Brief facts of Case for Order in Original When Seizure is Contended Invalid

Brief facts of case is precursor to an Order in Original (OIO). Drafting brief facts requires an inclusive approach to evaluate the facts and circumstances of the case and knowledge of all applicable provisions to the offence. Once approved and signed by adjudicating authority, the draft of brief facts becomes an OIO.

An Order in Original (OIO) is reflective of a balanced and considerate views of an adjudging officer in the face of charges notified to the accused through a SCN and receipt/ non-receipt of reply from the accused. The views of adjudicating authority have elements of interpretation of the applicable provisions to the offences committed, legal appreciation of the submissions & Contentions and the desired compliance. Further, the desired compliance could require the absolute confiscations of goods seized, penalty and launching prosecution or confiscation with option to redeem in lieu of fine and the penalty. The element of launching prosecution usually is not express in the OIO as depending upon the extent and nature of the offence the prosecution on their own pursues the matter with court for trials once the order for absolute confiscation clubbed with penalty has been issued.

Considering the quintessential elements of an OIO, the draft brief facts have to be prepared accordingly. Let us see one typical example where a part of the entire seizure is contended by the noticee as invalid and demands consequential quashing of SCN. To analyze things first you need to have look on the vital aspects of the seizure case under some touch stones.

Vital Aspects of the Case of Seizure that Took Place

Let us view the matter under 06 different touch stones for proper and complete appraisement of the seizure case in an alleged attempt of gold smuggling.

1. Facts

The passenger Mr. N is holding Indian passport and has arrived from Dubai. Interception has been done once the passenger cleared himself through green channel. On objective query if he is carrying anything contraband or dutiable replied in negative. Personal Search of the passenger however resulted in recovery of one(01)gold kada, six(06)gold bars of 10 tolas each together having gross weight 899 grams and valued at Rs 28,36,475/-) and gold dust having gross weight 1216 grams (provisional weight 1034 gms of gold) and provisionally valued at Rs 32,62,420/-. Collective value of the seizure is thus Rs 60,98,895/-. The gold dust later is sent for refinement which allows ascertaining the actual gold within dust and final value of the gold in dust form.

2. Actions of Intercepting Unit

AIU seizes the recovered items after certification process by a govt valuer under a seizure Panchanama and seizure memo. Recording of statements and admissions of the intercepted traveller followed on close heels. The assessed value found to be more than Rs 20 lakhs and hence Mr. N was arrested and later released under a bond, surety and compliance of other conditions in the bail order issued by a competent authority of Customs.

3. Refining the Gold dust for Ascertaining the Final Value of Gold

Part of seizure is Gold dust which is sent to govt. mint for refining melting and extract the gold. After the refining process, the gold extracted was certified as 981.318 grams (995.0 fine) by the Mint. Accordingly, the gold dust recovered and seized vide Panchanama was finally valued as Rs 30,96,201/- as per the tariff value and exchange rate Thus, the final value of seized Six (06) Gold Bars of 10 tolas each, one (01) crude Gold Kada both weighing 899 grams and the fine gold dust in wax yielding actual gold of 981.318 grams, collectively weighing 1880.318 gms was worked out to be Rs. 59,32,676/-

4. Observations of Investigation

(I) CONTRAVENTIONS:

i) Section 77 of the Customs Act, 1962

Explanation: Section 77 of the Customs Act, 1962, the owner of any baggage shall, for the purpose of clearing it, shall make a declaration of its contents to the proper officer of Customs, in Form-I (Indian Customs Declaration Form), prescribed under Customs Baggage Declaration Regulations, 2013.

ii) Rule 3 of the Baggage Rules 2016

Explanation: Rule 3 of the Baggage Rules 2016 prescribes the limit, terms and conditions for duty free import by the individual residents. Rule 3 ibid, provides that an Indian resident or a foreigner residing in India or a tourist of Indian origin, not being an infant arriving from any country other than Nepal, Bhutan or Myanmar, shall be allowed clearance free of duty articles in his bona fide baggage, that is to say, –

(a) used personal effects and travel souvenirs; and

(b) articles other than those mentioned in Annexure-I, upto the value of fifty thousand rupees if these are carried on the person or in the accompanied baggage of the passenger:

Further, the rule 3 excludes the articles in Annexure-I

Explanation: Annexure-I to the Baggage Rules, 2016, lists “Gold or silver in any form other than ornaments.” which means that when Annexure I to the Baggage rule 2016 is read with Rule 3 of the Baggage Rule 2016, it emerges that a major Indian individual is allowed articles up to Rupee fifty Thousand only duty free and this allowance excludes gold and silver in any form but includes ornaments of gold and silver.

iii) Rule 11 & 12 of Foreign Trade (Regulation) Rules, 1993

Explanation: As per CTH 9803 of first schedule to Customs Tariff Act, 1975, “all dutiable articles imported by a passenger in his baggage” are “restricted” as per Foreign Trade Policy 2015-20, subject to the saving clause 3(1)(h) of the Foreign Trade (Exemption from application of Rules in certain cases) Order, 1993 as amended vide Foreign Trade (Exemption from application of Rules in certain cases) Order, 2017 dated 25.07.2017. The said saving clause 3(1)(h) says:

“3. Exemption from the application of rules-

(1) Nothing contained in the Foreign Trade (Regulation) Rules, 1993 shall apply to the import of any goods,

(h) by the person as passenger baggage to the extent admissible under the Baggage Rules for the time being in force:

Provided that in the case of imports by a tourist, articles of high value whose re-export is obligatory under Baggage Rules, 2016, shall be re-exported on his leaving India, failing which such goods shall be deemed to be goods the import of which has been prohibited under the Customs Act, 1962 (52 of 1962);”

iv) “Passenger Baggage” under Para 2.26 of the Foreign Trade Policy, 2015-20

Explanation: Gold collectively weighing 1880.318 gms valued at Rs. 59,32,676/- are in such quantity and nature that it cannot be construed as bonafide household articles required for day-to-day use by Mr. N.

(II) OTHER FINDINGS:

The the findings of Investigation included among other things as following:

(i) Mr. N. had failed to declare the gold items and replied in negative on being enquired about the goods subject to restrictions and duty.

(ii)The passenger failed to produce any evidence about the legitimate source of acquisition of the gold and that his monthly salary of Rs. 70,000/- was too meagre to acquire gold of such high worth

(iii) The passenger avoided the summons repeatedly and did not co –operated with the Investigation proceedings.

(iv) recovery of fine gold dust in wax finally yielding at 981.318 gms, from his innerwear constitutes premeditated plan to never declare and engage into the act of smuggling

(v) The passenger has been a frequent visitor.

(III) DEFINITIONS FOUND CONTRIBUTORY

i) As per Section 2(33) of the Customs Act, 1962, “prohibited goods” are defined as 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 but 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. This construes that gold being restricted goods if the conditions stipulated are not complied with, the same falls under the category of “prohibited goods”.

ii) As per section 123 of the Customs Act, 1962, burden of proof in the cases where goods are seized in the reasonable belief that they are smuggled goods lies on (i) the person from whose possession the goods were seized; and (ii) any other person who claims to be the owner thereof. The section provides the ambit of its application to gold and manufactures thereof, watches, and any other class of goods which the Central Government notifies by the Official Gazette. Under the facts on record, the passenger has failed to discharge the burden of proof, proving that the gold imported by him and put under seizure are not smuggled goods.

iii) As per section 2(39) of the Customs Act, 1962 “smuggling”, in relation to any goods, means any act or omission which will render such goods liable to confiscation under section 111 or section 113. A conjoint reading of Section 2(33), Section 123 and section 2(39) in the backdrop of facts and circumstances of the instant case it is apparent that first, the restricted imported of gold was rendered prohibited by contravention of a host of legislations and then the passenger’s failure to discharge his burden of proof established the act of his illegal import as “smuggling”.

