IN THE HIGH COURT OF JUDICATURE AT MADRAS DATE: 27-04-2009 CORAM: THE HONOURABLE MRS. JUSTICE PRABHA SRIDEVAN AND THE HONOURABLE MR. JUSTICE M.SATHYANARAYANAN C.M.A.No.2040 of 2007 Commissioner of Customs(Air) Custom House No.60, Rajaji Salai Chennai – 1 … Appellant Vs. 1. Samynathan Murugesan 2. Customs, Excise and Service Tax Appellate Tribunal South Zonal Bench at Chennai Shastri Bhawan Annexe, 1st Floor 26, Haddows Road Chennai – 600 006 … Respondents Civil Miscellaneous Appeal against the final order No.1038 of 2006 dated 09-11-2006 on the file of Customs, Excise and Service Tax Appellate Tribunal, Chennai. For appellant :: Mr. S. Yashwanth, SCGSC For respondents :: Mr. A. Thiagarajan, SC for Mr. S. Ramesh Kumar for R1 JUDGMENT (Judgment of the Court was delivered by Prabha Sridevan,J.) The substantial question of law raised in this civil miscellaneous appeal are as follows: “Whether in the facts and circumstances of the case, the Tribunal was right in remanding the matter with a direction to the Commissioner to invoke the power under Section 125 of the Customs Act for redemption of the goods on payment of fine?” 2. The facts of the case are as follows: The respondent is a Indian passport holder. He had been working in Singapore under a work permit. The period of stay in Singapore are as follows: From 1993 to 1995, he was there for two years. He returned to https://hcservices.ecourts.gov.in/hcservices/ India for a short visit and went back in 1995, worked their for a period of 5 ½ years continuously. Then, again he was there in 2004 and 2005. In 2005, he brought gold ornaments allegedly purchased from the savings over the years and kept in safe custody. When he arrived at Chennai Airport on 12-07-2005 a Customs Officer intercepted him. He asked him what were the goods that he was carrying. He said that they were personal belongings, TV sets and gold jewellery. He also offered to pay duty if it was found that he was carrying baggage in excess of free baggage allowance or in excess of duty free allowance. The officers seized gold jewellery under a mahazar and also damaged the TV set to see if any gold was concealed in the picture tube. The confessional statement was recorded. He was arrested and remanded to judicial custody on 13-07-2005 and also detained under COFEPOSA. On 09-01-2006, a show cause notice was issued. The Department proposed to levy penalty under Section 112 of the Customs Act. The Commissioner of Customs ordered absolute confiscation of the gold jewellery and a TV set and a penalty of Rs.2,00,000/- was imposed. On appeal, the Tribunal remanded the matter for fresh adjudication, giving the respondent a reasonable opportunity of redeeming the goods. Against this order of remand, the present appeal has been filed. 3. The learned Senior Central Government Standing Counsel submitted that a person working abroad is eligible to import gold weighing upto 7.075Kgs as per the Explanation to notification 31/2003-Cus.dated 01-03-2003. An eligible passenger is one who has coming to India after a period of not less than 6 months of staying abroad and short visits upto a total of 30 days shall be ignored. The learned Senior Central Government Standing Counsel submitted that the respondent herein gone to Singapore on 19-04-2005 and returned to India on 12-07-2005, that is, he had stayed only for about 2 ½ months and prior to 19-04-2005 had visited abroad was during 2004. There were no short visits. Therefore, the respondent was not ‘an eligible passenger’ to bring gold. 4. The next submission that he made was that the respondent was in fact walking through the green channel at the time of interception and he specifically denied that he was carrying gold. In the customs declaration form, he had not declared the gold ornaments carried by him. But when the gold jewellery was found, he said in his statement that the TV in which the gold ornaments were recovered do not belong to him and that they were given by his uncle’s friend at Singapore Airport. The second version is that he had converted his hard earnings to gold chains and jewellery ornaments and gifts which he received from relatives and friends were also converted to gold chains. There was no evidence to support this statement. The learned counsel submitted that it would not be possible for a labourer/driver to have earned 40lakhs to purchase so much gold. It was clearly a false statement. He had attempted