1 W.P.NO.1469 of 2006 lgc IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION WRIT PETITION NO.1469 OF 2006 1 Union of India through the ] Commissioner of Customs ] having his office at C S I Airport ] Sahar, Andheri, Mumbai – 400 099 ]... Petitioners versus 1 Shri Suresh L Raheja ] an Indian Inhabitant having his ] address at Raheja Centre Point, ] 294, CST Road, Near Mumbai ] University, Off Bandra-Kurla ] Complex, Santacruz (East) ] Mumbai 400 098 ] ] 2 Smt.Meena S Raheja ] an Indian Inhabitant having his ] address at Raheja Centre Point, ] 294, CST Road, Near Mumbai ] University, Off Bandra-Kurla ] Complex, Santacruz (East) ] Mumbai 400 098 ] ] 3 Shri Ashish S Raheja ] an Indian Inhabitant having his ] address at Raheja Centre Point, ] 294, CST Road, Near Mumbai ] University, Off Bandra-Kurla ] Complex, Santacruz (East) ] Mumbai 400 098 ] ] 4 Shri Rahul S Raheja ] an Indian Inhabitant having his ] address at Raheja Centre Point, ] 294, CST Road, Near Mumbai ] University, Off Bandra-Kurla ] Complex, Santacruz (East) ] Mumbai 400 098 ] ] 2 W.P.NO.1469 of 2006 5 Smt.Ekta R Raheja ] an Indian Inhabitant having his ] address at Raheja Centre Point, ] 294, CST Road, Near Mumbai ] University, Off Bandra-Kurla ] Complex, Santacruz (East) ] Mumbai 400 098 ] ] 6 Settlement Commission, ] Customs and Central Excise ] Mumbai having its office at Utpad ] Shulk Bhavan, 6th Floor, ] Bandra-Kurla Complex, ] Bandra (East), Mumbai 400 051 ]... Respondents. Mr. P S Jetle for the Petitioner Mr.V Sridharan i/by PDS Legal for the Respondents. CORAM :- V.C.DAGA & R.M.SAVANT,JJ. DATE :- 13th October 2010 JUDGMENT :- [PER R M SAVANT, J.] 1 By the above Petition, filed under Article 226 of the Constitution of India, the Petitioner takes exception to the order dated 20.2.2006 passed by the Settlement Commission whereby and whereunder, the Settlement Commission settled the case of the Respondents on the following terms and conditions :- (a) Customs duty in the case settled at Rs.7,64,952.82; (b) The applicant to pay 10% simple interest on the goods already paid by the co-applicants from the date the 3 W.P.NO.1469 of 2006 duty was due till it is fully paid. The Bench granted immunity to the applicant from interest in excess of 10% per annum; (c) Ordered confiscation of seized goods valued at Rs. 18,66,725/- CIF, which were far in excess of the total free baggage allowance of Rs.25,000/- per passenger, under Section 111(l) 111(m) of the Customs Act, 1962. However, the Commission permitted these goods to be released on payment of a token fine of Rs. 1 lakh in lieu of confiscation; (d) Granted immunity to the applicant Shri Suresh L Raheja and to the other co-applicants from penalty and prosecution under the Act as applicable. 2 Shorn of unnecessary details, the facts necessary to be cited for adjudication of the above Petition can be stated thus :- The genesis of the matter reaching the Settlement Commission lies in the fact that on 8.6.2005, the Customs Air Intelligence Unit, CSI, Airport, Mumbai on a specific information intercepted two passengers viz. Suresh Raheja and his wife Smt.Meena Raheja at the Customs Exit Gate of 4 W.P.NO.1469 of 2006 Terminal II A Arrival Hall, C.S.I. Airport, Sahar, Mumbai. The said two passengers had arrived from London by Jet Airways flight No.9W 117. The said two passengers had opted for Customs clearance through the Green Channel. Though initially they denied that they were carrying any dutiable goods, but on persistent questioning, Suresh Raheja disclosed that he had purchased a watch worth Great Britain Pounds 3500 and other goods valued at Great Britain Pounds 1500. Thereafter a detailed examination of their baggage resulted in the recovery of dutiable goods collectively valued at Rs.10,28,878/- CIF and Rs.20,57,756/- LMV. The said goods were seized under a panchanama by the Customs Authorities on the reasonable belief that they were smuggled into India and hence liable to confiscation under the provisions of the Customs Act, 1962, (for short “the said Act”). A seizure panchanama was accordingly drawn. From the baggage of the said two passengers, jewellery items weighing 317.58 grams were also recovered and they were detained for production of legal documents for their possession and valuation. The Customs Authorities also recovered 5 VAT Refund Receipts in the name of Suresh Raheja and Meena Raheja indicating claiming of VAT refund of Great Britain Pounds 1651/- on a total value of goods amounting to Great Britain Pounds 13,296/- (equivalent to Indian Rs.10.47 lakhs) at London Airport prior to their arrival in India. 