Gujarat High Court

Jay Sudhirbhai Vaidya vs Principal Commissioner And Ex ... on 19 March, 2021

Bench: Sangeeta K. Vishen

         C/SCA/5042/2019                                         JUDGMENT




            IN THE HIGH COURT OF GUJARAT AT AHMEDABAD

             R/SPECIAL CIVIL APPLICATION NO. 5042 of 2019


FOR APPROVAL AND SIGNATURE:


HONOURABLE MS. JUSTICE SONIA GOKANI

and
HONOURABLE MS. JUSTICE SANGEETA K. VISHEN

==========================================================

1     Whether Reporters of Local Papers may be allowed to
      see the judgment ?

2     To be referred to the Reporter or not ?

3     Whether their Lordships wish to see the fair copy of the
      judgment ?

4     Whether this case involves a substantial question of law
      as to the interpretation of the Constitution of India or any
      order made thereunder ?

==========================================================
                     JAY SUDHIRBHAI VAIDYA
                             Versus
    PRINCIPAL COMMISSIONER AND EX OFFICIO ADDL. SECRETARY TO
                         GOVT. OF INDIA
==========================================================
Appearance:
MR D K TRIVEDI(5283) for the Petitioner(s) No. 1
MR PY DIVYESHVAR(2482) for the Respondent(s) No. 2
NOTICE SERVED(4) for the Respondent(s) No. 1,3
==========================================================

    CORAM: HONOURABLE MS. JUSTICE SONIA GOKANI
           and
           HONOURABLE MS. JUSTICE SANGEETA K. VISHEN

                                Date : 19/03/2021


                                    Page 1 of 28



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      C/SCA/5042/2019                                   JUDGMENT



                     ORAL JUDGMENT

(PER : HONOURABLE MS. JUSTICE SONIA GOKANI)

1. This is a petition preferred under Articles 226 and

227 of the Constitution of India with the following

reliefs:

"09. On the foregoing grounds and others which may be urged at the time of hearing of this petition, the petitioner, therefore, prays that:-

                a.     Your Lordships may be pleased to
                admit this petition;

                b.      Your Lordships may be pleased to
                allow this petition;

                c.    Your Lordships may be pleased to
                issue writ of mandamus or any other

appropriate writ quashing and setting aside Order No.953/2018-

                CUS(WZ)/ASRA/MUMBAI/DATED
                19/11/2018      being    annexed    as
                ANNEXURE-C        hereinabove;

                d.     Your Lordships may be pleased to
                issue writ of mandamus or any other
                appropriate   writ    restoring   Revision

Application before the Respondent No.01 herein u/s. 129DD of the Customs Act, 19562 against Order-in-Appeal No.AHD/CUSTM/000-APP-320-15-16 dtd.20/01/2016 passed by the Commissioner of Customs, Ahmedabad;

        C/SCA/5042/2019                                          JUDGMENT



                  e.      Your Lordships may be pleased to

grant such other and further relief/(s) that may be deemed fit and proper in the interest of justice in favour of the Petitioner."

2. Brief facts leading the present petition are as

follows:

2.1. The petitioner was working as Airport Supervisor in

Air Arabia during July, 2013. Officer of Directorate

of Revenue Intelligence (DRI), received a specific

information that one passenger Mr. Mayur

Keshubhai Kuchhadiya was arriving by Air Arabia

Flight No.G-9-0481 from Sharjah at Sardar

Vallabhbhai Patel International Airport (SVPI

Airport), Ahmedabad on 24.07.2013 and he

attempted to illegally smuggle gold, jewellery and

some foreign currency notes. The said passenger is

alleged to have handed over the goods to the airline

staff of Air Arabia at the time of disembarking from

the aircraft and a trap was laid by the officers of

C/SCA/5042/2019 JUDGMENT

DRI. The Airport officers found that there were three

begs, which were smuggled into the country by the

passenger with the help of some Airport staff. Two

persons, namely, Dhaval Joshi ( Mr. Dhaval) and

Arpit Sinh Raol ( Mr. Arpit) are alleged to have

collected three bags from the said passenger and

they were kept at the residence of Mr. Arpit Raol.