to smuggle 7.075Kgs by ingenious concealment in the TV set without declaring to customs in violation of provisions under section 11 and 77 of the Customs Act and therefore, the learned Senior Central Government Standing Counsel submitted that this was a case where the goods were ‘prohibited’ since he did not belong to the category of persons who could bring in gold at concessional rate of duty. So far as the respondent was concerned, he was prohibited from bringing the gold since he did not https://hcservices.ecourts.gov.in/hcservices/ satisfy the relevant conditions. Therefore, under Section 112, the officer had the discretion to decide whether he should allow the gold to be redeemed. The officer had considered the mode of concealment and the fact that he was not an eligible passenger and had rightly held that absolute confiscation is warranted. The learned Central Government Standing Counsel referred to the following decisions: Shaik Jamal Basha Vs. Government of India (1997 (91) ELT 277 (AP)) Garg Woollen Mills (P) Ltd. Vs. Addl.Collr. of Customs, New Delhi (1998 (104) ELT 306 (SC)) A. Shaud Ali Vs. Additional Collector of Customs, Madurai 2001 (133) ELT 554 (Mad) Nine Star Exports Vs. Commissioner of Customs (Ports) Chennai (2003(151) ELT 265 (Mad)) Gurucharansingh Vs. Directorate of Revenue Intelligence in Crl. Appeal No.576 of 2008 dated 01-04-2008 Commissioner of Central Excise, Bangalore Vs. Srikumar Agencies (2008 – TIOL-220-SC-CX-LB) M.K.S. Mohammed Rafi Vs. Joint Commissioner of Customs in W.P.No.15146 of 2001 dated 03-12-2004 Prince Anthony Sagayam Vs. The Deputy Commissioner of Customs in W.A.No.758 and 563 of 2006 dated 25-01-2008 5. Mr. A. Thiagarajan, learned Senior Counsel appearing for the respondent submitted that the goods were only restricted goods. Gold was not a prohibited item. Therefore, the officer was under a mandatory duty to give option to the person found guilty to pay in lieu of confiscation. He relied on 1997 (91) E.L.T. 227 (A.P.)(Shaik Jamal Basha Vs. Government of India). 6. Section 2(33) of the Customs Act defines ‘prohibited’ goods. It reads as follows: “(33)" 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;” 7. Section 11 empowers the Central Government to prohibit either absolutely or subject to such conditions to be fulfilled before or after clearance the import or export of the goods of any specified direction by issuing a notification in this behalf. The effect of interpretation of the words “prohibited goods” was considered in Om Prakash Bhatia Vs. Commissioner of Customs (2003 (6) SCC 161) and in paragraph No.10 of the said judgment the Supreme Court held as follows: https://hcservices.ecourts.gov.in/hcservices/ “10. From the aforesaid definition, it can be stated that (a) if there is any prohibition of import or export of goods under the Act or any other law for the time being in force, it would be considered to be prohibited goods; and (b) this would not include any such goods in respect of which the conditions, subject to which the goods are imported or exported, have been complied with. This would mean that if the conditions prescribed for import or export of goods are not complied with, it would be considered to be prohibited goods. This would also be clear from Section 11 which empowers the Central Government to prohibit either 'absolutely' or 'subject to such conditions' to be fulfilled before or after clearance, as may be specified in the notification, the import or export of the goods of any specified description. The notification can be issued for the purposes specified in Sub-section (2). Hence, prohibition of importation or exportation could be subject to certain prescribed conditions to be fulfilled before or after clearance of goods. If conditions are not fulfilled, it may amount to prohibited goods. This is also made clear by this Court in Sheikh Mohd. Omer v. Collector of Customs, Calcutta and Ors. AIR 1971 SC 293 wherein it was contended that the expression 'prohibition' used in Section 111(d) must be considered as a total prohibition and that the expression does not bring within its fold the restrictions imposed by Clause (3) of the Import Control Order, 1955. The Court negatived the said contention and held thus:-- "...What Clause (d) of Section 111 says is that any goods which are imported or attempted to be imported contrary to "Any prohibition imposed by any law for the time being in force