95 purchase vouchers were also recovered and it was noticed that there was a difference of Rs.8,37,847/- between the value of goods of Rs.18,66,725/- as per the said 95 purchase vouchers recovered from the baggage of Suresh Raheja and his wife Meena Raheja, and the value of 5 W.P.NO.1469 of 2006 actual seized goods of Rs.10,28,878/- that were recovered from them. The statements of the said two passengers were recorded on the same day. Both of them inter alia stated that their two sons Ashish and Rahul and daughter-in- law Smt.Ekta R. Raheja had brought part of these goods and part of it was consumed in London (i.e. the differential portion). The statement of Suresh Raheja was recorded under Section 108 of the said Act as also the statement of his wife Meena Raheja. Both admitted the factum of seizure, acquisition, carriage, non-declaration of the goods. Further statement of Suresh Raheja was recorded on the same day in which statement he confirmed his earlier statement also made on the same day and, further stated that he had made two visits abroad in 2004. The said Suresh Raheja was arrested under Section 104 of the said Act for the offences committed under Section 135 of the said Act. He was produced before the Addl. Chief Metropolitan Magistrate, Mumbai, when he was released on bail on 9.6.2005 in the sum of Rs. 1,00,000/-. On the same day the said Suresh Raheja submitted a demand draft of Rs.5,00,000/- as a pre-deposit against the duty, fine penalty, if any, in respect of the goods seized. It appears that on 13.6.2005, further statement of Suresh Raheja was recorded under Section 108 of the said Act, in which statement he stated that he would produce documentary evidence with regard to the detained jewellery. The said detained jewellery was valued at Rs.3,00,000/- by the Customs Appraiser under a panchanama, in presence of the said Suresh Raheja and his associate and in presence of two independent witnesses. 6 W.P.NO.1469 of 2006 Further statement of the said Suresh Raheja was recorded on 17.6.2005 wherein he accepted the valuation of detained jewellery at Rs. 3,00,000/- and further admitted that he and his family members had taken foreign currency totalling Euros 7,000/-, Great Britain Pounds 18,310/- and UAE Dirhams 1000/-. The statements of Ashish and Rahul were also recorded wherein they had gone to abroad and had returned on 7.6.2005 and 1.6.2005 respectively. It appears that Suresh Raheja vide his letter dated 17.6.2005 addressed to the Joint Commissioner of Customs, AIU, claimed that the seized Techno Marine Watch was worn by him and that all the items seized were used and hence no duty was leviable on them. The contentions made in the said letter dated 17.6.2005 were rebutted by the department stating that the Techno Marine watch was recovered from the baggage and, the wrist which was worn by Suresh Raheja was returned to Suresh Raheja. Thereafter a statement of one Jayantilal M Thadeshwar, Manager of M/s. D N Mehta Jewellers was recorded on 13.7.2005, in which statement, the said Thadeshwar confirmed that two cash memos produced by Shri Raheja for the detained jewellery were genuine and the payment for the same was made by cheque. The said Thadeshwar submitted copies of cash memo, cheque, copy of statement of the Bank, copies of purchase and sale register etc. 7 W.P.NO.1469 of 2006 The statement of one Arvind Y Sawant, Cashier of M/s. Pheroze Framroze & ?Co. Pvt. Ltd was also recorded on 15.7.2005 in which satement the said Arvind Sawant confirmed that the cash memos submitted by Shri S L Raheja for purchase of the subject foreign currency under enquiry were genuine and they belonged to his company. Further statement of the said Thadeshwar was recorded on 22.7.2005 wherein he stated that Suresh Reheja was introduced to him by one Anup Kapoor of Punjab Jewellers and the said jewellery was made by his workders on order and design furnished by the Rahejas. The statement of Ms.Ekta Raheja, wife of Rahul Raheja, was recorded under Section 108 of the said Act on 06.10.2005 wherein she denied the knowledge regarding the goods worth Rs.8 lakhs (i.e. the difference between the value in the purchase vouchers recovered and the actual value of seized goods in the instant case). She also denied of having brought these goods into India by her and by her husband. 