Judgment:
1. This is an appeal against the order No. 17/84 dated 3.11.1983 passed by the Additional Collector of Customs, Calcutta. Briefly stated the facts of the case are that on 13.11.1982 the appellant who is an Indian National arrived at Dum Dum Airport from Kathmandu by Indian Airlines flight No. IC-248. He opted for the Green Channel and did not make any written declaration in respect of any dutiable or prohibited items carried by him in his baggage. On suspicion the Customs officer on duty decided to examine the baggage of Shri Mehta. As a result of the examination of the contents of a suit-case belonging to Shri Mehta from the pockets of an old coat and from a toilet kit certain items of jewellery collectively valued at Rs. 1,04,500/- were recovered. The recovered items recovered (sic) were detained against detention receipt No. 1462/82 dated 13.11.1982 for the purpose of valuation. Shri Mehta on being questioned declined to make any statement on the grounds that he was feeling unwell. He, however, signed an endorsement on the detention receipt wherein it was stated that he had purchased the detained items at Kathmandu. Shri Mehta was permitted to leave the airport and was advised to appear before the Customs officers after two days. Since he did not appear before the concerned officers, the detained items of jewellery were examined by the Customs Jewellery Expert who recorded the following details as regards the description and value of each of the detained items: DESCRIPTION C.I.F. VALUE ____________ ____________ i) One pc. white metal necklace set rubies, Rs. 30,000/ Sapphires, Emeralds, diamonds and ii) One pc. white metal Ring set Emerald, Rs. 3,000/- other stones and small diamonds.
monds, Sapphires, Rubies, Emeralds Rs. 12,000/ etc.
iv) One pc. white metal necklace set Rs. 52,000/ Rubies and diamonds, v) 3 pcs. Mangal Sutras with black beads- Rs. 7,500/- each having one white metal pedent ______ (sic) set small diamonds.
2. After valuation of the goods the appellant was served with a show cause dated 11.5.1983 requiring him to show cause as to why the goods should not be confiscated under Section 111(d), (i), (1) and (m) of the Customs Act, 1962 and why penal action should not be taken against him.
The appellant denied the charges and claimed that the detained goods not being of third country origin, he had refrained from declaring them. He stated that his signature on the detention receipt was merely an acknowledgement of the detention of the goods and he had nowhere admitted the purchase of the goods in Nepal. He claimed that items 1 to 3 in the detention receipt were presented to his wife by one Shri Balram Bhakta Mathema and item No. 5 was also received by his wife as a gift from one Shri Shrestha. He contended that the value of goods was not in excess of Rs. 60,000/- and in the absence of any evidence that the goods were of Other than Nepalese origin, they were neither chargeable to duty nor could they be held as liable to confiscation under Section 111(d) of the Customs Act, 1962. However, in the impugned order the Additional Collector rejected the appellant's claim that the detained items were of Nepalese origin and were received as gifts by his wife from certain family friends in Nepal on the grounds that at the time of seizure the appellant had not mentioned that the goods were of Nepalese origin and they had been received as gifts, it was also held that by opting for the Green Channel the passenger had made a declaration that he had no 3rd country goods in his baggage. For these reasons and also for the reason that the passenger had concealed the goods in question, the Additional Collector ordered their confiscation under Section 111(d), (i) and (m) of the Customs Act, 1962. He also imposed a penalty of Rs. 1,00,000/- on the appellant under Section 112 of the Customs Act.
3. On behalf of the appellant Shri S.K. Roy, Barrister with Shri K.K.Anand, Advocate appeared before us. Shri Roy stated that only a detention receipt was issued to his client in respect of the items of jewellery which were received as gifts by his wife from certain family friends. He contended that the goods could not be deemed as 'seized goods' since no 'panchnama' was drawn up in the presence or witnesses.
He argued that goods not having been seized they were not liable for confiscation. He stated that the case of the Department was that the detained goods being of third country origin were liable to confiscation. He argued that the Additional Collector had erred in holding that the detained goods were not of Nepalese origin. He stated that the jewellery expert of the department was not able to give any finding regarding the origin of the goods and in the proceedings launched under Section 135, the appellant had been acquitted by the Court on the grounds that there was no proof that the goods were of third country origin. He contended that under these circumstances and in view of the fact that Shri Balram Bhakta Mathema of Nepal had confirmed in his statement that items 1 to 3 in the detention receipt had been gifted by him to Smt. Mehta and similarly Shri S.K. Shrestha another family friend had confirmed that he had given the item at Sr.
