Delhi High Court
The Commissioner Of Customs vs Jyotsna Chikersal & Anr. on 16 January, 2019
$~36
* IN THE HIGH COURT OF DELHI AT NEW DELHI
Date of Order: January 16, 2019
+ W.P.(C) 8881/2015
THE COMMISSIONER OF CUSTOMS ..... Petitioner
Through: Mr.Harpreet Singh, Senior Standing
Counsel with Ms.Suhani Mathur,
Advocate
versus
JYOTSNA CHIKERSAL & ANR. ..... Respondent
Through: Ms. Alisha Panda, Mr. Aadil Singh
Boparai, Advocates
CORAM:
HON'BLE MR. JUSTICE S. RAVINDRA BHAT
HON'BLE MR. JUSTICE PRATEEK JALAN
ORDER
%
S. RAVINDRA BHAT, J. (ORAL)
1. The Customs Authorities have filed these proceedings
questioning the decision of the Settlement Commission made upon an
application filed by the respondent. It is contended that the Settlement
Commission could not have, by virtue of third proviso to Section
127B [read with Section 123(2)] of the Customs Act, lawfully
entertained the application and proceeded to pass orders settling the
issues urged.
2. The respondent, who is a former United Nations official,
arrived at IGI Airport, Delhi, on 04.05.2014; carrying 6 gold bars
weighing 1832.4 gms, valued at Rs. 45,45,222/-. She did not declare
the gold either at the stage of clearing the customs area or disclose the
information in the disembarkation slip. Upon search, the gold was
detected and seized from her person. The show cause notice was
issued on 22.10.2014. On 13.01.2015, the respondent moved the
Settlement application which was finally disposed of and the matter
settled by recording a final settlement order on 05.06.2015.
3. The Union of India through the Customs Department urges that
Section 123(1) which provides for shifting the burden of proof where
the goods are seized in the reasonable belief that they have been
smuggled, would apply to gold, watches and any other class of goods
which the Central Government notifies. It is urged that this is apparent
by virtue of Section 123(2), and the third proviso of Section 123B
operates as a clear bar to the Settlement Commission's jurisdiction.
Learned counsel for the petitioner/Customs authorities relies upon the
decision of the Division Bench of this court in Additional
Commissioner of Customs vs. Ram Niwas Verma, 2015 (323) ELT
424 (Del), especially the following extract:
"7. On a plain reading of the third proviso to Section
127B(1) of the said Act, it is evident that no application
for settlement can be made if it relates to goods to which
Section 123 applies. Section 123 sub-section (2)
specifically provides that the said Section applies to,
inter alia, gold. It is, therefore, clear that when the two
provisions are read together, no application under
Section 127B(1) can be made in relation to gold. This
case clearly pertains to gold. The respondent made an
application, nevertheless, to the Settlement Commission
which has entertained the same and has also rejected the
plea raised by the Revenue that it did not have
jurisdiction to entertain such an application. We agree
with the submission made by the learned counsel for the
Revenue that the Settlement Commission did not have the
jurisdiction to entertain such an application as there was
a complete bar provided in the third proviso to Section
127B(1) read with Section 123 of the said Act.
8. The learned counsel for the respondent sought to
draw some support from a decision of this Court in the
case of Commissioner of Customs v. Ashok Kumar Jain:
2013 (292) ELT 32 (Del) as also a subsequent decision
of another Division Bench of this Court in Komal Jain v.
Union of India and Another: 2014 (304) ELT 675 (Del).
In Ashok Kumar Jain (supra), the issue of Section 123
has not been considered at all. Insofar as the decision in
Komal Jain (supra) is concerned, the Division Bench
itself, in paragraph 21, observed that the issue with
regard to the applicability of Section 123 of the Act by
way of the third proviso to Section 127B was left open
and it was for the Settlement Commission to examine the
same, if such a point was raised, in accordance with law.