3 Consequent to the investigation done by the department, a show cause notice dated 20.10.2005 was issued to five noticees for their role in the smuggling of dutiable goods and confiscation of goods and penal action under the said Act. The gravamen of the said show cause notice can be culled out from Para 31 and 32 and the charges levelled against the Respondents can be 8 W.P.NO.1469 of 2006 seen from Para 39 of the said show cause notice, which are reproduced herein under :- Para 31 :- As per Appendix A to the Baggage Rules, 1998 notified vide notification No.30/98-Customs (NT) dated 2.6.98 (as amended) the articles allowed free of duty admissible to a passenger is Rs.25,000/- for import of new articles in accompanied baggage. The goods in excess of Rs. 25,000/- attract Customs duty @ 35% in terms of notification No.136/90 Customs dated 20.3.1990 & Education Cess of 2% on the amount of Customs duty as per notification No. 69/2004 Customs dated 9.7.2004. Para 32 :- From the foregoing it is evident that Shri Suresh L. Raheja and Smt. Meena S Raheja had imported duitable goods and had failed to declare the same to Customs on arrival as required under section 77 of the Customs Act, 1962 with an intention to evade Customs duty leviable on the said goods. Further both Shri Suresh L Raheja and Smt. Meena S. Raheja admitted the non declaration, possession, carriage, recovery and seizure of the goods from their baggage and also that they had declared their baggage through green channel. Shri Sureh L Raheja and Smt. Meena S Raheja have travelled abroad many times before and should have been aware/fully conversant with the quantum of free allowance admissible to them and also should have known that goods collectively worth more than Rs.25,000/- is chargeable to duty. Further it is also seen that the value of certain goods brought by them are individually worth more than Rs.25,000/- and as such their contention that they were not aware that they had to declare these goods and pay duty on them is not sustainable. Thus is appears that the main reason not to declare the goods was to avoid payment of Customs duty. Also it is seen that some of the goods imported by them like cosmetics, toiletries, apparels etc appear to be in trade quantity. Para 39 :- In view of the above, Shri Suresh L Raheja, Smt. Meena S Raheja, Shri Ashish S Raheja, Shri Rahul S Raheja and Smt. Ekta R Raheja are hereby called upon to Show Cause in writing to the Joint/Additional Commissioner of Customs, Chhatrapati Shivaji International Airport, Sahar, Mumbai, within 30 days of the receipt of this notice, as to why :- 9 W.P.NO.1469 of 2006 1) The aforesaid seized dutiable goods valued at Rs. 10,28,878/- (CIF) and Rs.20,57,756/- (LMV) should not be confiscated under Section 111(d) & (1) of the Customs Act, 1962; 2) The seized studded gold jewellery weighing 317.58 grams and totally valued at Rs.3,00,000/- should not be confiscated under Section 111(d) of the Customs Act, 1962; (3) The aforesaid goods valued at Rs.8,37,847/- that have been clandestinely cleared and are not available now, should not be confiscated under section 111(d) and (1) of the Customs Act, 1962; and (4) Penalty should not be imposed on each of them under Section 112(a) of the Customs Act, 1962” 4 It appears that after the deluge in Mumbai on 26.7.2005 the sealed packages in which the seized goods were kept were examined on 26.10.2005 in the presence of Respondents/Representatives and two witnesses under a Panchanama when it was found that most of the items including the writ watches and jewellery were found to be soaked and in wet condition. Respondent No.1 Suresh Raheja and the Co-noticees i.e. the Respondent Nos. 2 to 5 herein approached the Settlement Commission under Section 127(B)(1) of the Customs Act by filing separate applications viz. Application No. SC/WZ/CUS/207-211/2005 on 21.11.2005. By the said Applications, the Respondents sought grant of immunity from imposition of penalty and prosecution under the provisions of the said Act. To the said Applications, the department filed its submissions/contentions against the admission of the said Applications, and 10 W.P.NO.1469 of 2006 the principal contention was that non-maintainability of the Applications under Section 127(B) of the said Act. The Settlement Commission by the common impugned order dated 20/2/2006 allowed the said Applications. In view of the ground raised by the Department of the non- maintainability of the Applications under section 127(B) of the said Act, the Settlement Commission recorded a specific finding that the applicant fulfills all the conditions laid down in Section 127(B)(1) of the Act and, further recorded that it accordingly allows all the applications to be proceeded with under Section 127(C)(1) of the Act. The Settlement Commission also recorded a statement of the learned counsel appearing for the Respondents that the goods other than the watch and the studded gold jewellery are already destroyed in the deluge and that the case should be finally disposed of. The Settlement Commission, therefore, directed to settle all the cases under Section 127(C)(1) of the Act on the following terms and condition :- Customs duty : The