No. 5 in the detention receipt as gift to Smt. Mehta the detained goods could not be treated as being of third country origin. He added that his client had at no stage admitted that the items in question were bought by him in Nepal and he had affixed his signature on the detention receipt since he was asked to do so by the concerned officer.
He reiterated his stand that in absence of any evidence that the goods were of third country origin the order holding the goods as liable to confiscation under Section 111 (d) of the Customs Act, 1962 was not sustainable. He contended that the order imposing penalty on his client was also illegal since the adjudicating authority had failed to mention the particular clause of Section 112 which had been invoked. In support of his submissions Shri Roy cited the following case law:Jenson Enterprises v. Collector of Customs, Cochin and Anr.
1986 (28) ELT 346 (Madras)Sharda Devi v. Collector of Customs (Prev.) Patna 1992 (63) ELT 136 (Tribunal) : 1992 (43) ECR 224 (Tribunal) (iv) Ambalal v. UOI and Ors. 1983 ELT 1321 : 1983 ECR 1935D (SC) : ECR C Cusll8SC (v) M.K.S. Abubacker v. Secy. to Govt. of India, Min. of Finance, New Delhi and Ors.
(vii) J. Mohanlal v. Collector of Central Excise, Madras 1985 (35) ELT 709 : 1988 (18) ECR 430 (Cegat SRB) 4. On behalf of the respondent the learned SDR Smt. C.G. Lai stated that the appellant was a businessman dealing in precious jewellery. She added that the appellant had tried to smuggle the detained items by concealing them in his baggage. She contended that the goods covered by the detention receipt could be deemed as seized and even if it was assumed that they were not seized goods, there would be no bar as regards their confiscation if it is established that they were imported contrary to any prohibition in force at the time of importation. In support of her contention she cited the decision of the Tribunal in the case of Rajesh K. Bhansali v. Collector of Customs . She added that on perusal of the detention/seizure memo it follows that in order to avoid detention the appellant had concealed the seized items in the pocket of a coat and a toilet kit which were packed in his suit-case, and he had admitted that the items were purchased in Nepal. She contended that the claim that the seized items were of Nepalese origin and were received as gifts from close family friends by the appellant's wife was an after thought since the appellant had come forward with this explanation several months after the detention of the goods. She stated that the acquittal of the appellant in the prosecution case is not relevant since the main consideration which weighed with Court was that the original 'Detention Receipt' had not been filed by the prosecution. She contended that it was for the appellant to establish that the detained items were of Nepalese origin and in any case as a passenger returning from Nepal, the appellant was not entitled to import any dutiable goods as a part of his baggage. She submitted that the order adjudging penalty would not be vitiated only on the grounds that any particular sub-clause of Section 112 had not been mentioned. She pleaded for the rejection of the appeal.
5. We have examined the records of the case and considered the submissions made on behalf of both sides. It is seen that the only question that arises for consideration in this case whether it was permissible for the appellant to import from Nepal as part of his baggage the detained items of jewellery studded with precious and semi-precious stones valued at Rs. 1,04,500/-, as a part of his baggage.
6. It is seen that on his arrival at Calcutta airport on 13.11.1982 from Kathmandu the appellant was intercepted on suspicion while he was trying to walk through the 'Green Channel1 and on examination of his suit-case 5 items of jewellery valued at Rs. 1,04,500/- were recovered from the pocket of a coat and also from a toilet kit. Even though the appellant had signed the detention receipt in which it was inter alia stated that the items of jewellery were purchased by him in Kathmandu in his statement dated 15.2.1983 he claimed that detained items of jewellery were of Nepalese origin and had been received as gifts by his wife and daughters from old family friends in Kathmandu. The appellant's claim that the goods were of Nepalese origin and had been received as gifts by his family members from old family friends in Nepal was, however, rejected by the Additional Collector, who in the impugned order held that in importing the goods in question and concealing them the appellant had contravened the provisions of Section 77 and the Baggage Rules and also the provisions of Import and Export (Control) Act and had thereby rendered them liable to confiscation under Section 111(i), (m) and (d) of the Customs Act, 1962.
6 (sic). It has been contended on behalf of the appellant that in terms of Section 110 and Section 111 goods not having been seized, their confiscation was illegal. In order to appreciate the appellant's argument, we refer to Sections 110(i) and 111(d), which are reproduced below: 110(i). Seizure of goods, documents and things.--If the proper officer has reason to believe that any goods are liable to confiscation under this Act, he may seize such goods; Provided that where it is not practicable to seize any such goods, the proper 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.
