal import as, import of any goods in contravention of the provisions of the Customs Act, 1962 or any other law for the time being in force. Goods imported, contrary to the enumerated subject matters in chapters IV and IV-A of the Customs Act, 1962, which deal with prohibition on importation and exportation goods and detection of illegally imported goods prevention and disposal thereof, morefully ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under the Customs Act, 1962 or any other law for the time being in force, in Section 2(33) of the Customs Act, has to be read and understood, in the light of what is stated in the entirety of the Act and other laws. Production of legal and valid documents for import, along with payment of duty, determined on the goods imported, are certainly conditions to be satisfied by an importer. If the conditions for import are not complied with, then such goods, cannot be permitted to be imported and thus, to be treated as prohibited from being imported. 79. In Om Prakash Bhatia v. Commissioner of Customs, Delhi reported in 2003 (155) ELT 423 (SC), the Hon'ble Apex Court held that if there is intentional over-invoicing of the goods imported, then such goods imported, fall under the category, prohibited goods, as per Section 2(33) of the Customs Act, 1962. Smuggling under the Customs Act, 1962, in relation to any goods, means any act or omission which will render such goods liable to confiscation, under section 111 or section 113 of the Act and therefore, those goods, would also fall under the definition of prohibited goods, in terms of Section 2(33) of the Customs Act, 1962. .. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 Act, 1962, would be defeated. 88. Provisions in the Customs Act, 1962, dealing with prohibition/restriction or any other law for the time in force, have to be read into Section 2(33) of the Act. Section 11A of the Act, as to what is illegal import, cannot be thrown to winds, while interpreting, what is prohibited goods, in terms of Section 2(33) of the Customs Act, 1962. To add, while interpreting Section 2(33) of the Customs Act, 1962, as to what is prohibition, imposed in other laws, for the time being in force, one cannot ignore, the Conservation of Foreign Exchange and Prevention of Smuggling Activities Act, 1974, rules framed by way of delegated legislation, like the Baggage Rules ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oshi v. Collector of Customs and others reported in AIR 1987 SC 1982, relied on the learned counsel for the 1st respondent, the Hon'ble Apex Court considered a case, where consignment of goods (zip fasteners), were seized. On adjudication, the Additional Collector of Customs ordered for confiscation and imposed a penalty on the appellants therein. The said order was confirmed by the Tribunal. Before the Hon'ble Apex Court, three questions were raised by the appellant, as to the (1) Validity of the order confiscating the goods. (2) Validity of the order imposing penalty. (3) Failure to give option to the appellants for redeeming the goods on payment of such fine as may be determined by the Collector of Customs in lieu of confiscation. Placing reliance on Section 125(1) of the Customs Act, 1962, a contention has been made in the reported case that when the Additional Collector of Customs has the discretion to give option for redemption, he should have addressed himself to the said issue and passed orders. 21. Reading of the abovesaid judgment shows that at that point of time, zip fasteners were imported freely. Having regard to the said fact, prevalent at ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that there was a violation of Section 111(d)(i)(l) and (m) of the Customs Act, 1962, r/w. Section 3(3) of the Foreign Trade (Development and Regulations) Act, 1992 and when reference has been made to the Custom Notification No.117/92-Cus., dated 01.03.1992, as amended from time to time and when there was a categorical finding of the adjudicating authority that the respondent had deliberately attempted to smuggle 2548.3 grams of gold, by concealing and without declaration of Customs, for monetary consideration and that gold bits seized were liable for confiscation, under Section 111(d)(i)(l) and (m) of the Customs Act, 1962, r/w. Section 3(3) of the Foreign Trade (Development Regulation) Act, 1992 and when the 1st respondent was also detained under the COFEPOSA Act, for six months and when the Commissioner of Customs (AIRPORT), had imposed a penalty of ₹ 50,000/- (Rupees fifty thousand only), with Section 112(a) of the Customs Act, 1962, it is unfortunate that without due consideration to the above facts and statutory provisions and the categorical finding of the adjudicating authority, the Tribunal has observed that there is no need for absolute confiscation of the goods. A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ctness of the same, a Hon'ble Division Bench of the Calcutta High Court, at Paragraph 23, held as follows: 23. It is only on the suggestion of the learned Counsel appearing on behalf of the appellant that the learned Trial Judge passed the said order although no affidavit-in-opposition had been filed by them. In fact the writ application was disposed of with the consent of the parties. The learned Trial Judge was given the impression by the counsel for the appellant that the gold is not a prohibited item. Had the intention of the appellant been that no discretion should be exercised in favour of the writ petitioner/respondent in terms of Section 125 of the Customs Act, the appellant could not state the quantum of fine, as also the amount of Customs duty to be levied upon the writ petitioner by the authority concerned. 