Customs duty in the case is settled at Rs. 7,64,952.82/-. The applicant has already deposited an amount of Rs.5,00,000/-. The applicant shall pay the balance amount within 30 days of receipt of this order and submit proof thereof to the Commission and the Revenue Interest :- This is a case wherein an attempt was made to clear the imported baggage goods/the baggage goods already removed without payment of Customs duty due thereon by 11 W.P.NO.1469 of 2006 not declaring them by the applicants at the time of arrival in India. They are, therefore, liable to pay interest. However, keeping in view the co-operative attitude of the applicants in the proceedings, the Commission orders the applicant to pay 10% Simple Interest on the goods already cleared by the co- applicants from the date the duty was due till it is full paid. The Bench grants immunity to the applicant from interest in excess of 10% per annum. The Revenue shall calculate the amount of interest as ordered aforesaid within 15 days of the payment of the balance duty amount as ordered above and communicate to the applicant, who thereupon would pay it within the next 15 days. The applicant shall furnish proof of payment of interest, both to the Commission and the Revenue. Fine :- The Bench observes that the total goods brought by the applicants were valued at Rs.18,66,725/- (CIF) which were far in excess of the total free baggage allowance @ Rs. 25,000/- for each passenger. Therefore the seized goods are liable for confiscation. We take note of the fact that the studded gold jewellery was of Indian origin which had been exported without declaration and without obtaining Export Certificate. Further we also take note of the fact that the goods other than the seized watch and studded gold jewellery have been damaged and destroyed, which are still in the custody of the Revenue and which fact has been admitted by the Revenue during the hearing. Taking these facts into consideration, we ordere confiscation of the seized goods under Section 111(l) and 111(m) of the Act, but permit them to be released on payment of token fine of Rs.1,00,000/- in lieu of confiscation. Penalty & Prosecution :- The Bench grants immunity to the applicant and the co-applicants from penalty and prosecution under the Act as applicable. As indicated above, it is this order dated 20.2.2006 which is impugned in the instant Petition. 12 W.P.NO.1469 of 2006 5 Submissions on behalf of the Petitioner/Revenue a) That the Settlement Commission has erred in equating the gate passes of Suresh L Raheja and other Respondents as specified under Section 77 of the said Act with the Bill of Entry. The Settlement Commission ought to have seen that since no Bill of Entry was filed, the Applications were not maintainable under Section 127B of the Act; b) That the Settlement Commission totally mis-interpreted the judgment of this Court in Writ Petition No.2430 of 2004 and further erroneously relief upon the cases of Shri Mahesh Raj and Anil Prasad Nanda; c) That the Settlement Commission ought to have seen that the provisions of Section 123 of the said Act were applicable to the seized wrist watches; d) That the Settlement Commission erred in not appreciating the fact that applicant had failed to discharge the burden of proof cast under Section 123 of the said Act; e) That the Settlement Commission ought to have rejected the Applications as hit by 3rd proviso to Section 123(1) of the said Act. 13 W.P.NO.1469 of 2006 6 Submissions on behalf of the Respondents :- i) That the Appellant could not invoke Section 123 of the said Act as the same has not been invoked in the show cause notice; ii) That the watch is a personal effect for the purposes of the Baggage Rules, 1998 and, therefore, two watches brought by the Respondents into India could be classified as personal effects and therefore are not exigible to duty; iii) That the contents of the Panchanama dated 8.6.2005 show that the foreign origin watch was not found in its original packing and the Settlement Commission in its order dated 20.2.2006 has categorically recorded that the customs department has admitted that the foreign origin watch was not in its original packing. The irresistible conclusion was therefore that the watches in question were used personal effects; iv) That exemption contained in Appendix-A will apply to both the watches; v) That since there is no dispute that the jewellery was of Indian origin, the said jewellery can therefore be said to be imported into India after exported the same out of India and, therefore, qauntified for exemption under Notification No.94/96-Customs; 14 W.P.NO.1469 of 2006 vi) That Section 111 is not applicable as the said section applies to any