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M/s. Prakash Gold Palace P Limited Versus Commissioner of Customs (Airport & Air Cargo) , Chennai

2015 (12) TMI 1578 - MADRAS HIGH COURT

SEZ unit - Release of confiscated 12 kgs of gold bars - confiscation of gold bars - imposition of penalties - SEZ - mandatory intimation under the Trade Facilitation Notice No.02/07 dated 3.3.2007 to be sent to the Department - Whether the failure on the part of the passenger to adhere to the rules provided in Rule 29(5) of the SEZ Rules, 2006 and in the absence of valid permit or authorization, the detention of gold bars justified? - opportunity of being heard - applicability of section 51 - He .....

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is a SEZ unit, section 51 applicable. - Non consideration of CCTV footage by the Appellate Authority - Held that: - the CCTV footage was concealed by the Appellate Authority for the reasons best known to them. Though the burden lies upon the passenger to establish his defence, the Appellate Authority ought to have considered the said electronic evidence also, before penalising the Petitioner. Production of scientific and electronic evidence in court as contemplated under Section 65B of the .....

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the Respondents are inconsistent with each other. - Petition disposed off - matter remanded - opportunity of being heard to be provided to the petitioner. - WP.Nos.11898 and 26133 of 2015 with MP.No.1 and 1 of 2015 - Dated:- 18-12-2015 - R. MAHADEVAN J. Mr. B.Kumar, SC for Mr.T.Sudhan Raj for the Petitioner. Mr. Haja Mohideen Gisthi for the Respondent. ORDER In these Writ Petitions, the Petitioner seeks for a direction to the Customs Authorities to implement the order of the lower adjudicati .....

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eir employees (authorised officers), namely, Deepak Gheesulal Siroya and Abishek Betala went to Dubai on 19.08.2014, carrying consignment shipping bill/Invoice No.0014643, dated 18.08.2014 and delivered gold jewellery made by the Petitioner to the order of M/s.Kundan Jewellery LLC., Dubai and they were instructed to collect Gold Bullion Bars, weighing 12 kgs from the aforesaid entity and bring it back to India as baggage as per SEZ Rules. As there was no sufficient stock, they had to wait till a .....

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r the scheme for the Jewellery to be manufactured at MEPZ and exported. However, the Customs Authorities have detained the Gold Bullion under DR No.5533/2014-AIU-AIR for violation of Rule 29(5) of SEZ Rules, 2006, dated 22.08.2014. The said DR was issued in the name of the authorised passenger/employee of the petitioner company, as mandated under Clause 3 of Facilitation Notice No.02/2007 dated 03.03.2007 (Air Customs). Hence, the Petitioner filed WP.No.33907/2014 for release of the said consign .....

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dicating authority), passed the order dated 12.03.2015, dropping all the charges against Petitioner. As against the same, an appeal was filed by the Respondent Department in No.C4-I/172/O/ 2015-Air before the Commissioner of Customs (Appeals-I), Chennai (Appellate Authority), who on considering the objections of the Petitioner, by the impugned order dated 12.08.2015, ordered for confiscation of the goods and imposed penalty. Hence, the above Writ Petitions have been filed for the reliefs as stat .....

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ion of the same. Investigation revealed that there was no prior intimation with regard to the import/hand carry of the said gold bars as a personal baggage. The said passengers failed to adhere to the rules provided in Rule 29(5) of the SEZ Rules, 2006 and in the absence of valid permit or authorization, the said gold bars were detained for further investigation and necessary action under the Act. Thereafter, a show cause notice was issued to the Petitioner, proposing to confiscate the goods und .....

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d the Petitioner as well. There is an effective alternative remedy under Section 129(DD) of the Act. The communication of the appeal papers and the opportunity to file cross objection is to be treated as adequate serving of notice. Therefore, there is no violation of principles of natural justice. In such facts, these Writ Petitions are not maintainable. 4. The learned Senior Counsel for the Petitioner, praying to implement the order dated 12.3.2015, by quashing the order dated 22.8.2014, conten .....