111. Confiscation of improperly imported goods etc. 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 brought within the India Customs 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.
On a plain reading of these provisions it is evident that seizure of goods is not mandatory or a pre-requisite for confiscation of any goods which are imported improperly or in contravention of any prohibition under the Customs Act, or under any other law. Hence the appellant's contention that the goods in question having been detained and not seized were not liable for confiscation has no force at all and has to be rejected. From the words "....he may seize" in Section 110(i) it is evident that seizure of any goods in respect of which the proper officer entertains the belief that they are liable to confiscation is discretionary any liability to confiscation of any goods which are imported contrary to any prohibition under any law for the time being in force does not cease, if such improperly imported goods are only detained and not seized. The judgement of the Madras High Court in the case of Jenson Enterprises v. Collector of Customs, Cochin reported in 1987 (28) ELT 346 and the judgement of the Allahabad High Court in the case of State of U.P. v. Lavkush Kumar are not relevant since the question examined in these cases was whether the seizure of goods made by the concerned officers was legal.
7. It is seen that the Jewellery Expert who had examined the detained items was not able to confirm whether the goods were of third country origin. The appellant's case is that the items in question being of Nepalese origin were not liable to confiscation since there was no prohibition in regard to the import of goods of Nepalese origin.
8. As pointed out by the appellant there is no categorical finding by the Jewellery Expert of the department as regards the origin of the detained items of jewellery. Even if the appellant's contention that the goods were of Nepalese origin is accepted, the question that we will have to examine is whether at the relevant time the appellant arriving as a passenger from Kathmandu was permitted to import them. In this regard we consider it desirable to refer to Sections 77 and 79 relating to import of goods as baggage in Chapter XI of the Customs Act, 1962, which are reproduced below: Special Provisions Regarding Baggage, Goods Imported OR Exported by Post And Stores, 77. Declaration by owner of baggage--The owner of any baggage shall for the purpose of clearing it, make a declaration of its contents to the proper officer.
89. Bona fide baggage exempted from duty--(1) The proper officer may, subject to any rule made under Sub-section (2) pass free of duty-- (a) any article in the baggage of a passenger or a member of the crew in respect of which the said officer is satisfied that it has been in his use for such minimum period as may be specified in the rules: (b) any article in the baggage of a passenger in respect of which the said officer is satisfied that it is for the use of the passenger or his family or is a bona fide or souvenir; provided that the value of each such article and the total value of all such articles does not exceed such limits as maybe specified in the rules.
(2) The Central Government may make rules for the purpose of carrying out the provisions of this section and, in particular, such rules may specify- (a) the minimum period for which any article has been used by a passenger or a member of the crew for the purpose of Clause (a) of Sub-section (1); (b) the maximum value of any individual article and the maximum total value of all the articles which may be passed free of duty under Clause (b) of the Sub-section (1); (c) to conditions (to be fulfilled before or after clearance) subject to which any baggage may be passed free of duty.
(3) Different rules may be made under Sub-section (2) for different classes of persons.