in this country" is liable to be confiscated. "Any prohibition" referred to in that section applies to every type of "prohibition". That prohibition may be complete or partial. Any restriction on import or export is to an extent a prohibition. The expression "any prohibition" in Section 111(d) of the Customs Act, 1962 includes restrictions. Merely because Section 3 of the Imports and Exports (Control) Act, 1947, uses three different expressions "prohibiting", "restricting" or "otherwise controlling", we cannot cut down the amplitude of the word "any prohibition" in Section 111(d) of the Act. "Any prohibition" means every prohibition. In other words all types of prohibitions. Restriction is one type of prohibition. From item (I) of Schedule I, Part IV to Import Control Order, 1955, it is clear that import of living animals of all sorts is prohibited. But certain exceptions are provided for. But nonetheless the prohibition continues."” Therefore, if we apply this judgment to the notification, the notification contemplates import of gold subject to certain conditions. The relevant paragraphs of Import trade control order are extracted as follows: “Import of Gold permitted as Baggage. https://hcservices.ecourts.gov.in/hcservices/ Import of gold in any form, including ornaments but excluding ornaments studded with stones or pearls, is allowed to be imported as part of baggage by passengers of Indian origin or a passenger holding a valid passport issued under the Passport Act subject to the following conditions: that the passenger importing the gold is coming to India after a period of not less than six months of stay abroad; the quantity of gold imported shall not exceed 10 Kg, per passenger import duty on gold shall be paid in convertible foreign currency; there will be no restriction on sale of such imported gold. A person shall be deemed to be of Indian origin, if— he held an Indian passport at any time, or he or either of his parents or any of his grand parents, was a citizen of India by virtue of the Constitution of India or the Citizenship Act, 1955 (57 of 1955); provided that the national of Pakistan or Bangladesh shall be deemed to be not of Indian origin. A spouse (not being a national of Pakistan or Bangladesh) of a person of Indian origin shall also be deemed to be of Indian origin.” 8. Relevant portion of The Exemption Notification 31/2003 under Section 25 of the Customs Act reads thus: “G.S.R. (E).- In exercise of the powers conferred by sub-section(1) of section 25 of the Customs Act, 1962(52 of 1962) and in supersession of the notification of the Government of India in the erstwhile Ministry of Finance (Department of Revenue) No.171/94-Customs, dated the 30th September, 1994, published in the Gazette of India, vide number G.S.R. 733(E), dated the 30th September, 1994, the Central Government, being satisfied that it is necessary in the public interest so to do, hereby exempts goods of the description specified in column (2) of the Table below and falling under Chapter 71 of the First Schedule to the Customs Tariff Act, 1975 (51 of 1975), when imported into India by an eligible passenger, from so much of the duty of customs leviable thereon which is specified in the said First Schedule, as is in excess of the amount calculated at the rate as specified in the corresponding entry in column (3) of the said Table and from the whole of the additional duty leviable thereon under section 3 of the said Customs Tariff Act. … (2) The exemption is subject to the following conditions, namely:- (i)the duty shall be paid in convertible foreign currency; https://hcservices.ecourts.gov.in/hcservices/ (ii)the quantity of gold imported in any form shall not exceed ten kilograms per eligible passenger, and (iii)the gold is either carried by the eligible passenger at the time of his arrival in India or is imported by him within fifteen days of his arrival in India.