Delhi High Court
Deepesh Mamodiya vs Chief Commissioner Of Customs ... on 28 May, 2014
Author: S.Ravindra Bhat
$~18
* IN THE HIGH COURT OF DELHI AT NEW DELHI
% DECIDED ON: 28.05.2014
+ W.P.(C) 3507/2014
DEEPESH MAMODIYA ..... Petitioner
Through: Mr. Vikram Singh, Advocate.
versus
CHIEF COMMISSIONER OF CUSTOMS (DZ) & ANR.
..... Respondents
Through: Mr. G.S. Arora, Advocate.
CORAM:
HON'BLE MR. JUSTICE S. RAVINDRA BHAT
HON'BLE MR. JUSTICE V. KAMESWAR RAO
MR. JUSTICE S.RAVINDRA BHAT (OPEN COURT)
1. Issue notice. Mr. G.S. Arora, Advocate accepts notice.
2. The petitioner in these proceedings claims an order giving
directions to quash the order of the Chief Commissioner (Customs)
dated 10.03.2014, whereby his application for compounding made
under Section 137 of the Customs Act was rejected.
3. The facts are that the petitioner landed in India from Hong
Kong inter alia with ten thousand pieces of micro chips (micro SD
cards) valued at Rs.15,80,000/-. These articles were sought to be
taken into the country without declaring them; he could not, upon
being stopped by the customs authorities, give a satisfactory
W.P.(C)3507/2014 Page 1
explanation or produce any evidence with regard to the legality of the
goods. He admitted the recovery of goods from his package. In his
first statement on 31.05.2011 recorded under Section 108, the
petitioner stated that goods were given by one Shri Rakesh Jain of
Hong Kong for delivering the same to someone else in Jaipur. In the
later statement recorded in July and August, 2011, the petitioner
admitted that the articles were procured by him only and that he
bought them from the market to sell them in India. He admitted that
due to fear, he did not disclose the truth on 31.05.2011. Apparently,
he also made certain contradictory statements in the bail application
presented on his behalf before the Metropolitan Magistrate.
4. After show cause notice was issued, an adjudication order was
made which was appealed; this ultimately culminated in the duty in
respect of the goods valued at Rs.15,80,000/- being deposited by the
petitioner. He also concededly paid the redemption fine to avoid
confiscation, as well as the penalty imposed upon him. In these
circumstances, in order to avoid prosecution he applied for
compounding. By the impugned order, the compounding application
was rejected.
5. The Chief Commissioner relied upon the decision reported as
Union of India v. Anil Chanana 2008 (222) ELT 481 SC to say that
the disclosure here was not clear and, on the contrary, was
contradicted. The operative portion of the Chief Commissioner's
order impugned herein reads as follows: -
―21. From the above I find that applicant had initially in his
statement admitted recovery of 10000 Pcs of Memory Cards
W.P.(C)3507/2014 Page 2
from his baggage but denied the ownership and stated that the
goods were given to him by one Shri Rakesh Jain to be
delivered to another person Shri Ritesh at Jaipur. But later on
he admitted that the goods belonged to him and that he had
used the name of a fictitious person Sh. Rakesh Jain to divert
the attention. In between his two statements the applicant took a
different stand in his bail application and stated that he had
reported to the Customs Officer at the Red Channel Counter to
declare 10000 Pcs of Memory Cards and pay duty but the
Customs Officer instead of preparing necessary papers for
payment of duty took him to the office room and made him sit
there and dictated the statement dated 31/05/2011. Thus, it is
evident that the applicant has not made a true and complete
declaration of facts in as much as he did not reveal in his
application for compounding anything about the contradictory
stand taken by him in his bail application and statements
recorded under Section 108 of the Customs Act, 1962. A
comparison of the statements made under Section 108 and in
bail application disclose major demonstrable contradictions or
inconsistencies or incompleteness in the case of the applicant in
as much as in his initial statement he admitted recovery of
10,000 Pcs of Memory cards and non-declaration of the same
to the Customs Officer but in his bail application denied having
committed any offence and put the blame on the Customs
Officer in framing him in the whole matter. This was followed
by him by admission of offence in his later statements
20/07/2011 & 09/08/2011. This admission was again followed
by a denial in written submissions before the adjudicating
authority wherein he stated that he had reported at Red
Channel Counter to declare 10000 Pcs of Memory Cards to pay
duty and had orally declared the same to the Customs Officer
but the Customs Officer failed to perform his duty to assist him
in filling up disembarkation card in terms of Board's
Instruction/Circular resulting in initiation of proceedings him.
The Reporting Authority has also in his later report dated
03/03/2014 reported that there are demonstrable
contradictions, inconsistencies or incompleteness in the case of
the applicant.
W.P.(C)3507/2014 Page 3
22. In view of the foregoing the application of the applicant for
compounding of offences punishable under Section 132 &
135(1)(a) of the Customs Act, 1962 is not allowable for
compounding under the provisions of Customs (Compounding
of Offences) Rules 2005.‖
6. Learned counsel argues that the kind of offences which the
petitioner could have been charged with in this case, did not attract a
minimum penalty and that given the gradation of the offences under
Section 135, the petitioner most probably would have incurred a fine
imposed by the trial court at its discretion. In these circumstances,
argued the counsel, with the acceptance of the adjudication order,
depositing the duty, penalty and redemption fine, no purpose would
have been served by the Revenue's insistence on his prosecution.