26. Uma Shankar Verma's case (cited supra), cannot be made applicable to the case on hand, to the assessee, for the reason that, release of goods, in the said case, has been made, on consent. One of the contentions raised before us, in the instant case, is that gold is not a prohibited item and therefore, there can be an order to release the same, o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ITC (HS) Classifications of Exports and Import Items published and notified by the Director General of Foreign Trade and as amended from time to time. Item 2 provides for ITC (HS) Classification of Import and Export which contained as under - 710812.00 Other Unwrought forms Restricted Not permitted to be imported except against a licence or in accordance with a Public Notice issued in this behalf. Import permitted against Special Import Licence (SIL) 7. Section 11 of the Customs Act, 1962 empowers the Central Government to prohibit importation and exportation of goods. 8. Section 111 which deals with the power of the Commissioner to confiscate the goods inter alia provided for confiscation of improperly imported goods. Section 111(d) of the Customs Act, 1962 reads thus - 111. The following goods brought from a place outside India shall be liable to confiscation - (d) any goods which are imported or attempted to be imported or are brought within the Indian Customs water for the purpose of being imported, contrary to any prohibition imposed by or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (HS) Classifications of Export and Import Items 1997-2002 :- Gold: 710812 00 Other unwrought forms. 12. The same was further amended by a Public Notice No. 54 dated 4th November, 1997 which is to the following effect :- Attention is invited to Public Notice No. 51/(PN)/97-02 dated 27th October, 1997 on the above subject. In partial modification of the above Public Notice, it is hereby notified that the import of gold and silver shall be permitted to the nominated and authorised agencies by the Reserve Bank of India (RBI)/Ministry of Finance. It is further notified that payment of Customs duty for import of gold and silver by such agencies without surrender of Special Import Licence (SIL) and by other importers against surrender of SIL shall also be made in Indian Rupees on payment of such Customs duties as may be notified by the Deptt. of Revenue from time to time. This issues in public interest. 13. It is, therefore, evident that the gold could be imported only against a Special Import Licence or by the agencies authorised by the Reserve Bank of India. 14. The entire case of the writ petitioner/respondent is that they have purchased gold from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n has been created for the purpose of computation of the assessable income of the assessee under the head 'Business Income'. It was rightly pointed out by the learned Solicitor General that legal fictions are created only for a definite purpose and they should be limited to the purpose for which they are created and should not be extended beyond their legitimate field. But, as indicated earlier, the fiction under Section 41(2) is created for the purpose of computation of assessable income of the assessee under the head 'Business Income' and under Section 80-E(1), in order to compute and allow the permissible special deduction, computation of total income in accordance with the other provisions of the Act is required to be done and after allowing such deduction the net assessable income chargeable to tax is to be determined; in other words, the legal fiction under Section 41(2) and the grant of special deduction in case of specified industries are so closely connected with each other that taking into account the balancing charge (i.e. deemed profits) before computing the 8% deduction under Section 80-E(1) would amount to extending the legal fiction within the limits ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case is inapposite to the case on hand. That was a case, where the discretion was exercised, having regard to the policy prevailed, at that point of time. Whereas, in the case on hand, the appellant has contended that there was a deliberate attempt to smuggle gold. Merely because, discretion has been exercised by the revisional authority, in the reported case, it cannot be contended that in every case, where there is seizure of gold imported, in contravention of the provisions of the Customs Act, 1962, or any other law for the time being in force, redemption should be allowed, as a matter of right. 29. In Commissioner of Customs (AP), Mumbai v. Alfred Menezes reported in 2009 (242) ELT 334 (Bom.), the only question raised before the Bombay High Court, was whether, exercise of jurisdiction by the adjudicating authority, who had given option to the 1st respondent therein, to redeem prohibited goods, even though they were liable for confiscation, was right or not? The Tribunal upheld the order of the adjudicating authority. By observing that there is discretion on the authority and as the Tribunal had upheld the same and taking note of the word, May under Section 125(1) of the Cust ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cited supra), it could be deduced that there was no argument advanced by the revenue, as to what are prohibited goods, in terms of Section 2(33) of the Customs Act, 1962 and therefore, with due respect, we are of the view that the Hon'ble Division Bench only considered the Export-Import Policy 2002-07, during the relevant period that import of gold was allowed free and answered the issue. 33. In T.Elavarasan v. Commissioner of Customs (Airport), Chennai reported in 2011 (266) ELT 167 (Mad.), a learned single Judge of this Court considered a case, where gold chain was brought from Singapore, without due declaration. Contending inter alia that the gold was not a prohibited item, provisional release was sought for. Writ Court directed release of gold, on payment of custom duty and redemption fine, subject to adjudication proceedings. 