Bag No.1 contained 10,000 USD valued at

Rs.5,96,500/-. There were 100 currency notes of the

denomination of USD 100/-. Bag No.2 had assorted

jeweleries like bracelets, bangles, ear rings,

pendants of gold and bag No.3 had necklaces and

earrings of gold wighting 3073.43 valued at

Rs.86,04,987/- recovered from the residence of the

very Airport staff.

2.2. On completion of inquiry, the show cause notice was

issued on 20.01.2014, proposing to confiscate the

smuggled gold jewellery and foreign currency of USD

10,000/-, totally valued at Rs.92,01,487/- and also

C/SCA/5042/2019 JUDGMENT

confiscated motor vehicle GJ-01-KL-3888 valued at

Rs.3,41,390/- belonging to the petitioner and

further imposed penalties under section 112(a) and

(b) of the Customs Act, 1962 ("the Customs Act" for

short). After due process of law, Additional

Commissioner of Customs passed order in original

on 20.05.2015 and rejected the proposal of

confiscation of motor vehicle car No.GJ-01-KL-3888

belonging to the petitioner and also dropped the

proposal to impose penalties under section 112(a) of

the Customs Act.

2.3. However, Additional Commissioner (Customs)

imposed the penalties under section 112(b) of the

Customs Act to the tune of Rs.10 lakhs against the

petitioner and others.

2.4. Aggrieved petitioner preferred the appeal against the

said order before the Commissioner of Customs. It

held that the goods were not recovered from the

possession of the petitioner nor did he claim any

C/SCA/5042/2019 JUDGMENT

ownership of his car and again, it was not used for

transport of the smuggled goods. Moreover,

according to him, even the call data records (CDRs)

did not specify the conversation between the

petitioner and others and, therefore, the penalty

under section 112(b) of the Customs Act according

to it, was not justifiably imposed. It, therefore, had

reduced the penalty from Rs. 10 lakhs to Rs.1 lakh

under section 112(a) of the Customs Act, keeping in

mind the gravity of offence.

2.5. In the revision application preferred under section

129 of the Customs Act, the challenge was made to

this reduction by the Principal Commissioner of

Customs, which chose to adjudicate in detail entire

dispute and imposed penalty of Rs.10 lakhs under

section 112(a) of the Customs Act upon the

petitioner, particularly noticing the CDRs and also

highlighting position of the petitioner as the Airport

Supervisor of Air Arabia and also for his having

C/SCA/5042/2019 JUDGMENT

access to the Airport including to the most sensitive

areas like tarmac and the aircraft . It also held that

the access permitted to him was for the purpose of

providing service to the passengers embarking and

disembarking from the Airport. He, however,

misused the access given to him by even facilitating

the smuggling of gold jewellery. He was since aware

of the fact that the persons authorized to use all

areas of Airport are not are checked by the Airport

security while leaving the Airport, he used the

knowledge of Airport procedure and facilitated

smuggling of gold jewellery through the departure

hall of the Airport and, thereby, misused his

authority as Airport Supervisor. He also ensured

that the Air Arabia staff members, Mr. Dhaval and

Mr. Arpit both remain stationed at the rear exit door

of the Aircraft for receiving the parcels containing

gold jewellery from the passenger and, thus, having

misused his authority, penalty under section 112(a)

of the Customs Act, as imposed in the order in

C/SCA/5042/2019 JUDGMENT

original, has been revived.

3. The petitioner before this Court is essentially and

predominantly making a grievance that he was

never served with any intimation of hearing before

the revisional authority. He was served with only

one hearing, which was scheduled on 23.10.2018.

However, for the dates fixed on 30.10.2018 and

06.11.2018, no opportunity of hearing was availed.

Therefore, the claim of respondent authority of

availing so-called opportunity of hearing was

nothing but an empty formality and respondent

No.2 was heard in absence of the petitioner. On a

single hearing notice, two dates were given.

Therefore also, it can be said that there was

insufficient notice. The CDRs also do not specify the

conversation between the petitioner and other

persons and, therefore, also imposition of penalty

under section 112(a) of the Customs Act is totally

unjustifiable.

C/SCA/5042/2019 JUDGMENT

4. According to the petitioner, he was not involved in

the smuggling of gold nor was he aware of any

conspiracy. Again, gold not being a prohibitory item,

use of term of smuggling is also impermissible.