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imposing penalty and that there are enough materials to show that the Petitioner was the consignee of the gold bars in question supplied by the Kundan Jewellery, Dubai to the Petitioner for the purpose of making jewellery and for subsequent re-export and in these circumstances, prayed for quashing of the impugned order dated 12.8.2015 as contrary to Section 51 of the SEZ Act, which provides for overriding effect and consequently for release the confiscated goods. 5. The learned Standing Counsel .....

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ake of convenience) had arrived at Chennai Airport from Dubai on 22.08.2014. On verification of the handbag carried on by the Employee (1) and his declaration form, the bag was found to contain 12 kgs of gold bars and in his declaration form, it was declared as 'Nil'. In the declaration form of the Employee (2), it was declared as 12 Kgs of gold bars and he was not carrying any hand baggage and any gold bars as well. Hence, after detaining the goods, by the show cause notice dated 7.1. .....

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ing the entire case records including the show cause notice, statements of the said Employees as well as the other customs house agents, video clippings of the incident and the provisions of the SEZ Act and Rules and also the Customs Act, dropped the proceedings against the Employee (1) and the Petitioner. However, on the appeal preferred by the Respondent Department, the Appellate Authority, by the impugned order dated 12.08.2015, valuing the impugned goods at ₹ 3,38,54,000/-, confiscated .....

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on of the evidence and material, including the CCTV footage and contrary to the provisions of Section 51 of the Act, which provides for overriding effect over the other laws. 9. On the other hand, it is the case of the Respondents that since the Employee (1) was not an authorised passenger as per the provisions of the Rule 29(5) of SEZ Rules 2006, which mandates for prior intimation in advance to be given to the authorised officer, the goods were confiscated and penalty was imposed. 10. At this .....

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the green channel and they passed through the red channel only. The show cause notice has been issued to the Employee (1), whose name is not mentioned in the detention receipt and the Petitioner Company only. For failure in complying with the provisions of the Rule 29(5) and the facility circular, dated 3.3.2007, action can be initiated only under Section 22 or any other relevant provisions of the SEZ Act. Further, in terms of Section 51 of the SEZ Act, the provisions of this Act shall have over .....

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peal:- (1) The Commissioner (Appeals) shall give an opportunity to the appellant to be heard if he so desires. (2) The Commissioner (Appeals) may, at the hearing of an appeal, allow the appellant to go into any ground of appeal not specified in the grounds of appeal, if the Commissioner (Appeals) is satisfied that the omission of that ground from the grounds of appeal was not willful or unreasonable. (3) The Commissioner (Appeals) shall, after making such further inquiry as may be necessary, pas .....

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has been short-levied or erroneously refunded, no order requiring the appellant to pay any duty not levied, short-levied or erroneously refunded shall be passed unless the appellant is given notice within the time-limit specified in section 28 to show cause against the proposed order. 12. Rule 28(5) of the SEZ Rules, 2006 reads as under:- (5) The goods imported by the Unit or Developer shall be allowed to be transferred from the port or airport to the Special Economic Zone without examination b .....

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orm as specified by Commissioner of Customs in charge of the airport along with a duly acknowledged copy of intimation submitted to the authorized officer; PROVIDED that the goods may be examined with the prior permission of the Assistant or Deputy Commissioner of Customs in writing in case there is specific adverse information or intelligence. 14. The crucial question lost at sight off by the Appellate Authority is relating to the Employee (2), declaring in his declaration form as 12 kgs of gol .....

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issued to the Employee (2). Further, the Employee (2), who declared in the quantity column as 12 kgs, should have also carried 12 kgs of gold bars, but strangely, nowhere in the impugned order of the Appellate Authority, it is stated about the Employee (2) carrying, 12 kgs and not issuing a show cause notice to the Employee (2), though the detention receipt was issued in his name. But, it was merely stated that though the Employee (2) declared the goods in his declaration form, but he was not c .....

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ot imposed on him. If the Employee (2) was not carrying any hand baggage, then authority should have searched for the said goods as per his declaration form and accordingly, he should have been dealt with. It is also not known about the action taken as to the compliance of other rules and regulations and procedures in this regard. Further, the detention receipt was given in the name of Employee (2) only. If really the Employee (1) had carried the gold bars without declaration form, there is no n .....