34. When T.Elavarasan's case, was tested in W.A.No.582 of 2011, a Hon'ble Division Bench of this Court, vide order, dated 01.04.2011, while modifying the order of the learned single Judge, directed the respondent therein to deposit 50% duty of the value of the goods, instead of depositing the entire customs duty and redemption fine and o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the payment of duty. But ultimately, final order was passed, including a direction to pay the customs duty. The department attempted to justify the order under Section 125 of the Customs Act, 1962, On the said facts, the Hon'ble Supreme Court held that direction for payment of customs duty, could not be issued under Section 124 of the Customs Act, 1962 and more so, as it was not proposed in the show cause notice. Fortis Hospital Ltd.,'s case (cited supra), would not lend any support to the case on hand. 37. In Rajaram Bohra v. Union of India reported in 2015 (322) ELT 337 (Cal.), the question considered by the Hon'ble Division Bench of Calcutta High Court, was whether, the adjudicating authority has exercised his option under Section 125 of the Customs Act, 1962, according to the rules of reasons and Justice. After considering the decision of the Hon'ble Supreme Court in UPSRTC v. Md. Ismail reported in 1991 (3) SCC 239 and on the facts and circumstances of the reported case, the Hon'ble Division Bench of Calcutta High Court, held that whenever discretion is vested, the administrative authority shall do well to atleast briefly record the reasons, why they ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ggage, he produce the customs declaration form indicating the contents as Martin Shirts, calculators anti miscellaneous goods whereas thorough search of his baggage in the presence of witnesses has resulted in the recovery of 111 gold bits totally weighing 2548.3 Grams valued at ₹ 10,34,355/- (MV) and other assorted goods valued at ₹ 41.117A (CIF). 11. In his voluntary statement dated 18-09-99 Shri.P.Sinnasamy narrated the sequence of events that subsequently led to the seizure of 111 gold bits and other assorted goods and he admitted having committed the offence knowingly only for the monetary consideration and this statement was given in his own handwriting without any force, coercion or threat. The retraction dated 15.03.2000 that his earlier statement was obtained by force, threat and coercion is an after thought. His contention that his baggage got mixed with the baggage of another Babu Chinnasamy also appears to he unacceptable as he has not stated so in his voluntary statement dated 18.09.1999 and also it is evident from the cross-examination of mahazar witness and the Officer who effected the seizure that there was only one passenger viz., Sinnasamy at the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... payment of Customs duty is evident. In view of the above, the assorted goods brought by the passenger in excess of the declared goods, valued at ₹ 41,117/- (CIF) are also liable for confiscation under Section 111(d) (l) (m) of the Customs Act, 1962 read with Section 3 (3) of the Foreign Trade (Development Regulation) Act 1992. Besides Shri P.Sinnasamy is also liable for penal action under Section 112(a) of the Customs Act 1962. ORDER Taking into account the facts of the case and the submissions made, I order absolute confiscation of the 111 gold bits weighing 2548.3 grams value ₹ 10,34,355/- (MV) under Section 111 (d), (i), (1) and (m) of the Customs Act, 1962, read with Section 3(3) of the Foreign Trade (Development Regulation) Act 1992. I also order confiscation of the other assorted goods valued at ₹ 41,117/- (CIF) under Section 111 (d), (1) (m) of the Customs Act 1962 read with the Foreign Trade (Development Regulation) Act 1992. However, under Section 125 of the Customs Act, 1962, I allow the passenger to redeem the same on payment of a redemption fine of ₹ 20,500/- (Rupees Twenty Thousand Five Hundred Only ) within 30 days of r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ds on payment of fine and duty. Exercise of discretion has been interfered with by the Tribunal, with a specific direction to give option for redemption, in which event, there is no choice left to the adjudicating authority to act. He has no freedom or liberty to act, according to own will and that he has been compelled to exercise discretion and his power, without control, other than his own judgment and in this context, let us consider, what the Hon'ble Apex Court has said on exercise of discretion, 42. Explaining as to how, discretionary power has to be exercised, the Hon'ble Supreme Court in Sant Raj and another v. O.P.Singla and others reported in (1985) 2 SCC 349, held that whenever, it is said that something has to be done, within the discretion of the authority, then that something has to be done, according to the rules of reason and justice and 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 to the discharge of his office ought to find himself. Discretion means sound discretion guided by law. It must be governed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the action is bereft of rationality, lacks objective and purposive approach. Public interest or general good or social betterment have no doubt priority over private or individual interest but it must not be a pretext to justify the arbitrary or illegal exercise of power. It must withstand scrutiny of the legislative standard provided by the statute itself. The authority exercising discretion must not appear to be impervious to legislative directions. The action or decision must not only be reached reasonably and intelligibly but it must be related to the purpose for which power is exercised. No one howsoever high can arrogate to himself or assume without any authorisation express or implied in law a discretion to ignore the rules and deviate from rationality by adopting a strained or distorted interpretation as it renders the action ultra virus and bad in law. 45. In Shiv Sagar Tiwari v. Union of India and others reported in 1997 1 SCC 444 the Hon'ble Supreme Court held that the discretionary power has to be exercised to advance the performance, to subserve for which the power exists. 