However, since Jagdishbhai was known to the

passenger, he himself had shared the petitioner's

mobile number with Mr. Mayur Keshubhai

Kuchhadiya, the passenger, who travelled from

Sharjah. The petitioner also was holding a

responsible position in Air Arabia. According to him,

he did not know Jagdishbhai at all. He never met

the passenger and only on Jagdishbhai's

instructions Mr. Mayur Keshubhai Kuchhadiya had

called the petitioner on 24.07.2013 after landing. He

also urged this Court to look at his profile, which

inspired trust and confidence and under these

circumstances, he has approached this Court for the

aforementioned reliefs.


5.    On       issuance       of       notice        on     25.03.2019,              the








        C/SCA/5042/2019                             JUDGMENT

respondents appeared and filed affidavit-in-reply for

and on behalf of respondents No.1,2 and 3 denying

all averments set out in the petition. According to

the said respondents, the petitioner was offered

three opportunities on 04.09.2018, 01.10.2018 and

30.10.2018, 06.11/2018. However, the petitioner

failed to attend the same and there is no lapse of

principles of natural justice on the part of the

respondent authority.

5.1. It is also further contended that the petitioner was

working as Airport Supervisor in Air Arabia from

July, 2013 and the case was booked on the basis of

information that Mr. Mayur Keshubhai Kuchhadiya

was arriving in Air Arabia flight and was carrying

gold jewellery and foreign currency and on laying

trap, the confiscated articles were found from the

two airline staff at the SVPI Airport. It is the say of

the respondents that no penalty was imposed under

section 112(a) by the Additional Commissioner at

C/SCA/5042/2019 JUDGMENT

the time of passing the order in original. However,

penalty under section 112(b) was imposed

amounting to Rs.10 lakhs.

5.2. The petitioner approached the

Commissioner(Appeals), who reduced the penalty

under section 112(b) of the Customs Act from Rs. 10

lakhs to Rs.01 lakh.

5.3. Aggrieved respondent filed revision application before

the Principal Commissioner & ex-officio Additional

Secretary to the Government of India against the

order in appeal, who vide order dated 19.11.2018

confirmed the order dated 20.05.2015 issued by the

Additional Commissioner (Customs), Ahmedabad

upholding the penalty imposed upon the petitioner

to the tune of Rs. 10 lakhs. According to the

respondents, there would not be any requirement for

a separate show cause notice before enhancement of

penalty from Rs. 1 lakhs to Rs. 10 lakhs at the

revisional stage. Affidavit-in-reply of respondents

C/SCA/5042/2019 JUDGMENT

No.1 and 3 also is along the very line.

6. This Court has heard learned advocates for the

respective sides extensively, who along the line of

pleadings have put forth their rival stands.

6.1. Mr. D.K. Trivedi, learned advocate for the petitioner

has while arguing along the line of this memo of

petition urged that without a separate show cause

notice, enhancement of penalty is impermissible by

the respondent.

6.2. Learned Central Government Standing Counsel Mr.

Parth Diveyeshwar for and on behalf of the

respondents has vehemently argued justifying the

order of imposition of penalty by contending that

revision being the continuity of original proceedings,

concept of fresh issuance of show cause notice has

no valid basis, much less legal base.

7. On thus hearing the learned advocate and on closely

C/SCA/5042/2019 JUDGMENT

examining the entire material on record, it is

apparent from the record that on a tip off received

by DRI, surveillance was maintained in different

areas by the DRI. On arrival of Air Arabia Flight

No.G-9-0481 from Sharjah on 24.07.2013 at SVPI

Airport, Ahmedabad, as per the information

passenger Mr. Mayur Keshubhai Kuchhadiya was

carrying gold, jewellery as well as foreign currency,

who was to hand over the same to the airline staff at

the time of disembarkment from the aircraft. He was

a frequent flier and travelled six times between

Mumbai, Sharjah and Ahmedabad and back in the

year 2013. He opted for the Green Channel and

when he was crossing the green channel, he was

intercepted by the DRI officers. He had one hand

bag and one check in bag and had nothing to

declare. The dutiable goods carried by him was zero

in the disembarkation slip. In his interrogation, he

admitted to have brought three bags from Sharjah,

which were to be given to one Jagdishbhai.