Counsel stressed that on the other hand, the Revenue would have
earned an additional Rs.1.83 lakhs being the compounding fee (10%
of the value of the goods + redemption fine).
7. The Revenue resisted the petition urging that the reasoning of
the Chief Commissioner was reasonable and does not call for
interference. Counsel relied upon the decision in Anil Chanana
(supra) to say that the disclosure in the present case was not made at
one go, that the petitioner retracted from its initial statements and later
approached the authority; these acts dispel his arguments about
voluntary disclosure at any given point of time.
8. This Court has carefully considered the submissions. The
judgment in Anil Chanana (supra) no doubt stressed upon the rule of
disclosure. The Court had highlighted the importance of the
W.P.(C)3507/2014 Page 4
compounding authority discharging the statutory duty of making
proper enquiry by examining with care and caution, the materials that
have been made available and that the compounding authority should
be satisfied that the appellant did all that he needed to do in the
matter. Section 137 of the Act reads as follows: -
―SECTION 137. Cognizance of offences. - (1) No
court shall take cognizance of any offence under
section 132, section 133, section 134 or section 135
or section 135A, except with the previous sanction of
the Commissioner of Customs.
(2) No court shall take cognizance of any offence under
section 136, -
(a) where the offence is alleged to have been committed by
an officer of customs not lower in rank than Assistant
Commissioner of Customs, except with the previous
sanction of the Central Government;
(b) where the offence is alleged to have been committed by
an officer of customs lower in rank than Assistant
Commissioner of Customs except with the previous
sanction of the Commissioner of Customs.
(3) Any offence under this Chapter may, either before or
after the institution of prosecution, be compounded
by the Chief Commissioner of Customs on payment,
by the person accused of the offence to the Central
Government, of such compounding amount and in
such manner of compounding as may be specified by
rules.
Provided that nothing contained in this sub-section
shall apply to-
(a) a person who has been allowed to compound once in
respect of any offence under sections 135 and 135A;
W.P.(C)3507/2014 Page 5
(b) a person who has been accused of committing an
offence under this Act which is also an offence under
any of the following Acts, namely:--
(i) the Narcotic Drugs and Psychotropic Substances
Act, 1985(61 of 1985);
(ii) the Chemical Weapons Convention Act, 2000 (34
of 2000);
(iii) the Arms Act, 1959 (54 of 1959);
(iv) the Wild Life (Protection) Act, 1972 (53 of 1972);
(c) a person involved in smuggling of goods falling under
any of the following, namely: -
(i) goods specified in the list of Special Chemicals,
Organisms, Materials, Equipment and
Technology in Appendix 3 to Schedule 2 (Export
Policy) of ITC (HS) Classification of Export and
Import Items of the Foreign Trade Policy, as
amended from time to time, issued under section 5
of the Foreign Trade (Development and
Regulation) Act, 1992 (22 of 1992);
(ii) goods which are specified as prohibited items for
import and export in the ITC (HS) Classification
of Export and Import Items of the Foreign Trade
Policy, as amended from time to time, issued
under section 5 of the Foreign Trade
(Development and Regulation) Act, 1992 (22 of
1992);
(iii) any other goods or documents, which are likely to
affect friendly relations with a foreign
Stateorare derogatory to national honour;
(d) a person who has been allowed to compound once in
respect of any offence under this Chapter for goods of
value exceeding rupees one crore;
W.P.(C)3507/2014 Page 6
(e) a person who has been convicted under this Act on or
after the 30th day of December, 2005.‖
9. As is evident, the power to permit compounding of offences
contained in Section 137 (3) is apparently wide; the concerned official
is not empowered to allow compounding in respect of offences under
Section 135 and 135 (A) and the class of offences which are spelt out
in clauses (b) & (c) of the proviso to Section 137 (3). Likewise, an
embargo has been placed upon the power of compounding in respect
of a person who has been allowed to compound once in respect of any
offence under Chapter XVI of the Customs Act, 1962. The
requirement of disclosure, apparently spelt out in Anil Chanana's case
was read in to the power under Section 137 (3) of the Act, having
regard to the given circumstances of the case. It was highlighted
during the hearing, that the offence with which the importer or
smuggler was charged with in that case attracted a minimum sentence
- which impelled the Court's observation that the petitioner was not
entitled to claim compounding.
10. In the given facts of this case, it is apparent that the petitioner
after initially refuting ownership, later on admitted ownership in his
subsequent statements and paid up the duty amount, penalty and
redemption fine. In these circumstances, considering that no
minimum sentence or penalty was attracted for the offence that the
petitioner was charged with, the denial of compounding meant that he
would have to face a long trial which ultimately would, in all
probability, culminate in a small fine. The impugned order of the
Chief Commissioner in our opinion is erroneous, because apart from
W.P.(C)3507/2014 Page 7
the initial contradiction and the first denial, there were in fact no
subsequent conflicting statements in that that subsequent statements
recorded under Section 108 (on 20.07.2011 and 09.08.2011) clearly
admit that he purchased the articles for sale in India.
11. Having regard to these conspectus of circumstances, the
impugned order is hereby quashed. The respondents are hereby
directed to accept the compounding application and pass
consequential orders within four weeks from today.
12. The petition is allowed in the above terms.
S. RAVINDRA BHAT
(JUDGE)
V. KAMESWAR RAO
(JUDGE)
MAY 28, 2014
/vks/
W.P.(C)3507/2014 Page 8