On a plain reading of these special provisions relating to baggage, it follows that clearance of goods brought by passengers as baggage was governed by the special provisions laid down in the Act. Hence, clearance of goods brought as baggage had to be examined only in terms of the relevant Baggage Rules and apart from the articles in the bona fide use of passenger only such articles in the baggage of a passenger in respect of which the proper officer was satisfied that they were for the use of the passenger or his family or were a bona fide gift or souvenir and whose value did not exceed the limits specified for passing free of duty in the relevant rules could be cleared free of duty. It is seen that in exercise of the powers conferred by Section 79 of the Customs Act, 1962 the Central Government had framed the Baggage Rules, 1978 vide Notification No. 101-Cus dated 16.5.1978. The following extract from the Baggage Rules, 1978 (as amended by Notification No. 166-Cus dated 20.1.1986) in force at the time of arrival of the appellant at Calcutta airport is relevant: In exercise of the powers conferred by Sub-section (2) of Section 79 of the Customs Act, 1962 (52 of 1962) and in the supersession of the Baggage Rules, 1970 and Ceylon Baggage Rules, 1930, the Central Government hereby makes the following rules, for importing free of duty baggage of passengers (other than tourists) who arrive from (any country other than Nepal or Bhutan) namely: It is seen that the provisions of the 'Baggage Rules, 1978' were applicable to passengers other than tourists. These rules were not applicable to the appellant who had arrived from Nepal. It is also seen that at the relevant time there were no other 'Baggage Rules' in force extending concessions for the clearance of dutiable articles brought by passengers arriving from Nepal. Hence, having regard to the provisions of Section 79 it has to be held that all dutiable articles including articles of Nepalese origin carried by the appellant (i.e. articles other than his used personal effects) were chargeable to duty. We also find that under the Savings Clause 11(i)(g) of Imports Control Order, 1955 the prohibitions and restrictions under Clause 3 of the order were not attracted only in respect of the goods brought as passengers' baggage to the extent they were admissible under\ Baggage Rules for the time being in force. Since the Baggage Rules, 1978 did not apply to passenger arriving from Nepal and as discussed earlier no other Rules were framed by the Central Government to extend concessions for the clearance of dutiable articles brought by passengers arriving from Nepal it follows that in terms of Clause 11(g) of the Imports (Control) Order, 1955 (as amended) the dutiable articles, including such articles of Nepalese origin brought by the appellant as a part of his baggage and which were not covered by a valid Import licence were imported in contravention of Clause 3 of the said order rendering them liable to confiscation under Section 111(d) of the Customs Act, 1962.
9. In view of the above discussion, we do not find any infirmity in the Additional Collector's finding that the detained dutiable articles had to be deemed as having been imported in contravention of the provisions of Imports and Exports Control Act, 1947 were liable to confiscation under Section 111 (d) of the Customs Act, 1962 since they were imported as part of the appellant's baggage were not eligible for clearance without payment of duty in terms of any Baggage Rules, framed in terms of Section 79 of the Customs Act, 1962. Since the appellant had attempted to import the detained dutiable and prohibited goods of large value without any declaration thereof required under Section 77 of the Act, and by concealing them in his baggage we also uphold the Additional Collector's finding that the offending items of jewellery were also liable to confiscation under Sub-section (i) and (m) of Section 111 of the Customs Act, 1962.
10. Another point raised by the appellant is that the impugned order cannot be sustained since he was acquitted in the case in Criminal Proceedings initiated against him under Section 135, in respect of the same offence. In this regard we find that in the case of S.A. Thete v.Collector of Customs (Preventive), Bombay the Tribunal has held that adjudication and criminal proceedings arc independent of each other and acquittal of the accused in the latter, cannot prohibit the Departmental officers from continuing to perform their statutory functions in regard to adjudication under the Act. Para 10 of the said decision being relevant is reproduced below: 10. Now coming to the third issue, the learned Counsel for the appellant argued that in the context of the judgment of the Madras High Court in case Aboo Bakar v. Secretary to the Govt. of India, the verdict of the Court acquitting the accused in the criminal prosecution proceeding is to be taken as conclusive and the orders of the adjudicating authority holding a different view is not tenable. On this, we invite the attention of the learned Counsel to the judgment of Division Bench of the Bombay High Court in the case of Maniklal Pokhraj Jain v. Collector of Customs (Preventive), Bombay and Ors., this issue. This judgment is based on the judgment of the earlier Division Bench which has been approved. We would therefore prefer to extract the observations of the Division Bench as below, which squarely answers the issue raised by the Counsel: 15. Section 112 is an express provision which authorises the levy of penalty in respect of acts or omissions referred to therein. The procedure with regard to adjudication of confiscation and penalties is expressly provided for in Section 122 of the Act. The power to be exercised by the Collector of Customs or by Gazetted Officer of Customs lower in rank than an Assistant Collector of Customs is in accordance with the value of the goods liable to confiscation. The procedure to deal with confiscation or imposition of penalty is prescribed in Section 124 and under that provision a notice in writing has to be given to the concerned person informing him of the grounds on which it is proposed to confiscate the goods or to impose a penalty, and he is to be given a reasonable opportunity of being heard in the matter. Then comes Section 127 which expressly provides that even though an order of confiscation and an order of penalty is made by the Customs Officer, that does not affect the liability to punishment under the provision of Chapter XVI or under any other law. We already reproduced the provisions of Section 135 which make it pointedly clear that the power to prosecute under Section 135 is without prejudice to the action which may be taken independently under the provisions relating to confiscation and penalty. Now, it cannot be the argument that while independent powers of making an order of confiscation and penalty can be made by the appropriate officer of the Customs, irrespective of a prosecution under Section 135 being resorted to or not. In case there is a prosecution and there is an acquittal, the power expressly bestowed under Section 112 must be treated as ineffective. Unless we are able to hold that even in spite of the express provisions of Section 112 and Section 127, in case there is an acquittal in prosecution instituted under Section 135, their powers cannot be exercised, the contention on behalf of the Petitioner could not be accepted. We see no warrant for the view that there is a prohibition against the Customs Officers to perform their statutory functions and exercise their statutory power under the Act because of a failure of the prosecution started under Section 135 and the acquittal of the person concerned. By its very nature, the two proceedings are independent of each other. In a given case, evidence which may be available for the purposes of proceedings under Section 112 may not be available or even if it is available, it may be admissible in regular Court of law, in which the admissibility and relevance of the evidence is determined with reference to the provisions of the Evidence Act. In a Criminal prosecution the accused need not open his mouth or make any statement while in the proceedings for adjudication or confiscation before the Customs Department, the statement made by the person from whom the contraband articles were seized can be looked into. The scheme of the Act, therefore, clearly indicated that the two proceedings have to be dealt with independently of each other on such material as is availabe and permissible in these proceedings.