C/SCA/5042/2019 JUDGMENT

Jagdishbhai had given him one mobile phone

number, which belonged to an airline staff and

instructed him to call the airline staff upon landing.

He was then asked to hand over the bags to the said

staff member. A phone call was received by him on

the landing of the aircraft. He was asked to remain

seated till all passengers disembarked and he then

used the rear exit for disembarking. He came across

two persons bearing identity card of Airport staff to

whom he handed over the three packets. The mobile

number belonged to Aircraft Supervisor of Air

Arabia, Ahmedabad Shri Jay Sudhirbhai Vaidya, the

present petitioner.

7.1. The petitioner though claimed ignorance of any bag

having been received from the passenger, in fact, the

record reveals that he had asked Mr. Dhaval and

Mr. Arpit, the ground handling staff members to be

at the rear exit of the aircraft and receive the

packets from the last passenger, who was

C/SCA/5042/2019 JUDGMENT

disembarking from the aircraft. Mr. Dhaval admitted

that he along with Mr. Arpit had received the three

packets from the passenger, who was the last to

disembark from the aircraft. In the event of any

issues, they both were asked by the petitioner to

take all the three bags out of the Airport and, thus,

Mr. Arpit had left the Airport and kept the bags at

his residence.

7.2. The three packets were retrieved by the DRI from

the residence of Mr. Arpit. These bags when

examined, the first one contained USD 10,000/-, the

second bag contained assorted jewellery i.e.

bracelets, bangles, ear rings, pendants of yellow

metal, which appeared to be gold and examined by

the Government Approved Valuer. The total value of

the gold weighing 3073.43 grams along with making

charges amounted to Rs.86,04,987/- and under the

Customs Act, they are said to have been smuggled

into India.

C/SCA/5042/2019 JUDGMENT

8. The panchnama dated 24.07.2013 was carried out

in presence of independent witnesses and the

statement of the passenger was recorded under

section 108 of the Customs Act. This eventually led

to issuance of show cause notice. According to the

passenger, Mr. Mayur these three bags were handed

over to him, by one Jagdishbhai at Sharjah. He had

given mobile Number 9824331093, which belonged

to the petitioner, who provided him the details of two

mobile phones numbers belonging to one Kishorbhai

and one Polabhai and the passenger was told that

after handing over the parcels to the petitioner, he

was to intimate one of those persons. He was

telephoned by the petitioner, who instructed him to

hand over the three bags to Mr. Dhaval and to

Mr. Arpit. After five minutes of handing over the

three bags Jagdishbhai had telephoned him from

Sharjah and enquired him about the bags to which

he informed that he had handed over the packets,

as instructed by the petitioner. Thereafter,

C/SCA/5042/2019 JUDGMENT

Kishorbhai called him from mobile phone number

8128202010 and enquired about the delivery of the

packets. He new Jadgishbhai since the last three-

four months, who was having office at Sharjah. He

also knew five to seven persons like him, who are

regularly carrying gold jewellery packets to India

from Sharjah office of Jagdishbhai. He also

previously travelled five times with such packets and

upon landing, he had handed over these packets to

Mr. Dhaval and Mr. Arpit as per the instruction of

the petitioner. He was instructed by the petitioner to

disembark from the rear exit of aircraft, because had

he disembarked from aero-bridge, the exchange of

packets would have come to the notice of other

airline staff members, but it can be exchanged easily

without being noticed by anybody, if he

disembarked from the rear exit gate.

9. The statement was also recorded of the petitioners

under section 108 of the Customs Act, wherein he

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had revealed that he attends to the passenger

handling and customer services which includes

entire departure activities starting from entry of

passenger in Airport, their checking, liaisoning with

Customs and Immigration department, all the

ground handling staff of Air Arabia at SVPI Airport

were working under his supervision and monitoring

when he was on duty. In case of his absence, the

ground handling work was carried out by other

security supervisor and his boss Manvendra Singh

Vaghela. He had instructed the passenger to

disembark from the rear door, as he had received

phone call from Jagdishbhai and received three

packets. He also had admitted that he and Firoz

Sheikh Alam had visited Dubai on a holiday and

met Jagdishbhai. He knew Jagdishbhai through one

of the acquaintances. This petitioner further

provided the details as to how proposal was made to

smuggle gold from Sharjah in the flight, where the

role of his would be restricted to collecting the gold

C/SCA/5042/2019 JUDGMENT

parcels from the person, who carried the same in

the flight and to take it out from the Airport for

which he was promised some monetary benefits.