5. Concluding Action of Investigation

A show cause notice was issued to Mr. N to explain the authority as to why: the seized gold not be confiscated under Section 111(d), (l) and (m) of the Customs Act, 1962 and penalty not be imposed commensurately under section 112 (a)

6. ‘Question of Facts’ and ‘Question of Law’

Will Mr. N get facility of redemption in lieu of redemption fine? Is the passenger subject to Penalty? If so, how much?

CONTENTIONS of the NOTICEE in RESPECT of SEIZURE & SCN

Note: The averments of the noticee here are different from the usual reply to the SCN on two counts. It alleges a part of seizure to be invalid, argues for redemptions of the goods and demands quashing of SCN as well.

1.0. DEFENSE SUBMISSION OF THE NOTICEE

At the outset, the noticee submits that he carried the gold for his sister’s marriage which was to be held after a month. He admits the possession and carriage of six gold bars of 10 tolas each, 1 crude gold kada totally weighing 899 grams and fine gold dust in wax finally weighing 981.318 gms and collectively weighing 1880.318 gms. He carried the seized gold in a concealed manner to avoid detection by Customs and payment of Customs duty.

1.1. No Valid Seizure Was Made in Respect of The Melted Gold (i.e, 981.318 Gms) and There Was No Seizure Order Issued by The Officer. Therefore, Proposal for Confiscation of 981.318 gms of Gold is Not Sustainable

i) The noticee submits that seized gold dust weighing 1216 grams of gold was forwarded to Government of India Mint for refining and melting. India Government Mint issued out-turn certificate giving the details of gold extracted as 981.318 grams (995.0 fine). No seizure memo/order was prepared and issued by the Investigating Officer for seizure in respect of the refined gold. Seizure memo/order had been issued only to validate the gold dust but not the melted gold. When no seizure memo/order is issued, it would vitiate the conviction. In the instant case, it is an admitted fact that the Investigating Officer has not issued any seizure memo/order with regard to the melted gold. In this connection, the noticee invites attention to the instruction no 01/2017 issued by the Board under F.NO. 591/04/2016-cus (AS) dated 8-2-2017wherein, clear instruction has been given that whenever goods are being seized, the proper officer must pass an appropriate order (seizure memo/order/etc.) clearly mentioning the reasons to believe that the goods are liable for confiscation. However, in the present case, no seizure memo or order was passed by the proper officer for the melted gold.

ii) The noticee contends that in a case of alleged smuggling where imported goods are to be confiscated, the first step to be taken by the Customs Officer where he has reason to believe that any provision of the Act has been, or is being or is attempted to be contravened, seize goods and take the goods in the possession of the Department. The noticee further contends that something which is not already in possession of the Departmental Authorities cannot not be confiscated, and the very provision relating to proposal made under the impugned SCN should show that the goods must be in the custody of the authority concerned before an order of confiscation could be passed in respect thereof. However, the goods were not taken into custody by the proper officer by way of issuing a seizure order. The contention of the noticee is sound and on an examination of the scheme of the Act, it is not easily possible to say that an article which is not in its custody could be ordered to be confiscated by the adjudicating authority under the Act. To prove the point, reliance is placed on the following decisions:

(a)Patna High Court in the case of Union of India &Ors vs Md.Mazid @ Md.Tufani on 20 July, 2011 wherein it was held that:

“A confiscation proceeding has to be preceded by a valid seizure. Unless the seizure is upheld the confiscation proceeding cannot proceed further”

(c)Bombay High Court in the case of Arvind Trading Company And Ors. vs State of Maharashtra And Ors. on 5 August, 1991 wherein,it was held that:

“Thus, the present case is not merely one of defective seizure but of no seizure at all, and hence it is difficult to sustain the order of confiscation. Seizure of goods is a condition precedent before the order of confiscation could be passed.”

(c) Bombay High Court in the case of Dina Baldev Pathak vs Collector of Customs and Ors. on 20 March, 1961: AIR 1962 Bom 290, (1961) 63 BOMLR 873 wherein the Honorable Judge observed as follows:

“”Anything liable to confiscation under this Act may be seized …………..’

(d) Now, it appears to me that the clear meaning of the above phrase is that the action of seizure under that Section must precede the order of adjudication of confiscation.”

(e) Gujarat High Court in the case of Manilal Bhanabhai Patel vs Kaul And Ors. on 3 September, 1974: AIR 1976 Guj 134 wherein it was held that:

“The belief as regards the liability to confiscation should, therefore, precede the act of seizure.”

(f) Allahabad High Court in the case of L. Kashi Nath Seth vs Collector, Central Excise, … on 22 November, 1978 – AIR 1979 All 128.

(g) The decision of the Bombay High Court in the Dhiraj Pal Amrit Lal Mehta case and the single Judge decision of the Delhi High Court in the Shanti Lal Mehta case proceed on the basis that once the seized articles are liable to be returned for want of service of notice within 6 months as required under Section 110 of the Customs Act, the authorities lose jurisdiction thereafter to proceed further in the matter of confiscation, since they would not have possession of the article which would be a condition precedent for an order for confiscation.

iii) Upon a proper interpretation of Section 110, the noticee submits that seizure of goods which are liable to confiscation is a condition precedent to initiation of any proceedings for confiscation thereof and if such goods are not either validly seized or are not continued under seizure before issue of a show cause notice under Section 124 or before issue of adjudication order, then it is not open to the Authority to initiate adjudication proceedings.

iv) The above submission is based on the premise that unless gold is validly seized, it cannot be confiscated under Section 111 of Customs Act, 1962. It is, therefore, necessary to determine what, on a true construction of Section 111 is the condition for confiscation under the said section. It is necessary that gold must be validly seized under Section 110 of the Act before it can be confiscated under Section 111. It is not gold which is declared to be liable to confiscation; it is only gold seized under Section 110 of the Act which is subjected to the liability to confiscation. Seizure of gold must, therefore, clearly precede its confiscation. Having regard to the clear and explicit language of the rule, the noticee submits that unless gold is seized it cannot be confiscated. What is required to satisfy the condition of the Act is, the physical act of seizure by issuing a seizure memo/order. It therefore becomes necessary to consider whether the undeclared gold was seized by the Officer was validly seized as per the instruction no 01/2017 issued by the Board under F.NO. 591/04/2016-cus (AS) dated 8-2-2017.

v) In the case of Asst. Collector of Customs v. Mukbul hussein Ibrahim-10 GLR 662, the Honourable Gujarat High Court also held that in order to attract the presumption under Section 123 of the Customs Act, 1962, the goods must be shown to have been seized from the possession of the accused by the Customs authorities. The ratio of the decision is that in order to attract the presumption under section 123 of the Customs Act, 1962, a seizure must be shown to be under the Act. The decision of the Supreme Court in Gian Chand v. State of Punjab (supra)has been referred to by this Court while rendering the above decision. This Court also held that mere markings could not be taken as proof of the fact of the foreign origin of the goods as such markings and labels would be hearsay evidence.