46. In A.P. Aggarwal v. Govt. of NCT of Delhi reported in (2000) 1 SCC 600, the Hon&# ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he jurisdiction of the courts so that statutory provisions which purport to exclude judicial review are construed restrictively. There are, however, certain areas of governmental activity, national security being the paradigm, which the courts regard themselves as incompetent to investigate, beyond an initial decision as to whether the Governments claim is bona fide. In this kind of non-justiciable area judicial review is not entirely excluded, but very limited. It has also been said that powers conferred by the Royal Prerogative are inherently unreviewable but since the speeches of the House of Lords in Council of Civil Service Unions v. Minister for the Civil Service this is doubtful. Lords Diplock, Scarman and Roskill appeared to agree that there is no general distinction between powers, based upon whether their source is statutory or prerogative but that judicial review can be limited by the subject-matter of a particular power, in that case national security. Many prerogative powers are in fact concerned with sensitive, non-justiciable areas, for example, foreign affairs, but some are reviewable in principle, including the prerogatives relating to the civil service where natio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or taken into account irrelevant factors. The decision of the administrator must have been within the four corners of the law, and not one which no sensible person could have reasonably arrived at, having regard to the above principles, and must have been a bona fide one. The decision could be one of many choices open to the authority but it was for that authority to decide upon the choice and not for the court to substitute its view. 48. In National Insurance Co. Ltd., v. Keshav Bahadur reported in 2004 (2) SCC 37 = AIR 2004 SC 1581, the Hon'ble Supreme Court held that, The word discretion standing single and unsupported by circumstances signifies exercise of judgment, skill or wisdom as distinguished from folly, unthinking or haste; evidently therefore a discretion cannot be arbitrary but must be a result of judicial thinking. The word in itself implies vigilant circumstances and care; therefore, where the Legislature concedes discretion it also imposes a heavy responsibility. 49. In Union of India v. Kuldeep Singh reported in (2004) 2 SCC 590, the Supreme Court again explained the meaning and significance of the word discretionas follows: The word discr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... imposes a heavy responsibility. The discretion of a judge is the law of tyrants; it is always unknown. It is different in different men. It is casual, and depends upon constitution, temper and passion. In the best it is often times caprice; in the worst it is every vice, folly, and passion to which human nature is liable, said Lord Camden, L.C.J., in Hindson and Kersey reported in (1680) 8 HOW St Tr 57. 51. In Aero Traders Pvt. Ltd., v. Ravinder Kumar Suri reported in AIR 2005 SC 15, the Supreme Court, while explaining the meaning of the word discretion, held as follows: the word 'discretion' connotes necessarily an act of a judicial character, as used with reference to discretion exercised judicially, it implies the absence of a hard and fast rule, and it require an actual exercise of judgment and a consideration of the facts and circumstances which are necessary to make a sound, fair and just determination and a knowledge of the facts upon which discretion may properly operate. When it is said that something it to be done according to the rules of reason and justice and not according to private opinion; according to law and not honour. It only gives certain ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ary power. The two classes are not, however, mutually exclusive. Thus, discretion may be improperly fettered because irrelevant considerations have been taken into account, and where an authority hands over its discretion to another body it acts ultra vires. 53. In Reliance Airport Developers Pvt. Ltd., v. Airports Authority of India reported in 2006 (10) JT 423 (SC), the Hon'ble Apex Court held that the discretion must be governed by rule and not by humour or fanciful, but by legal and regular practice and procedure. The Hon'ble Apex Court further added that, Judicial Discretion signifies unrestrained exercise of choice or will; freedom to act according to one's own judgment; unrestrained exercise of will; the liberty or power of acting without control other than one's own judgment. 54. The power conferred on the authority without any guidelines may likely to be abused or arbitrarily exercised and in such circumstances, the guidance and the control of exercise of such power has to be gathered from the object of conferment of such power. Non-consideration or non-application of mind to the relevant factors, renders exercise of discretion manifestly erroneous ..... X X X X Extracts X X X X X X X X Extracts X X X X
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