Matter was then discussed between him and Firoz

Sheikh Alam and accepted the proposal of

Jagdishbhai in facilitating and taking out the gold

jewellery from the Airport. Mr. Dhaval and Mr. Arpit

also were included being the ground staff and one

Assistant Supervisor Sameer Mansoori of M/s

Cambata Aviation Pvt. Ltd. also was with them.

These parcels were collected from the passenger and

once they came out from the Airport, in his vehicle

being Chevrolet Beat having registration number

GJ-1-KL-3888, they were taken to the residence of

Arpit.

9.1. According to him, later on, the Airport Manager Shri

Manvendra Singh Vaghela, who was in Air Arabia

was also involved and agreed to participate in the

said activity of receiving gold jewellery for 50%

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share of the amount, which they received from

Jagdishbhai. All in all, they had helped smuggling

80 kgs of gold jewellery and they were paid about

Rs.08 lakhs for receiving parcels and Rs. 04 lakhs

had been given to Manavendra Singh Vaghela and

remaining were distributed amongst themselves.

10. After all these details, since the petitioner was found

to be a key person in this entire incident, the

Additional Commissioner Customs, Ahmedabad vide

order dated 20.05.2015 directed confiscation of gold

jewllery and the USD currency notes smuggled by

the passenger and imposed penalty under section

112(b) of the Customs Act on the petitioner and

others.

10.1. This imposition of penalty was reduced to

Rs.1,00,000/-(Rupees One Lakhs only) by the

Commissioner of Customs(Appeals), whereas the

revisional authority i.e. the Principal Commissioner

& ex-officio Additional Secretary of Government of

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India once again imposed the penalty to the tune of

Rs. 10 lakhs. The statements recorded under section

108 of the Customs Act was considered a valid

defence in the legal proceedings and by a detailed

discussion, it restored the penalty imposed by the

order in original.

11. Much reliance is placed by the petitioner on sub-

section 5(b) of section 129DD of the Customs Act

challenging the action of the respondent in imposing

penalty urging inter alia that unless the persons

affected by the proposed order has been given notice

to show cause against it within one year from the

date of the order nothing, could be annulled or

modified by the revisional authority. Emphasis is

that the revisional authority passed the order under

the provision of section 129DD of the said Act and

enhanced the penalty, which was reduced by the

Commissioner (Appeals), while passing the order

under section 128A of the Customs Act. According

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to the petitioner, required show cause notice is

completely missing as has not been given to the

petitioner within the stipulated time period of one

year from the date of the said order and, therefore,

it is emphasized that in absence of any such show

cause notice, penalty cannot be enhanced from Rs.

01 lakh to Rs. 10 lakhs.

12. Apt would be refer to section 129DD of the Customs

Act at this juncture.

                 "1[129DD.        Revision     by     Central
                 Government.--

(1) The Central Government may, on the application of any person aggrieved by any order passed under section 128A, where the order is of the nature referred to in the first proviso to sub-section (1) of section 129A, annul or modify such order:

2[Provided that the Central Government may in its discretion, refuse to admit an application in respect of an order where the amount of duty or fine or penalty, determined by such order does not exceed five thousand rupees.] Explanation.--For the purposes of this sub-section, "order passed under section 128A" included an order passed under that section before the commencement of section 40 of the Finance Act, 1984*, against which an appeal has not been preferred before such commencement and could have been, if

C/SCA/5042/2019 JUDGMENT

the said section had not come into force, preferred after such commencement, to the Appellate Tribunal. 2[(1A) The Commissioner of Customs may, if he is of the opinion that an order passed by the Commissioner (Appeals) under section 128A is not legal or proper, direct the proper officer to make an application on his behalf to the Central Government for revision of such order.] (2) An application under sub-section (1) shall be made within three months from the date of the communication to the applicant of the order against which the application is being made: Provided that the Central Government may, if it is satisfied that the applicant was prevented by sufficient cause from presenting the application within the aforesaid period of three months, allow it to be presented within a future period of three months. 3[(3) An application under sub-section (1) shall be in such form and shall be verified in such manner as may be specified by rules made in this behalf and shall be accompanied by a fee of,--