vi) Prosecution cannot be permitted to take advantage of its own wrong. Conducting a fair trial for those who are accused of a criminal offence is the cornerstone of our democratic society. A conviction resulting from an unfair trial is contrary to our concept of justice. Conducting a fair trial is both for the benefit of the society as well as for an accused and cannot be abandoned. While considering the aspect of fair trial, the nature of the evidence obtained and the nature of the safeguard violated are both relevant factors. Courts cannot allow admission of evidence against an accused, where the court is satisfied that the evidence had been obtained by a conduct of which the prosecution ought not to take advantage particularly when that conduct had caused prejudice to the accused. If after careful consideration of the material on record it is found by the court that the admission of evidence collected in search conducted in violation of the legal provision render the trial unfair then that evidence must be excluded.

vii) Upon a proper interpretation of Section 110, the noticee submits that seizure of goods which are liable to confiscation is a condition precedent to initiation of any proceedings for confiscation thereof and if such goods are not either validly seized or are not continued under seizure before issue of a show cause notice under Section 124, then it is not open to the Authority to initiate proceedings, by giving a show cause notice under Section 124(a). Section 124 of the Customs Act, 1962 provides for issuance of notice before confiscation of seized goods (repeat before confiscation of seized goods), which inter alia states that no order confiscating any goods or imposing any penalty on any person shall be made unless the owner of the goods or such person is given a notice in writing informing him/her of the grounds on which it is proposed to confiscate the goods or to impose a penalty.

viii) The noticee contends that in any case where imported goods are to be confiscated, the first step to be taken by the Customs Officer where has reason to believe that any provision of the Act has been, or is being or is attempted to be contravened, seize goods. The noticee further contends that something which is not already in possession of the Departmental Authorities cannot not be confiscated, and the very provision relating to confiscation under the SCN should show that the extracted gold weighing 981.318 must be in the custody of the authority concerned before an order of confiscation could be passed in respect thereof. The contention of the noticee is sound and on an examination of the scheme of the Act it is not easily possible to say that an article which is not in its custody could be ordered to be confiscated by the adjudicating authority under the Act.

ix) The noticee further submits that in the present case what was seized on the day of interception was only 1216 grams of gold dust in wax with provisional net weight of 1034 grams. Later the gold dust was sent to Government Mint for extraction of gold. As per the SCN, Government Mint refined and melted the wet gold dust and issued an out-turn certificate wherein it was reported that 981.318 grams of gold (with 995.0 purity) valued at Rs 30,96,2017. Further, the Investigating Agency failed to validly seize the said 981.318 grams of gold (with 995.0 purity) valued at Rs 30,96,2017-. In view of this fact and the submission made above, the noticee submits that the said gold i.e 981.318 grams cannot be confiscated in an adjudication proceeding.

x) In view of the above submission, since there was no valid seizure and no order for seizure of the melted gold was issued by the proper officer, the said gold cannot be confiscated in adjudication proceedings. When confiscation is not sustainable, no penalty can be imposed and the gold weighing 981.318 grams is liable to be released to the noticee.

1.2. The Show Cause Notice Prejudged the Entire Issue and Thus Prejudiced the Noticee

i) In a Show Cause Notice, the allegations and charges have to be made in a tentative manner (e.g. it appears that ……). However, in the present case the noticee avers that the impugned show cause notice is bad in law on the ground that the show cause notice has pre-judged and pre-determined the entire issue and left nothing for the Adjudicating Authority to enquire into. In the present case, the opportunity of submitting defence reply to the Show Cause Notice and hearing has become an idle formality and farce. The Show Cause Notice is therefore liable to be set aside.

ii) The impugned paras of the SCN in question and the relevant passages are reproduced and highlighted below:

Para11: From the investigation in this case, it is evident that:

Para 11.1: Mr. N. holding Indian Passport No. . It is clear that Mr. N. did not declare the said dutiable goods under seizure to Customs and had opted to clear himself through the Customs Green channel……………….He had also admitted the same in his statement, thereby rendering the seized gold as prohibited goods… and hence the same appears liable to absolute confiscation.

Para 11.2: Further, it is also evident that Mr. N. had failed to make true declaration in terms of Section 77 of the Customs Act, 1962… This clearly indicates his malafide intention of smuggling the said seized gold into India. Thus, he had failed to make true and correct declaration…, the goods under seizure appears to be liable for absolute confiscation…

Para 12.a: 06 gold bars of 10 tolas each, 01 crude gold kada totally weighing 899 grams and fine gold dust in wax finally weighing 981.318 gms and collectively weighing 1880.318 gms and finally net valued at Rs 59,32,676/ should not be absolutely confiscated under Section 111(d), (1) and (m) of the Customs Act, 1962.

iii) The noticee submits that from the above, it appears that the authority who issued the SCN has already made up his mind that the gold under seizure is liable for absolute confiscation and the noticee is liable for exemplary punishment for the alleged acts of omission and commission. That being so, the question of submission of defence reply to the show cause notice or holding an enquiry and giving an opportunity of hearing by the Adjudicating Authority become an idle formality and mere farce. It is incumbent on the part of the enquiry officer/Adjudicating Authority to keep an open mind till it comes to a decision regarding the involvement of the noticee in the illicit importation of gold into India. If it is found that they have already closed their minds in respect unfolding developments there are all likelihoods of miscarriage of justice. Under such biasedness to the notice, the quasi-judicial proceeding cannot be held to be in accordance with law or in compliance with the principles of natural justice. Reliance is placed on the decision in the case of Calcutta High Court in Raghunandan Jalan vs Collector of Central Excise And … on 16 February, 1972: 1981 (8) ELT 476 Cal.

iv) The noticee contends that the impugned show cause notice is violative of principles of natural justice as the authority had already prejudged the issue and has come to the conclusion that the noticee is not entitled to the release of the goods under seizure. He also contends that the show cause notice suffers from biases as it confronts the noticee with definitive conclusions. He contends that although the show cause notice purports to give an opportunity to the noticee to respond to the charges against it, in fact the said opportunity offered to the noticee is illusory as it is obvious that the authority who issued the SCN has not kept an open mind. The portions of the show cause notice pointed out by the noticee supports the above contentions.

v) The above passages in the impugned notice indicate that there is a lot of substance in the contentions of the noticee. No doubt, at some of the places in the show cause notice the authority has also used the word “appears” suggesting that his conclusion is only tentative but not final or conclusive but the overall impression one gets from a reading of the show cause notice is that the authority has predetermined the issue.

vi) It is settled principle of law that a quasi-judicial authority, while acting in exercise of its statutory power must act fairly and must act with an open mind while initiating the show cause proceeding. A show cause notice is meant to give the person proceeded against a reasonable opportunity of making his objection against the proposed charges indicated in the notice. At the stage of show cause notice, the person proceeded against must be told the charges against him so that he can take his defence and prove his innocence. At that stage, the authority issuing the charge sheet/show cause notice, cannot; – instead of telling him the charges, confront him with definite conclusions of his alleged guilt. If that is done, as has been done in the present case, the entire proceeding initiated by the show cause notice gets vitiated by unfairness and bias and the subsequent proceedings become an idle ceremony.

vii) Therefore, while issuing a show-cause notice, the authorities must take care to manifestly keep an open mind as they are to act fairly in adjudging the guilt or otherwise of the person proceeded against and specially when he has the power to take a punitive step against the person after giving him a show-cause notice. The principle that justice must not only be done but it must eminently appear to be done as well is equally applicable to quasi-judicial proceeding if such a proceeding has to inspire confidence in the mind of those who are subject to it.” The said principle has been followed by the Supreme Court in V.C., Banaras Hindu University v. Shrikant (2006) 11 SCC 42,stating: (SCC p. 60, paras 48-49) quoted as below:

“48. The Vice-Chancellor appears to have made up his mind to impose the punishment of dismissal on the respondent herein. A post-decisional hearing given by the High Court was illusory in this case.