In the present case, we find that the point with regard to
the third proviso to Section 127B(1) read with Section
123 of the said Act had been specifically raised by the
Revenue and the same has been considered by the
Settlement Commission and has been rejected. We have
already indicated above that the rejection by the
Settlement Commission is not in accordance with law. A
plain reading of the provisions clearly indicates that an
application under Section 127B cannot be made in
respect of, inter alia, gold, which is specifically an item
to which Section 123 applies. We may point out that
there is no question of examining the provisions of
Section 123(1) as also its applicability because that is
not the context of the third proviso to Section 127B(1).
The said proviso only makes a reference to the goods to
which Section 123 applies and not to Section 123 itself.
We have already made it clear that the goods to which
Section 123 applies includes gold, as specifically
indicated in Section 123 (2) of the said Act."
4. Likewise the decision in Commissioner of Customs vs. Avinash
Dawar, 2015 (326) ELT 639 (Del) is relied upon. In that decision too,
the judgment of Ram Niwas Verma (supra) was reiterated and applied.
5. The respondent - assessee urged that the Settlement
Commission proceeded to pass final orders, allowing the application,
having regard to the jurisdiction it possesses and by relying upon its
Special Bench order in Re: Idris Y. Porbandarwala, 2005 (186) ELT
356, which was also cited in the judgment in Commissioner of
Customs vs. Ashok Kumar Jain, 2013 (292) ELT 32. It is pointed out
that in the facts and circumstances of that case the ground was that a
quantity of the watches was sought to be smuggled and that the court
had upheld the orders of the Settlement Commission.
6. Section 123 to the extent it is relevant, reads as follows:
Section 123 in the Customs Act, 1962
123. Burden of proof in certain cases.--
(1) Where any goods to which this section applies are seized
under this Act in the reasonable belief that they are
smuggled goods, the burden of proving that they are not
smuggled goods shall be--
(a) in a case where such seizure is made from the
possession of any person,--
(i) on the person from whose possession the
goods were seized; and
(ii) if any person, other than the person from
whose possession the goods were seized,
claims to be the owner thereof, also on
such other person;
(b) in any other case, on the person, if any, who
claims to be the owner of the goods so seized.
(2) This section shall apply to gold [and manufactures
thereof], watches, and any other class of goods which
the Central Government may by notification in the
Official Gazette, specify.
7. Chapter XIVA of the Customs Act contains the mechanism for
settlement of cases. By virtue of Section 127A, the Customs, Central
Excise and Service Tax Settlement Commission constituted under the
Central Excise Act is designated as the Settlement Commission under
the Customs Act also. Section 127B prescribes what ought to be the
contents of the application and the procedure therefor. To the extent
relevant, it is reproduced below:
Section 127B in the Customs Act, 1962
127B Application for settlement of cases. --
(1) Any importer, exporter or any other person
(hereinafter referred to as the applicant in this
Chapter) may, in respect of a case, relating to him
make an application, before adjudication to the
Settlement Commission to have the case settled, in
such form and in such manner as may be specified
by rules, and containing a full and true disclosure
of his duty liability which has not been disclosed
before the proper officer, the manner in which
such liability has been incurred, the additional
amount of customs duty accepted to be payable by
him and such other particulars as may be specified
by rules including the particulars of such dutiable
goods in respect of which he admits short levy on
account of misclassification, under-valuation or
inapplicability of exemption notification 254 [or
otherwise] and such application shall be disposed
of in the manner hereinafter provided: Provided
that no such application shall be made unless,--
(a) the applicant has filed a bill of entry, or a
shipping bill, in respect of import or export
of such goods, as the case may be, and in
relation to such bill of entry or shipping bill,
a show cause notice has been issued to him
by the proper officer;
(b) the additional amount of duty accepted by
the applicant in his application exceeds
three lakh rupees; and
(c) the applicant has paid the additional
amount of customs duty accepted by him
along with interest due under section 28AB:
Provided further that no application shall be
entertained by the Settlement Commission under
this sub-section in cases which are pending in the
Appellate Tribunal or any court: Provided also
that no application under this sub-section shall be
made in relation to goods to which section 123
applies or to goods in relation to which any
offence under the Narcotic Drugs and
Psychotropic Substances Act, 1985 (61 of 1985)
has been committed: Provided also that no
application under this sub-section shall be made
for the interpretation of the classification of the
goods under the Customs Tariff Act, 1975 (51 of
1975).