dutiable or prohibited goods which are not entered in the baggage declaration made in terms of Section 77; vii) That in the instant case, the Respondent No.1 and his wife in the disembarkation card had left the column blank in respect of “total value of dutiable goods being imported” under the bonafide belief that the used personal effects carried as personal baggage were not liable to duty; viii) That Section 123 of the said Act is not at all attracted to the present case for the reasons that it is not in dispute that the jewellery which was the part of the goods was of Indian origin and during the investigation itself proof of purchase of Jewellery from India was produced before the department; ix) That in so far as watches are concerned, there is no dispute that one watch was of foreign origin and the other was of Indian origin and, the panchanama drawn at the time of seizure also mentions that these goods were brought into India by the Respondents as baggage; x) That there was no question of discharging burden imposed by Section 123 of the said Act as there is no dispute about the origin of the goods when the Respondents arrived in India. 15 W.P.NO.1469 of 2006 xi) That the bar contained in the proviso to Section 127B would not apply to the goods whose origin is not in dispute ; xii) That Department has accepted the order and has released baggage pursuant to the said order of the Settlement Commission. CONSIDERATION : 7 We have heard the learned counsel for the parties and have bestowed our anxious consideration to their rival contentions. 8 It is an undisputed fact that in the present case, in the show cause notice there is no mention of Section 123 of the said Act and, therefore, the said provision has not been invoked by the Customs Authorities against the Respondents. It is further required to be borne in mind that in so far origin of the goods is concerned, there is no dispute in respect of both the jewellery as well as the watches. Therefore, the contention of the Petitioner that the Respondents had failed to discharge the burden cast by Section 123 of the said Act is mis-founded. Once the origin of the goods was not in dispute, the Respondents as held by the Settlement Commission were entitled to invoke the jurisdiction of the Settlement Commission and, therefore, the bar contained in the proviso to Section 127B could not have come in their way. The finding of the Settlement Commission in the aforesaid factual background that the 16 W.P.NO.1469 of 2006 Respondents herein, who were the Applicants before the Settlement Commission, fulfill all the conditions laid down in Section 127(B)(1) of the said Act, can be said to be a possible view in the said factual background. It is also required to be noted that the contention of the Revenue that the baggage goods are out side the purview of the Settlement Commission has not been entertained by the Settlement Commission on the application of the order of this Court dated 21.7.2005 in Writ Petition No.2430 of 2004 in the case of Union of India v/s. M/s. Hoganas India Ltd. wherein this Court has held that the Settlement Commission has got jurisdiction to deal with the cases of smuggling. However, the Applicant must satisfy the mandatory requirement of Section 127(B)(1) of the said Act and the order does not make any reference to the baggage or baggage declaration. The Settlement Commission by relying upon the case of Mahesh Raj reported in 2001 (131) ELT 707 (SC) wherein it has been held that non-filing of Bill of Entry for imported goods cannot be a factor affecting the admission of the applications when filing of Bill of Entry is not contemplated in law for clearance of baggage goods. The Settlement Commission was further of the view that the declaration made by a passenger on the Customs portion of disembarkation card meets the requirement of filing a declaration. The Settlement Commission in the background of the fact that the orders which it had relied upon in the case of Anil Prasad Nanda and in the case of Manish Kalvadiya having not been challenged by the department, was of the view that the contention of the 17 W.P.NO.1469 of 2006 Revenue that the baggage cases are not entertainable by the Settlement Commnission was untenable. It is also required to be noted that during the course of the investigation, the Respondents had paid an amount of Rs.Five lakhs towards duty payable and thereafter had filed the application before the Settlement Commission. It would also be of some significance to note that the goods in question were affected by the deluge that took place in Mumbai on 26.7.2005 and the entire baggage was affected by floods and the watches and jewellery had also become wet on account