49. In K.I. Shephard v. Union of India 1987 (4) SCC 431 this Court held: (SCC p. 449, para 16) ‘It is common experience that once a decision has been taken, there is a tendency to uphold it and a representation may not really yield any fruitful purpose.”

viii) In Rajam Industries (P) Ltd.’s case, the Chennai High Court held that where a show cause notice quantified the amount of Central Excise duty not paid by the petitioner therein under various heads and also stated that the petitioner therein was liable to pay penalty and interest, the said show cause notice has to be set aside insofar as it relates to the quantification of the amount liable to be paid by the petitioner therein towards the difference of the excise duty and the observations made therein that the petitioner had clandestinely removed the goods. It was held that when the respondents had arrived at the quantum of excise duty stated to have been evaded by the petitioner in the show cause notice by misusing the SSI exemption obtained by it, nothing remains for them to determine after the petitioner filed its response to the show cause notice.

ix) The impugned show cause notice by use of the words “it is evident”, “it is clear”, “it clearly indicates”, and “liable for absolute confiscation” at various places as pointed out above clearly suggests predetermination by the authority of the liability of the noticee. Reliance is placed on the decision in the case of HIGH COURT OF ANDHRA PRADESH in SBQ Steels Ltd. Versus Commissioner of Customs, Central Excise &Service Tax.

x) The apprehension expressed by the noticee is that the show cause notice is indicative of the basis or the prejudged conclusion as to what would be the inevitable and ultimate finding to be recorded by the Adjudicating Authority i.e Additional Commissioner of Customs and no useful purpose would be served by participating in the adjudication proceedings. Further reliance is placed on the following decisions:

(a) Poona Bottling Co. Ltd. &Anr. v. Union of India and Others

(b) 1981 (8) E.L.T. 476 (Cal.) (Raghunandan Jalan v. Collector of Central Excise, West Bengal and Ors.)

(d) Mysore Acetate and Chemicals Co. Ltd. v. Assistant Collector, Central Excise, Mysore). (v) 1981 (8) E.L.T. 565 (Mad.) (Madras Rubber Factory Ltd.

(e) Assistant Collector of Central Excise, Madras and Another).

(f) 1989 (24) E.L.T. 23 (Kar.) (Alembic Glass Industries Limited v. Union of India and Others).

(g) Calcutta Discount Co. Ltd. v. Income Tax Officer, Companies District 1, Cal.. wherein, their Lordship have expressed the view that the Court can issue a writ to prevent unnecessary harassment in appropriate cases.

(xi) The authority who issued the impugned SCN proposed for absolute confiscation of 1880.318 grams of gold finally valued it at Rs 59,32,676/-. The noticee contends that the impugned show cause notice is violative of principles of natural justice as the authority had already prejudged the issue and has come to the conclusion that the noticee is not entitled to the release of the goods under seizure. He also contends that the show cause notice suffers from bias as it confronts the noticee with definitive conclusions. He contends that although the show cause notice purports to give an opportunity to the noticee to respond to the charges against it, in fact the said opportunity offered to the noticee is illusory as it is obvious that the authority who issued the SCN has not kept an open mind.

xii) It is a settled principle of law that quasi-judicial authority, while acting in exercise of its statutory power must act fairly and must act with an open mind while initiating the show cause proceeding. A show cause notice is meant to give the person proceeded against a reasonable opportunity of making his objection against the proposed charges indicated in the notice. At the stage of show cause notice, the person proceeded against must be told the charges against him so that he can take his defence and prove his innocence. At that stage, the authority issuing the charge sheet/show cause notice, cannot, instead of telling him the charges, confront him with definite conclusions of his alleged guilt. If that is done, as has been done in the present case, the entire proceeding initiated by the show cause notice gets vitiated by unfairness and bias and the subsequent proceedings become an idle ceremony. Reliance is placed on the decision in the case of HIGH COURT OF ANDHRA PRADESH in SBQ Steels Ltd. Versus Commissioner of Customs, Central Excise &Service Tax.

xiii) The apprehension expressed by the noticee is that the show cause notice is indicative of the basis or the prejudged conclusion as to what would be the inevitable and ultimate finding to be recorded by the Adjudicating Authority i.e Additional Commissioner of Customs and no useful purpose would be served by participating in the adjudication proceedings.

xiv) In the impugned SCN, it has been proposed for absolute confiscation of the gold seized from noticee. The noticee avers that the impugned show cause notice is bad in law on the ground that the show cause notice has pre-judged and pre-determined the entire issue by proposing for absolute confiscation of the seized gold under the provisions of Customs Act, 1962. Neither Section 111 nor section 125 of the Act provides for absolute confiscation of goods which are not contrabands, and since gold is not a contraband or a prohibited item the owner or person from whom it is seized is entitled to have the goods released on payment of redemption fine and duty. Sections 111(d), 111(1) and 111(m) read as follows:

“#SECTION 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 are brought within the Indian 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;

(l) any dutiable or prohibited goods which are not included or are in excess of those included in the entry made under this Act, or in the case of baggage in the declaration made under section 77;

(m) any goods which do not correspond in respect of value or in any other particular with the entry made under this Act or in the case of baggage with the declaration made under section 77 in respect thereof, or in the case of goods under transhipment, with the declaration for transhipment referred to in the proviso to sub-section (1) of section 54;”

xiv) Section 124 of Customs Act, 1962 which provides for confiscation of the seized goods reads as follows:

“SECTION 124. Issue of show cause notice before confiscation of goods, etc. – No order confiscating any goods or imposing any penalty on any person shall be made under this Chapter unless the owner of the goods or such person – (a)is given a notice in writing with the prior approval of the officer of Customs not below the rank of an Assistant Commissioner of Customs, informing him of the grounds on which it is proposed to confiscate the goods or to impose a penalty; (b) is given an opportunity of making a representation in writing within such reasonable time as may be specified in the notice against the grounds of confiscation or imposition of penalty mentioned therein; and (c)is given a reasonable opportunity of being heard in the matter :

Provided that the notice referred to in clause (a) and the representation referred to in clause (b) may, at the request of the person concerned be oral.”

xv) Section 125 of Customs Act, 1962 which provides for redemption of seized goods reads as follows:

“SECTION 125. Option to pay fine in lieu of confiscation. – (1) Whenever confiscation of any goods is authorised by this Act, the officer adjudging it may, in the case of any goods, the importation or exportation whereof is prohibited under this Act or under any other law for the time being in force, and shall, in the case of any other goods, give to the owner of the goods or, where such owner is not known, the person from whose possession or custody such goods have been seized, an option to pay in lieu of confiscation such fine as the said officer thinks fit.”

xvi). Under Section 125 of Customs Act, 1962 a discretion has been conferred on the Adjudicating Authority to give an option to the importer/owner of the goods to pay fine in lieu of confiscation in cases of goods, the importation or exportation whereof is prohibited under the Act or under any other law for the time being in force but in respect of other goods the officer is obliged to give such an option. In a case of smuggling, having regard to the facts and circumstances in which the goods were said to be imported, only the Adjudicating Authority if he considers it appropriate to direct absolute confiscation of the goods or consider it a fit case for exercise of his discretion to give an option to pay the redemption fine under Section 125 of the Act. In view of sec. 125, the discretion rests with the adjudicating authority for either allowing the goods to be released on redemption fine or confiscate absolutely.

xvii) The High Court of Calcutta in CC (Prev) v/s. Uma Shankar Verma has held that where the goods are not prohibited, the authorities have no choice but to allow the option of redemption of goods on payment of fine. On the other hand, when the goods are prohibited, allowing redemption on payment of fine is wholly within the discretion of the adjudicating authority.

xviii) The law on absolute confiscation vis-à-vis option to redeem the same stands discussed in detail by the Tribunal in the case of Gauri Enterprises Vs. Commissioner of Customs, Pune (2002 (145) E.L.T. 706 (Tri. Bang.) wherein,

(a)It was observed in the said judgment that resort to absolute confiscation should be an exception and not the rule.