(a) two hundred rupees, where the amount of duty and interest demanded, fine or penalty levied by an officer of customs in the case to which the application relates is one lakh rupees or less;

(b) one thousand rupees, where the amount of duty and interest demanded, fine or penalty levied by an officer of customs in the case to which the application relates is more than one lakh rupees: Provided that no such fee shall be payable in the case of an application referred to in sub-section (1A).] (4) The Central Government may, of its own motion, annul or modify any order referred to in sub-section (1).

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(5) No order enhancing any penalty or fine in lieu of confiscation or confiscating goods of greater value shall be passed under this section,--

(a) in any case in which an order passed under section 128A has enhanced any penalty or fine in lieu of confiscation or has confiscated goods of greater value, and

(b) in any other case, unless the person affected by the proposed order has been given notice to show cause against it within one year from the date of the order sought to be annulled or modified.

(6) Where the Central Government is of opinion that any duty of customs has not been levied or has been short-levied, no order levying or enhancing the duty shall be made under this section unless the person affected by the proposed order is given notice to show cause against it within the time limit specified in section

128.]"

13. To recapitulate the legal proceedings, on completing

inquiry, a show cause notice had been issued by

the DRI being DRI/ AZU ND14/19 on 28.01.2014

proposing confiscation of gold and foreign currency

of USD 10,000/- and motor vehicle and also for the

imposition of penalty. This was adjudicated by the

adjudicating authority in order in original by an

elaborate discussion of entire materials. As reflected

earlier, when the appeal was preferred against the

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order in original, the Commissioner of Customs

(Appeals) under section 128A had reduced the

penalty from Rs.10 lakhs to Rs. 1 lakhs, against

which the revision application under section 129DD

of the Customs Act was preferred where the DRI

approached for revision of the said order in appeal.

13.1. Sub-section(5) of section 129DD precludes passing

of order of enhancing any penalty or fine in lieu of

confiscation or confiscation of goods of greater

value, unless while passing order under section

128A, the appellate authority has enhanced any

penalty or fine in lieu of confiscation or has

confiscated goods of greater value. However, if the

Appellate authority has not enhanced as provided

under sub-section 5(a), issuance of notice to the

person affected by the proposed order, is insisted

within one year from the date of the order sought to

be annulled or modified. In other words, for

enhancement of penalty or fine, issuance of notice

within one year of passing of order sought to be

challenged/ modified is made necessary.

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13.2. This surely would mean that once the revisional authority is approached against the order of appellate authority, it needs to put the person against whom the penalty or fine is proposed and who is the affected person, to notice and avail him the opportunity to represent his case. Stipulated period of issuance of notice is also one year which would be from the date of the order sought to be modified or annulled.

13.3. In the matter on hands, the order sought to be modified was of the Appellate Authority being Commissioner of Customs (Appeals) dated 20.01.2016 as the application for revision was preferred by the respondent No.2 under section 129DD of the Act, before the Principal Commissioner & Ex Officio Additional Secretary to Government of India on 30.11.2018. The petitioner was served with the notices thrice on 04.09.2018, 01.10.2018 and on 30.10.2018/ 06.11.2018. Grievance sought is made by the petitioner of non- service of show cause notice, although he had admitted of receipt of one notice of hearing on dated 23.10.2018 which is within the prescribed period under sub-section 5(b) of section 129DD of the Customs Act. There may not be any formal show

C/SCA/5042/2019 JUDGMENT

cause notice, this notice of the revisional authority would be sufficient compliance under the law.

14. Even otherwise, this revision being a continuance of

original order, there could not have been a need for

a separate issuance of the show cause notice in a

literal sense at the time of the matter having

travelled to the revisional authority. The challenge

made by the petitioner and the issues raised of non-

issuance of the show cause notice merit no

assistance, inasmuch as, aggrieved by the order in

appeal of the appellate authority that the

department had chosen to question it before the