On the ratio of the Tribunal's decision quoted above we hold that the appellant's acquittal in the criminal proceedings can have no bearing on the adjudication proceedings initiated by the department.
11. It has also been argued on behalf of the appellant that the order imposing penalty on the appellant was illegal since the particular sub-section of Section 112 which had been invoked had not been mentioned in the show cause notice and the impugned order. In this regard we find that in the case of Arvind Exports Pvt. Ltd. v.Collector of Customs held that non-incorporation of sub-section of Section 112 of the Customs Act, 1962 in the show cause notice cannot vitiate the imposition of penalty when it is otherwise clear therefrom that penalty was imposable under Section 112(b) ibid. Para 18A of the Tribunal's decision being relevant is reproduced below: 18A. The next contention of the learned Advocate Shri S.D. Nankani was that in the order-in-original the penalty was imposed without mentioning the relevant section and in this regard, he relied on the ruling reported in 1983 ECR 322. But that decision is not applicable to the facts of this case. In this case all these appellants were issued with show cause notices and in the show cause notices, it was mentioned as to why the goods should not be confiscated under Section 111(d) of the Customs Act, 1962 and why a penalty should not be imposed under Section 112 of the Customs Act, 1962. It was also mentioned that the goods were imported in contravention of Section 3(2) of the Import (Control) Order, 1955 as amended read with Section 03 of the Imports and Exports (Control) Act, 1947. It is, therefore, clear on a perusal of the show cause notices that the goods of the appellants are covered by Section 112(b) and this fact was borne by the Adjudicating Officer. In such circumstances, a mere non-incorporation of Section 112 of the Customs Act, 1962 in the order will not vitiate the imposition of the penalty. To that extent, the above said decision of the Madras High Court is distinguished on the facts and circumstances of these cases. In the result we are of the opinion that no grounds are made out to interfere with the impugned orders and accordingly, these four appeals are dismissed.
In the appellant's case it was clear from the charges framed in the show cause notice that penalty was sought to be imposed under Section 112(a) and in the impugned order the Additional Collector had arrived at the findings that the appellant had attempted to import the offending goods in contravention of Sub-section (d), (i) and (m) of Section 111 of the Customs Act, 1962. Hence the ratio of the Tribunal's decision quoted above we hold that the order passed by the Additional Collector imposing penalty on the appellant was not vitiated merely for the reason that the particular sub-section of Section 112 which had been invoked was not mentioned in the order.
12. The appellant has also contended that the value of the detained goods as determined by the Jewellery Expert Appraiser was excessive.
According to the appellant the value of the goods in question was only about Rs. 60,000/-. Since the value of the detained goods was appraised by the Jewellery Expert Appraiser of the Custom House, we find no reason to reject it especially when the appellant has not supported his claim that the goods were of lower value, by any supporting evidence.
13. In view of the foregoing, we uphold the order passed by the Additional Collector and reject the appeal. However, having regard to the overall facts and circumstances of the case and the long time that has elapsed since initiation of the proceedings we give the appellant the option to redeem the goods in question on payment of a fine of Rs. 50,0001- in addition to duty leviable. We also reduce penalty on the appellant from Rs. 1,00,0001- to Rs. 50,0001- only.