(b)The appellant should be given an option to redeem the goods on payment of fine,

xix) The learned authority who issued the SCN and proposed for absolute confiscation of the goods has indirectly put the Adjudicating Authority under a compulsion to confiscate the goods absolutely. This is an illegal interference of the discretionary power of the adjudicating authority. The show cause notice has thus pre-judged and pre-determined the issue. The notice submits that it is a pre-meditated notice and it has foreclosed the material rights of the noticee for redemption of the goods on payment of fine. The noticee refers to the decision of the Hon’ble Supreme Court in the cases of Oryx Fisheries Private Limited and Siemens Ltd. He also relies on the judgement of MOHIT THAKOR Vs COLLECTOR, report in 1994 (72) ELT 865 wherein, under similar circumstances, the Bench ordered for grant of redemption of 2 Kgs. of seized gold. It was also held that absolute confiscation was not justified in view of FER/Customs notifications and ITC order prevailing during the relevant period.

xx) The issue of absolute confiscation of goods and option of redemption thereof has been a subject to judicial interpretation in the past with rulings of the High Court and Tribunal on the same. The High Court of Calcutta in CC (Prev) v/s. Uma Shankar Verma has held that where the goods are not prohibited, the authorities have no choice but to allow the option of redemption of goods on payment of fine. On the other hand, when the goods are prohibited, allowing redemption on payment of fine is wholly within the discretion of the adjudicating authority.

xxi) Further, it is the discretion of the authority to impose either the minimum or maximum penalty under the penal provision of the Act. Discretion is inevitable both in civil and criminal proceedings. It is impossible to foresee the eventualities in the judicial proceedings and for this purpose the power of discretion is conferred upon the judge to decide justly according to the facts and circumstances. It is for this reason that in every piece of legislation generally we find words like, “as the court deems proper”, “as the court thinks reasonable”, “as the court otherwise directs” and other similar expressions which confers discretionary power on the court. These expressions show that a court/adjudicating Authority has unbridled freedom to decide a case according to his subjective satisfaction. Judges/Adjudicating Authorities are perceived as wielding wide range of power because of the discretion conferred on them. The fundamental purpose of imposition of sentence is based on the principle that the accused must realise that the crime committed by him has not only created a dent in his life but also a concavity in the social fabric. The purpose of just punishment is designed so that it serves as a deterrent for the individual and the society should not also suffer from the commission of crime time and again.

xxii) In view of the above submission, it is the discretionary power of the adjudicating authority either to absolutely confiscate the seized goods or redeem the goods on payment of fine or release the goods unconditionally. The prosecution cannot interfere with such a discretionary power by proposing or suggesting absolute confiscation of the goods and recommending for exemplary punishment. The authority who issued the impugned SCN interfered in the discretionary power of the adjudicating authority by proposing exemplary punishment on the noticee. If the Adjudicating Authority yields to such an interference, it will be against law.

xxiii) The noticee humbly requests the Adjudicating Authority to peruse the documents on record and the statutory provisions. Though power under Sections 111 and 112 of confiscation and penalty are available, under Section 125 of the Customs Act, Authority also enjoys discretionary power to impose fine in lieu of confiscation. Therefore, the proposal made in the SCN for absolute confiscation under Section 111(d), 111(1) and 111(m) of the Act is interference of the said discretionary power and therefore the SCN dated 31-12 18 is bad in law and not sustainable.

xxiv) The noticee submits that since the authority who issued the SCN has pre judged the entire issue and the impugned proceedings, it is not a show cause notice, but in effect it is an order of adjudication except, it has been termed as a show cause notice. To support his contention that the authority has pre judged and pre-determined the issue and the noticee would not have reasonable opportunity in defending himself, reliance is placed on the decision of the Hon’ble Supreme Court in the case of Oryx Fisheries Private Limited vs. Union of India & Ors., reported in (2010) 13 SCC 427 wherein, the Honorable Supreme Court observed as follows:

“Show cause notice cannot be read hyper technically and it is well settled that it is to be read reasonably. But while reading a show-cause notice the person who is subject to it must get an impression that he will get an effective opportunity to rebut the allegations contained in the show-cause notice and prove his innocence. If on a reasonable reading of a show-cause notice a person of ordinary prudence gets the feeling that his reply to the show-cause notice will be an empty ceremony and he will merely knock his head against the impenetrable wall of prejudged opinion, such a show-cause notice does not commence a fair procedure especially when it is issued in a quasi-judicial proceeding under a statutory regulation which promises to give the person proceeded against a reasonable opportunity of defence”

xxv) It is further submitted that even though the show cause notice is answerable to another officer, namely, the Additional Commissioner of Customs, yet the inherent defect cannot be cured, as the show cause notice has pre-determined the issue and it is the pre-meditated in nature and in such circumstances, the SCN should be quashed. In support of such contention, reliance is placed on the decision of the Hon’ble Supreme Court in the case of Siemens Ltd., vs. State of Maharashtra & Ors., reported in (2006) 12 SCC 33. (para 9&10).

xxvi). In the case of K.I. Shephard Vs. Union of India [(1987) 4 SCC431, the Hon’ble Supreme Court held as follows:

“When notice is issued with premeditation, a writ petition would be maintainable and also held that in such an event, even if the court directs the statutory authority to hear the matter afresh, ordinarily such hearing would not yield any fruitful purpose.”

xxvii) In the case of SBQ Steels Ltd. v Commissioner of Customs, Central Excise and Service Tax, Guntur 2013 (1) TMI 359 (Andhra HC), it was held as follows:

“While issuing such show cause the department should ensure that it does not indicate any pre-meditation or prejudgment by the Department.”

xxviii) In view of the above submission, the noticee submits that the impugned SCN which pre-judged and pre-meditated the entire issue is invalid and not sustainable. The impugned SCN is therefore liable to be quashed.