(1A) Notwithstanding anything contained in sub-section
(1), where an application was made under sub-
section (1) before the 1st day of June, 2007 but an
order under sub section (1) of section 127C has
not been made before the said date, the applicant
shall within a period of thirty days from the 1st
day of June, 2007 pay the accepted duty liability
failing which his application shall be liable to be
rejected.]
(2) Where any dutiable goods, books of account, other
documents or any sale proceeds of the goods have
been seized under section 110, the applicant shall
not be entitled to make an application under sub-
section (1) before the expiry of one hundred and
eighty days from the date of the seizure.
(3) Every application made under sub-section (1)
shall be accompanied by such fees as may be
specified by rules.
(4) An application made under sub-section (1) shall
not be allowed to be withdrawn by the applicant.
"(1) Any importer, exporter or any other person
(hereinafter in this Chapter referred to as the
applicant) may, at any stage of a case relating to
him, make an application in such form and in such
manner as may be specified by rules, and
containing a full and true disclosure of his duty
liability which has not been disclosed before the
proper officer, the manner in which such liability
has been incurred, the additional amount of
customs duty accepted to be payable by him and
such other particulars as may be specified by rules
including the particulars of such dutiable goods in
respect of which he admits short levy on account
of misclassification or otherwise of goods, to the
Settlement Commission to have the case settled
and such application shall be disposed of in the
manner hereinafter provided: Provided that no
such application shall be made unless--
(a) the applicant has filed a bill of entry, or a
shipping bill, in respect of import or export
of goods, as the case may be, and in relation
to such bill of entry or shipping bill or a
show cause notice has been issued to him by
the proper officer;
(b) the additional amount of duty accepted by
the applicant in his application exceeds two
lakh rupees: Provided further that no
application shall be entertained by the
Settlement Commission under this sub-
section in cases which are pending in the
Appellate Tribunal or any court: Provided
also that no application under this sub-
section shall be made in relation to goods to
which section 123 applies or to goods in
relation to which any offence under the
Narcotic Drugs and Psychotropic
Substances Act, 1985 (61 of 1985), has been
committed: Provided also that no
application under this sub-section shall be
made for the interpretation of the
classification of the goods under the
Customs Tariff Act, 1975 (51 of 1975).".
8. The decision in Ram Niwas Verma (supra) has analysed various
judgments including the previous judgment in Ashok Kumar Jain
(supra). The Court held that by virtue of Section 123(2), jurisdiction
of the Commission is barred on account of the third proviso to Section
127B(1), in cases involving or concerning smuggling of gold or
watches. This decision was carried in appeal by special leave to the
Supreme Court; the Special Leave Petition was rejected by order
dated 02.11.2015 [reported as Ram Niwas Verma vs. Additional
Commissioner of Customs, 2016 (331) ELT A 129 (SC)].
9. The plain reading of Ashok Kumar Jain (supra) that was relied
upon by the respondent assessee, shows that the Court had not
considered the impact of Section 123(2) upon the jurisdiction of the
Settlement Commission in the light of the third proviso to Section
127B. A conjoint reading of these two provisions clearly bears out
that the jurisdiction of the Commission to settle cases involving goods
referred to in Section 123(2) is excluded. In these circumstances, the
reliance placed by the Division Bench upon Re: Idris Y.
Porbandarwala (supra), in our opinion, was unsubstantial. Clearly,
the law was correctly interpreted and applied in Ram Niwas Verma
(supra) and Avinash Dawar (supra). The decision in Ashok Kumar
Jain (supra) overlooked the provision and therefore, cannot be treated
as binding precedent.
10. For the above reasons, this court is of the opinion that the
impugned order cannot be sustained which is hereby set aside.
11. The matter is remitted to the concerned Adjudicating Officer,
who shall proceed further and issue notice in the proceedings to be
held thereunder.
12. The writ petition is allowed in the aforesaid terms.
S. RAVINDRA BHAT, J
PRATEEK JALAN, J
JANUARY 16, 2019
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