… “Explanation : For the purpose of this notification, “eligible passenger” means a passenger of Indian origin or a passenger holding a valid passport, issued under the Passports Act, 1967 (15 of 1967), who is coming to India after a period of not less than six months of stay abroad; and short visits, if any, made by the eligible passenger during the aforesaid period of six months shall be ignored if the total duration of stay on such visits does not exceed thirty days and such passenger has not availed of the exemption under this notification or under the notification being superseded at any time of such short visits.” Therefore, the gold brought in could be cleared on payment of a concessional rate of duty if the respondent is an eligible passenger. The respondent is not a eligible passenger. The learned Senior Counsel appearing for the respondents submitted that the respondent had been in Singapore from 1993. We are not concerned with the date on which he first went to Singapore. For the purpose of this exemption or this concession, he should have come to India after a period of not less than six months’ stay in Singapore and short visits made by the eligible passenger during the aforesaid period of six months shall be ignored if the total duration of stay on such visits does not exceed thirty days. He had gone to Singapore on 19- 04-2005 was coming to India on 12-07-2005 i.e., after a period of less than six months. So he was not an ‘eligible passenger’. The previous periods where he had stayed for longer duration are not relevant now. The liberalisation policy and the repeal of the Gold Control Order had weighed with the Tribunal. The Tribunal ought to have considered whether he could have carried the gold as part of his baggage as an eligible passenger. 9. In view of meaning of the word “prohibition” as construed laid down by the Supreme Court in Om Prakash Bhatia case we have to hold that the imported gold was ‘prohibited goods’ since the respondent is not an eligible passenger who did not satisfy the conditions. The impugned order deserves to be set aside. 10.In 1992 (61) ELT 372(cited supra), the Supreme Court directed the Collector to consider the exercise of discretion. In this case, the Collector had rightly considered it and refused to give the option. 11.In 1997 (91) ELT 277(cited supra), the High Court held that the goods were not prohibited since they were ornaments. The words used in the Rules including ornaments but excluding ornaments studded with stones.” We are unable to follow this judgment. https://hcservices.ecourts.gov.in/hcservices/ 12.In 1998 (104) ELT 306 (SC), the Supreme Court held, “5. Another contention that was urged by Shri Mahabir Singh was that the Additional Collector, as also the Tribunal, have failed to take into consideration the provisions contained in Section 125 of the Act which prescribes that whenever confiscation of any goods is authorised by the Act, the officer adjudging it may, in the case of any goods, the importation or exportation whereof is prohibited under the 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. We do not find any merit in this contention of Mr. Mahabir Singh. Under Section 125 a discretion has been conferred on the officer to give the option 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 the present case, having regard to the facts and circumstances in which the goods were said to be imported and the patent fraud committed in importing the goods, the Additional Collector has found that the goods had been imported in violation of the provisions of Import (Control) Order, 1955 read with Section 3(i) of the Import and Export (Control) Act, 1947. In the circumstances he considered it appropriate to direct absolute confiscation of the goods which indicates that he did not 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. The Tribunal also felt that since this was a case in which fraud was involved, the order of the Additional Collector directing absolute confiscation of the goods did not call for any interference. We do not find any reason to take a different view.” In the present case too, the concealment had weighed with the Commissioner to order absolute confiscation. He was right, the Tribunal erred. 13. In the result, the substantial question of law is answered in favour of the appellant. Appeal allowed and the order of the Tribunal is set aside. However, there will be no order as to costs. Sd/ Asst.Registrar /true copy/ Sub Asst.Registrar glp https://hcservices.ecourts.gov.in/hcservices/ To 1 Commissioner of Customs(Air) Custom House No.60, Rajaji Salai Chennai – 1 2. Customs, Excise and Service Tax Appellate Tribunal South Zonal Bench at Chennai Shastri Bhawan Annexe, 1st Floor 26, Haddows Road Chennai – 600 006 1 cc To Mr.S.Ramesh Kumar, Advocate, SR.18870. 1 cc To Mr.S.Yashwanth, Advocate, SR.18382. C.M.A.No.2040 of 2007 VS(CO) pmk/12.5.2009 https://hcservices.ecourts.gov.in/hcservices/