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rther, while dropping the charges against the Employee (2) relying on the show cause notice, discriminating the Employee (1) alone relying on the same show cause notice is untenable, that too when the detention receipt was issued in the name of the Employee (2). Therefore, it is crystal clear that there was non application of mind and a procedural error crept on the part of the Authorities, while ordering for confiscation and penalty, which can also be termed as deliberate attempt for the reason .....

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to pay the penalty. 17. According to the Respondent Department, the invoice was recovered from the Employee (1) and he did not produce the same voluntarily and there was no proper explanation to the question put to the Petitioner as to whether the Petitioner Company is a SEZ Unit or not or their performance as SEZ Unit and even there was no written contract between the SEZ Unit and the seller of the gold in Dubai. 18. Admittedly, the goods in questions were consigned to the Petitioner as is evi .....

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ods were supplied free of cost against the gold jewellery to be manufactured and to be re-exported to Dubai. Therefore, according to the said invoice, the Employee (2) was the authorised passenger. However, according to the Petitioner, on the instructions of the Employee (2), the Employee (1) carried the gold bars, since they were travelling all the times together in a single e-ticket under the name of Employee (2) only. Since they had taken air tickets already in advance and they had to rush to .....

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claration form and the act of not giving prior intimation is not contumacious, calling for penal action and mere procedural lapse and technical violation will not attract confiscation and penalty. 20. It is the contention of the respondents that the local importer for whom the personal carriage of gem and jewellery parcel was brought should give prior intimation to Air Customs Officials vide Tel.No.044-22560246 and Tele Fax No.044-2256 1919. In this regard, the Petitioner explained that they con .....

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the gold bars. The Petitioner also stated in their letter dated 11.9.2014 that though they tried to contact over phone and through fax, they were not able to contact the officials to give intimation and the phone was continuously ringing and their Customs Agent also could not contact because of the late hours. 21. At this juncture, it is relevant to extract hereunder Sections 20 to 22 of the SEZ Act:- 20. Notwithstanding anything contained in any other law for the time being in force, the Centra .....

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notified offence for purposes of this Act. (2) The Central Government may, by general or special order, authorise any officer or agency to be the enforcement officer or agency in respect of any notified offences or committed in a Special Economic Zone. (3) Every officer or agency authorised under sub-section (2) shall have all the corresponding powers of investigation, inspection or search or seizure as is provided under the relevant Central Act in respect of the notified offences. 22. The agen .....

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ne by any agency or officer other than those referred to in sub-section (2) or sub-section of section 21 without prior approval of the Development Commissioner concerned. Provided further that any officer of agency, if so authorised by the Central Government, may carry out the investigation, inspection, search or seizure in the Special Economic Zone or Unit without prior intimation or approval of the Development Commissioner. 22. Section 51 (1) of the SEZ Act reads as follows:- 51(1) The provisi .....

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rther, as per Section 22 of the Act, an investigation or search ought to have been conducted in the SEZ Unit of the Petitioner, if the authority is of the opinion that a notified offence was committed. But, only based on the telephonic information, the entire proceedings had been done. Further, the provisions of Section 51 of the SEZ Act has got overriding effect over other laws, in case if there is any contradiction or inconsistencies or conflicts between the SEZ Act and the other Acts. It is s .....

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detention receipt. Since there was no case made out for confiscation of the goods as per Rule 29(5) of the SEZ Rules, earlier show cause notice was dropped. If at all any proceedings to be initiated, that can be initiated only under the provisions of the SEZ Act and Rules. 24. Even according to the Respondents, Section 51 can be enforced only when the goods are meant for SEZ Unit. In the case on hand, it is seen that the gold bars in question were consigned to the Petitioner Company, which is ad .....

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in everyday life and as a result, the production of electronic evidence in cases has become relevant to establish the guilt of the accused or the liability of the defendant. Electronic documents are admitted as material evidence. With the amendment to the Indian Evidence Act in 2000, Sections 65A and 65B were introduced into Chapter V relating to documentary evidence. Section 65A provides that contents of electronic records may be admitted as evidence if the criteria provided in Section 65B is .....

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