1.3. Notification No 50/2017-Cus Dated 30-6-2017 is Not Applicable in The Present Case

i) In the impugned SCN, allegation was made that the noticee was not entitled to import the gold into India in terms of notification no 50/2017 -Cus dated 30-6-17. In terms of Section 2(33) of Customs Act, 1962 if any goods are imported in violation of the conditions for such importation, such goods shall be treated as “Prohibited Goods”.

ii) There is no dispute regarding the fact that the noticee had an intention to smuggle the gold. The Authority who issued the impugned SCN proposed for confiscation of the gold on the ground that the noticee was not eligible passenger to bring any quantity of gold as per notification number 50/2017-Cus dated 30-6-17.

iii) The noticee submits that Notification no 50/2017-Cus dated 30-6-17 is only an exemption notification and it does not stipulate anywhere that gold is a prohibited goods and the eligibility of the noticee for concessional rate of duty given in respect of gold under the said notification is not an issue at all in this case as the noticee(s) never claimed it. Thus, notification no 50/2017-Cus dated 30-6-17 is not relevant at all in the present case. The relevant provision in the context of prohibited goods is Section 11 of Customs Act and it is not the case of the Department that gold has been notified as prohibited goods either absolutely or subject to some conditions. No other legal provision is also mentioned in the Show Cause Notice by which import of gold has been prohibited. Even Baggage Rules do not prohibit the importation of gold and its purpose is only to extend the facility of exemption from duty by way of providing free allowances in respect of bonafide baggage goods which are generally household goods and the goods of personal use by a passenger. Therefore, non-coverage of any goods under Baggage Rules such as gold only means that free allowance and exemption from duty is not allowed on such goods.

iv) The Hon’ble Supreme Court of India in the case of Om Prakash Bhatia vs Commissioner of Customs, Delhi 2003(155) ELT 423 (S.C) held in reference to Section 2(33), 11 and 113(d) of Customs Act, 1962 that prohibition of importation or exportation can be subject to certain prescribed condition to be fulfilled before or after clearance of goods and if conditions are not fulfilled it may render the goods as prohibited goods. The said case was decided in the context of over invoicing of exported readymade garments.

v) In the instant case against the noticee a case of absolute prohibition of imported gold has been made out in the SCN because of which the gold brought by the noticees can be termed as prohibited goods as defined in Section 2 (33) of the Customs Act, 1962 as enunciated by the Supreme Court in the above referred case (Om Prakash Bhatia vs Commissioner of Customs, Delhi 2003(155) ELT 423 (S.C)). No concrete basis has been revealed in the SCN to consider the gold as prohibited goods. In the said case it was held that since the appellant did not fulfill the basic eligibility criteria under Notification No. 31/2003-Cus, the gold brought by the appellant was rightly confiscated absolutely by the Commissioner in view of the concealment adopted by the appellant to bring in the gold. But it is not elaborated as to how the non-eligibility of a passenger under notification 50/2017-Cus dated 30-6-17 would mean that the gold is prohibited. Instead, the Government has noticed that the Notification No. 50/2017-Cus dated 30-6-17 provided concessional rate of duty of customs on fulfilment of specified conditions and did not prohibit the importation of gold by specifying any condition. Therefore, the impact of non-availability of exemption from customs duty on account of not being eligible was only that the person would be liable to pay customs duty at tariff rate. But despite of the fact that the said notification 50/2017-Cus dated 30-6-17 did not declare ‘the gold as prohibited goods, it cannot be held that the imported gold became prohibited goods in the event of the concerned passenger was not eligible to import the gold. Thus, Hon’ble- Madras High Court’s and subsequently the Apex court’s conclusion in the case of Samynathan Murugesan [2010 (254) EL.T. that the gold ornaments are Prohibited goods is not actually founded in notification no 31/2003-Cus.or any other legal positions. Further, the Hon’ble Madras High Court in its later decision in the case of T. Elavarasan vs CC (Airport), Chennai, 2011 (266) ELT 167 (Mad), has held that gold is not prohibited goods and a mandatory option is available to the owner of the goods to redeem the gold on payment of fine under Section 125 of Customs Act, 1962.

vi) Even, the Hon’ble High Court of Andhra Pradesh in the case of Shaikh Jamal Basha vs GOI, 1997 (91) ELT 277 (AP) has also held that as per Rule 9 of Baggage Rules, 1979 read with Annexure-B, gold in any form other than ornament could be imported on payment of Customs Duty only and if the same was imported unauthorizedly the option to owner of the gold is to be given for redemption of the confiscated gold on payment of fine.

vii) The Hon’ble High Court of Bombay in the case of Union of India Vs Dhanak M Ramji (2003(248) ELT 128 (Bom)]and the Apex Court in the case of Sapna Sanjiv Kohli Vs Commissioner of Customs, Mumbai [2010(253) ELT A52 (SC))has also held that gold is not prohibited goods and accordingly the gold jewellery was allowed to be redeemed on payment of fine and duties.

viii) Notification 50/2017-Cus dated 30-6-17 does not prohibit the importation of goods in any manner and it only specifies the eligibility criteria only for the purpose of exemption from Custom duty in respect of the imported goods which is not the issue in the instant case.

1.4. Gold is not a Prohibited Item. It is Only a Restricted Item. Therefore, Absolute Confiscation is Not Warranted in The Present Case

i) Gold is not a prohibited item. It is only a restricted item. Prohibition relates to goods which cannot be imported by any one, such as arms, ammunition, drugs etc. The intention behind the provisions of Section 125 is clear that import of such goods under any circumstances would cause danger to the health, welfare or morals of people as a whole. This would not apply to a case where import/export of goods is permitted subject to certain conditions or to a certain category of persons and which are ordered to be confiscated for the reason that the condition has not been complied with. In such a situation, the release of such goods confiscated would not cause any danger or detriment to public health. Admittedly, import of gold is permitted in case of certain category of persons, subject to certain conditions, therefore, it would not fall under the prohibited category as envisaged under the said provisions. The above view is also supported by Hon’ble High Court of Calcutta decision in the case of Commissioner of Customs (Preventive), West Bengal Vs. India Sales International reported in 2009 (241) ELT 182 (Cal.). Hon’ble High court while deciding whether “prohibited’ has to be read as prohibited absolutely, held that the Court cannot insert any word in the statute since it is in the domain of the legislators. The Hon’ble High Court has also held that option given under Section 125 of the said Act in respect of prohibited goods and right given to authorities for redemption of the confiscated goods cannot be taken away by Court by inserting a particular word therein. The Hon’ble High Court further held that power has been given by legislators to a particular authority to act in a particular manner and the said authority must act accordingly and not otherwise at all. In view of the above submission, the noticee contends that the gold bars imported by him are notto be treated as ‘prohibited goods’ and therefore the goods are not liable for confiscation under the provisions of Sections 111(d), (1) and (m) of the Customs Act, 1962.

ii) Section 125 of the Customs Act 1962 which gives power to the Adjudicating Authority for redemption of confiscated goods reads as follows:

“125(1):Whenever confiscation of any goods is authorised by this Act, the Officer adjudging it may, in the case of any goods, the importation or exportation whereof is prohibited under this Act or under any other laws for the time being in force, and shall, in the case of any other goods, give to the owner of the goods (or where such owner is not known, the person from whose possession or custody such goods have been seized) an option to pay in lieu of confiscation such fine as the said office thinks fit:

Provided that, without prejudice to the provisions of the proviso to sub-section (2) of section 115, such fine shall not exceed the market price of the goods confiscated, less in the case of imported goods the duty chargeable thereon.”

iii) In the present case a question of law arises namely whether the expression “prohibition” contained in Section 111(d) of the Customs Act 1962 includes prohibition of imports coupled with a power to permit importation under certain conditions. And the facts relevant for the purpose of deciding the point in issue is simple.

#Section 111 (d) of the Act provides:

“The following goods brought from a place out- side India shall be liable to confiscation:-(d) any goods which are imported or attempted to be imported or are brought within the Indian 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.”

#”Prohibited goods” is defined in Section 2(33) of the Act. That definition reads as:

“prohibited goods” means 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 but 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.”

This takes us to the question whether by importing gold, Mr. N contravened Section 111(d) read with Section 125 of the Act. It is urged that expression “prohibition” in Section 111(d) cannot be considered as a total prohibition and that expression does not bring within its fold the restrictions imposed for import of gold. Such a restriction cannot be considered as a prohibition under Section 111 (d) of the Act. While section 111 (d) of the Act uses the word “prohibition”, not merely prohibition of imports and exports, it also includes “restrictions or otherwise controlling” all imports and exports. Accordingly, restrictions cannot be considered as prohibition more particularly under the Foreign Trade Policy 2014-19. Under Export and Import Policy, laid down by the DGFT, in the Ministry of Commerce, certain goods are placed under restricted categories for import and export. Some of the goods are absolutely prohibited for import and export whereas some goods can be imported or exported against a licence.

iv) The main difference between prohibitions and restrictions is that –

# Prohibited goods are never allowed to enter or exit under any circumstances.

# Restricted goods are allowed to enter or exit the Country only in certain circumstances or under certain conditions, for example on production of a permit, certificate or letter of authority from the relevant government department, institution or body.

# Examples of prohibited goods:

a) Narcotic drugs, psychotropic substances and other controlled pharmaceuticals

b) Fully automatic, military and unnumbered weapons and explosives.

c) Obscene matters and objects, such as videocassettes, DVDs, films, books, magazines etc.;

d) Nuclear, chemical, toxic, biological weapons and similar substances;

c) counterfeit bank notes;

d) Goods to which a trade description or trademark is applied in contravention of any Act (for example, counterfeit goods – see below)

e) Unlawful reproductions of any works subject to copyright

f) goods shipped or originating from countries under an embargo from the United Nations Security Council and the European Union

# Examples of Restricted Goods

a) Currency, gold and silver bullion.

b) Endangered plants and animals. The restriction includes any parts of or articles made from them.

c) Food, plants, animals and biological goods:

d) Medicines.

v) According to the Law, the importation and exportation of certain goods is prohibited or restricted. Restrictions usually refer to the need for securing the authority or inspection from the appropriate Government Department. The aim of prohibitions and restrictions is the protection of society and the perpetuation of a safe environment. More specifically, such prohibitions and restrictions are essential for the safeguard of social ethics, order and security, protection of public health or the health of animals or the protection of plant-life, the protection of industrial and commercial property, archaeological treasures, cultural artefacts and others.

vi) The World Customs Organization is the only international organization with competence in Customs matters and can rightly call itself the voice of the international Customs community. In this connection reference is invited to the GLOSSARY OF INTERNATIONAL CUSTOMS TERMS published by World Customs Organization. The WCO defines prohibition of goods and restriction of goods as follow:

# PROHIBITIONS OF GOODS (Marchandises prohibées) – Goods whose importation or exportation is prohibited by law.

# RESTRICTION OF GOODS (Restriction de marchandises) – A legal requirement by law for the submission and approval of an application or other document (other than for Customs purposes) as a prior condition to importation or exportation.

vii) The Foreign Trade Policy 2014-19 which is in force categorizes goods into 2 categories as free, restricted or prohibited, thus makes a distinction between prohibited goods and restricted goods. The policy says that there are two kinds of restrictions. The items which are prohibited for trade are beyond the purview of import/export. The items which are restricted can be imported with a license (with its conditions) issued by DGFT. Gold figures as a restricted item. It would, therefore, not to be correct to say that the policy prohibited import of gold. It may be seen from the latter part of the Clause 33 of Section 2 of the Act which is in the nature of a clarification that even the goods, the import of which is prohibited are not considered to be prohibited if the condition subject to which their export or import are being complied with. Therefore, even if conditions for import of gold are not fulfilled, gold cannot be considered as prohibited goods.

viii) In this connection, the relevant paras of Foreign Trade Policy (14 April 2015 to 31st March 2020) are reproduced under to establish the contention that gold is not a prohibited item.

2.0. PRINCIPLES OF RESTRICTIONS

DGFT may, through a Notification, impose restrictions on export and import, necessary for: –

(a) Protection of public morals;

(b) Protection of human, animal or plant life or health;

(d) Prevention of use of prison labour;

(e) Protection of national treasures of artistic, historic or archaeological value;

(f) Conservation of exhaustible natural resources;

(g) Protection of trade of fissionable material or material from which they are derived;

(h) Prevention of traffic in arms, ammunition and implements of war

(i) Relating to the importation or exportation of gold or silver.

9.41 “Prohibited” indicates the import/export policy of an item, as appearing in ITC (HS) or elsewhere, whose import or export is not permitted.

9.47 “Restricted” is a term indicating the import or export policy of an item, which can be imported into the country or exported outside, only after obtaining an Authorisation from the offices of DGFT.

ix) In view of the above submission, Gold is not prohibited for import and therefore an option should be given to the importer for redemption of the goods, even if the importer fails to fulfill the conditions for import of gold, on payment of fine which does not exceed the market price of the goods less duty payable thereon.

3.0. THE NOTICEE CLAIMS OWNERSHIP OF THE GOLD UNDER SEIZURE

i) The noticee submits that he is the owner of the 1880.318 grams of gold valued at Rs 59,32,676/-. The gold was purchased by him in Dubai for his sister’s marriage. He attempted to clear himself through green channel to save Customs Duty.

ii) It is submitted without prejudice to the submission already made, admittedly gold is not a prohibited item for import. It is a restricted item and consequently the person from whom it was recovered or the owner of the goods is entitled for release of the seized material under Section 125 of the Customs Act. The benefit of the same be extended to the noticee. Importantly, no one else has claimed ownership of the gold pieces under seizure. Taking the overall facts and circumstance of the case and submissions made by the noticee into consideration, the gold under seizure may be released to the noticee on payment of reasonable fine, penalty and applicable duty. Reliance is placed on the decisions in the following cases

Halithu Ibrahim Vs Commissioner of Customs [2002 -TIOL 195-CESTAT MAD]
Felix Dorex Fernnees vs Commissioner of Customs [2002 TIOL-194 CESTAT- MUM]
Yakub Ibrahim Yusuf Vs CC, Mumbai 2011 (263) ELT 685 (Tri- Mumbai)
Reji Cheriyan Vs CC, Kochi
P. Sinnasamy Vs CC, Chennai 2007 (220) ELT 308 (Tri-Chennai)
Krishna kumari Vs CC, Chennai 2008 (229) ELT 222 (Tri-Chennai)
S. Rajagopal Vs CC, Trichy 2007 (219) ELT 435 (Tri-Chennai)
M Arumugam Vs CC, Tiruchirapalli, 2007 (220) ELT 311 (Tri-Chennai)
Shaik Jamal Basha V. Government of India (1997(91) E.L.T. 277 (A.P.)
Commissioner of Customs (Preventive) Vs. Uma Shankar Verma (2000 (120) E.L.T. 322 Cal.)
T. Elavarasan vs The Commissioner of Customs

iii) It is respectfully submitted by the noticee that he is entitled to an opportunity for redeeming the gold. Under Section 125 of the Customs Act, it is open to the Adjudicating authority to give an option to the owner to redeem the goods. Tribunals have held to this effect in numerous similar cases in the past. In the case of V.P.Hameed the Collector’s order of absolute confiscation of gold was set aside and the petitioner was allowed to redeem the goods under Section 125. This precedent is to be followed in the case of noticee too.

iv) It has been consistently held by Hon’ble Courts, Tribunals and Revisionary Authority of Government of India that if the import of commodities is not completely banned, then such commodities or articles could be released on payment of redemption fine. Reliance is placed on the decisions in the following cases wherein, despite the act of smuggling having been proved, the gold under seizure was released to the persons from whom it was seized.

VP Hameed Vs Collector of Customs, Bombay {1994 (73) ELT 425}: Baggage Gold- Confiscation and Redemption fine – Gold brought in as baggage not being declared by both appellants liable to confiscation under Section 1119d) of Customs Act, 1962. Redemption on payment of duty in foreign exchange allowed in view of liberalized policy allowing import of Gold – Section 125 ibid.
Kader Mydin vs Commissioner of Customs (Preventive), West Bengal {2001 (136) ELT 758}:- Gold biscuits brought in baggage by appellant not declared – Confiscation under Section 111(d) of Customs Act, 1962 sustainable – However option given to appellant to redeem the same on payment of fine of Rs 15 lakhs – Section 125 ibid.
Sapna Sanjeev Kohli Vs Commissioner of Customs, Alrport, Mumbai {2008(230) ELT 305}:- Absolute confiscation of gold jewellery not warranted which may be cleared on payment of redemption fine of Rs 10 lakhs.
Vattakkal Moosa Vs Collector of Customs, Cochin {1994 (72) ELT 473 (GOI)}:-_Redemption fine – Customs _ Gold weighing almost 5 kgs not declared- Absolute confiscation of gold not justified, passenger being otherwise qualified to bring in gold upto 5 kgs on payment of duty. Gold allowed to be released on payment of a redemption fine of Rs 4 lacs plus duty to be paid in foreign exchange – Section 125 of Customs Act, 1962.
Order no 426/04 issued vide file no 380/57/8/2094-RA-Cus dated 21-9-2004 passed by the Revision Authority, Government of Indiaupholding the Order of the Commissioner of Customs (Appeal), Mumbai Airport order redemption of the non-declared seized gold imported by an eligible passenger on payment of fine, penalty and duty.
In the case of K. Kuttiyandi v/s. Commissioner of Customs, Chennai (Appeal No. C/29/2000), CESTAT Benchset aside the Commissioner’s order of absolute confiscation of gold biscuits and he was directed to determine a fine to be paid by the party for redeeming the goods under Section 125.

v) All the decisions in the abovesaid cases are applicable to the noticee. As held in the abovesaid cases, the gold under seizure may be redeemed to the noticee on payment of reasonable fine, penalty and applicable duty.

4.0. FINAL SUBMISSION OF THE NOTICEE

i) The noticee respectfully submits that a complete and comprehensive appreciation of all vital features of the case and the entire evidence on record with reference to broad and reasonable probabilities of the case as carefully scanned and the contentions raised by the noticee may be taken into consideration while adjudicating the case. In view of all the abovesaid submissions, allegations made against the noticee that he acted as carriers are not proved. The allegations made under the impugned SCN is seen severely prejudiced with contradictory recording of facts. Considering the infirmities brought forth by the noticee, the SCN cannot be said to be free from elements of malice and incorrect portrayal of facts. The contradictions in the SCN need to be addressed, following principles of Natural Justice.

ii) It was a single and solitary incident of an alleged act of smuggling of goods, which can never be justifiable ground for absolute confiscation invoking the provisions of Section 111 of Customs Act, 1962. The act of the noticee cannot be termed as an organised crime or manifesting of an organised smuggling activity. The test in such a case is to see whether the act is such that it gives rise to an inference that the noticee was a habitual offender. The case against the noticee fails this test. He committed the mistake only with an intention to save a little money.

iii) The noticee submits that he is a law-abiding citizen and he has never come under any adverse remarks. The noticee prays for release of the gold on payment of appropriate fine, reasonable penalty and appropriate duty and to drop further proceedings against him. Further proceedings against him may be dropped.

How Does draft Brief Facts Assist OIO in Tackling the Contentions

The draft brief facts is tabled before the adjudging officer authorized in this behalf and after certain tweaking the draft is approved. The OIO so resulting, apart from general ‘discussion and finding’ has following part in the order.

1. Coming to the written submissions by Mr. N through his Advocate Mr. Adv. I basically find the following:

(i) Mr. N. doesn’t dispute the possession, concealment, non-declaration and recovery of Six (06) Gold Bars of 10 tolas each, One (01) crude Gold Kada both weighing 899 grams and the fine gold dust in wax yielding actual gold of 981.318 grams, together weighing 1880.318 gms and valued altogether at Rs. 59,32,676.

(ii) Passenger doesn’t dispute that the act was of smuggling and the seized gold items were not concealed ingeniously.

(iii) He contends that there is No Valid Seizure of the Gold extracted by process of melting and refining.

Here, I find that the gold dust once seized was never released provisionally, nor handed over to anyone for the purpose other than investigation. Getting a refined Gold from Govt. Mint by converting the dust is only part of Investigation process which is done for precise quantification of valuation all the way leading to quantification for imposition of penalty and redemption fine if eligible for. The extracted refined gold being only integral to dust, doesn’t require issuance of a further seizure memo. Further, the judgements relied upon are not comparable to the instant case insofar as facts and circumstances are concerned. Accordingly, ratios of the cited judgements would not apply for rendering the seizure of 981.318 grams of gold as invalid.

(iv) Language of the SCN is conclusive and predetermined and it influences the decision of adjudicating authority. Proposal for confiscation by the Investigation is bad in law.

I find that the “Proposal” word find place within the section 124(a) itself… “.. informing him of the grounds on which it is proposed to confiscate the goods or to impose a penalty.” Hence, an investigation agency can be conclusive in its findings during Investigation. This although seems a predetermined SCN but it aptly serves to adjudicating proceedings in taking a balanced view as the adjudicating authority in absence of a conclusive take on Investigation, cannot decide the case based on his own whims and fancy. Again, I find that, the judgements relied upon are not comparable to the instant case insofar as facts and circumstances are concerned. Accordingly, ratios of the cited judgements would not apply to the instant case.

(v) The Noticees being a carrier is not proved.

I find that even if the Noticee contends not being a carrier in perpetuity, the punitive measures laid under extant provisions do not seem to be relaxed in his favour.

(vi)The Prohibited and restricted goods are different and gold falls under restrictive.

I find that within contentions made, there is lack of conjoint reading of all the provisions together and instead, literal meaning of provisions in isolation seems having been referred with deepest flaws in understanding the spirit thereof.

(vii)There are case laws which have allowed the gold for redemption which the notice relies upon.

I have gone through the entire case laws relied upon I find that ratios of Judgements are not fully applicable to the instant case. Additionally, there are contra judgements which does not allow me for redemption in the instant case.

(viii)Single and solitary instance of smuggling

I do not find provisions of law any separate for the offences committed as single instance and that doesn’t permit the redemption based on this ground either.

2. Upon going through the averments made by the noticee, I find that a superficial and plain reading approach of the extant provisions of the law has been adopted. I find that the noticee is inclined on ignoring the facts and circumstances of the instant case and essentially has ruled out the conjoint reading of various provisions of law that are attracted in the seizure cases of baggage mode which is entirely different from the regular mode of import. So, on taking up a balanced perspective and a considerate view, I find that averments in the written reply lack the substance and merit and every contention of the noticee has been adequately covered under foregoing paras of this order. Accordingly, without being influenced by the proposals made under SCN, I hold that the redemption cannot be allowed in the instant case.

The above portion of the OIO is meant for addressing the noticee’s concerns squarely as certain things under usual ‘discussion & findings’ are not addressed. The motive of the article is to give a basic idea as to how the orders issued by the adjudging officer in a quasi-judicial setting address the averments of the noticees. I will appreciate if you could drop in your inputs as to how the draft orders could be made more inclusive, incorporating additional elements.

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