Madras High Court
Musthafa vs The Commissioner Of Customs on 1 August, 2023
W.P.(MD)No.17259 of 2023
BEFORE THE MADURAI BENCH OF MADRAS HIGH COURT
DATED: 01.08.2023
CORAM
THE HONOURABLE MRS.JUSTICE S.SRIMATHY
W.P.(MD)No.17259 of 2023
and
W.M.P.(MD)No.14453 of 2023
Musthafa ... Petitioner
vs.
1.The Commissioner of Customs,
Office of the Principal Commissioner
of Customs,
Commissionerate I, Chennai Airport,
New Customs House,
Meenambakkam, Chennai-600 027.
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W.P.(MD)No.17259 of 2023
2.The Joint Commissioner of Customs,
(Adjudication-AIR),
Office of the Principal Commissioner
of Customs,
Commissionerate I, Chennai Airport,
New Customs House,
Meenambakkam, Chennai-600 027. ... Respondents
PRAYER: Writ Petition filed under Article 226 of the Constitution of
India for issuance of Writ of Certiorarified Mandamus, to call for the
records pertaining to the impugned order passed by the 2nd respondent in
F.No.O.S.No.139/2020-AIU, DIN-202103573MW000000C52D, dated
31.07.2021 and to quash the same and consequently, to direct the
respondents to return the seized 03 numbers of crude gold chain 24 Karat
purity totally weighing 348 grams to the petitioner.
For Petitioner : Mr.V.Malaiyendran
For Respondents : Mr.R.Nandakumar
Senior Standing Counsel
assisted by M/s.S.Ragaventhre
Junior Standing Counsel
*****
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W.P.(MD)No.17259 of 2023
ORDER
This writ petition is filed for writ of Certiorarified Mandamus, to
quash the impugned order dated 31.07.2021 passed by the 2nd respondent
and consequently, to direct the respondents to return the seized 03
numbers of crude gold chain 24 Karat purity totally weighing 348 grams
to the petitioner.
2. The respondents have declined to return the jewels through the
impugned order. Challenging the same, the present writ petition is filed.
3. Heard Mr.V.Malaiyendran, the Learned Counsel appearing for
the petitioner and Mr.R.Nandakumar, Senior Standing Counsel assisted
by M/s.S.Ragaventhre, Junior Standing Counsel appearing for the
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W.P.(MD)No.17259 of 2023
respondents and perused the records.
4. The learned counsel appearing for the petitioner submitted that
the petitioner is working at Dubai for the past one year. The petitioner
arrived in Chennai Airport on 09.02.2020. The petitioner was possessing
gold chains, but the Customs Officers seized the gold under threat and
coercion. The contention of the petitioner is that he had purchased the
jewellery from his own income. The respondents have exercised their
power under Section 110 of the Customs Act. As per Section 110A the
provisional release of goods can be handed over even though the
adjudication is pending. Further as per Section 125 option to pay fine in
lieu of confiscation is available to the petitioner. The High Courts have
repeatedly held that gold is not prohibited item, but only restricted item.
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W.P.(MD)No.17259 of 2023
Bringing the restricted item by violating certain conditions would not
give right for the respondents to detain and confiscate gold articles. Since
it is only a restricted item and it can be handed over to the owner or to
the passenger from whom the same has been seized. In support of his
submission, the learned counsel appearing for the petitioner relied on
various judgments.
5. In the case of Vaibhav Sampat More vs. National Investigation
Agency, through its Chief Investigation Officer [Crl.A.No.115 of 2022,
dated 03.06.2022] the Hon’ble Delhi High Court has held that import of
gold is not prohibited, but restricted subject to prescribed quantity on
payment of duty.
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W.P.(MD)No.17259 of 2023
6. In W.P.No.1421 of 2011 filed by T.Elavarasan vs. The
Commissioner of Customs (Airport), Anna International Terminal,
Chennai and others wherein a direction has been sought to direct the
second respondent therein to release 350 grams of assorted gold jewels
viz., 7 gold chains on payment of duty as applicable for the passenger
staying abroad for more than six months and passport. A learned Single
Judge of this Court vide order dated 28.02.2021 after considering the
rival submissions and the decisions relied upon by the petitioner therein,
directed the respondents therein to release the gold jewels in question,
provisionally, to the petitioner therein, forthwith, on payment of customs
duty and the redemption fine, as per the Notification dated 01.03.2003
and as per Section 125 of the Customs Act, 1962, subject to the
adjudication proceedings to be conducted by the authorities concerned
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and also directed the petitioner therein to cooperate fully in the said
proceedings. Against the said order, the Department had filed a Writ
Appeal in W.A.No.582 of 2011 before the First Bench of this Court. The
First Bench of this Court, after hearing the parties, vide judgment dated
01.04.2011, disposed the Writ Appeal with a slight modification to the
order of the learned Single Judge that instead of depositing the entire
customs duty and redemption fine, directed the petitioner therein to
deposit 50% of the duty for the value of the gold jewels and on such
deposit being made, the gold jewels in question shall be released
forthwith. Thereafter, the Department filed Rev.Appl.No.89 of 2011
before the First Bench of this Court. The First Bench of this Court,
finding that there is no error apparent on the face of the record, vide
order dated 25.04.2011, dismissed the said Review Application.
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Aggrieved over the same, the Department filed S.L.P.(Civil)Nos.13870
and 13871 of 2011 before the Hon'ble Apex Court. Since the Hon'ble
Apex Court was not inclined to entertain the S.L.Ps., the same were
permitted to be withdrawn and accordingly, vide order dated 12.05.2011,
the Hon'ble Apex Court dismissed the Special Leave Petitions as not
pressed.
7. Further, following the above said decision of the Hon'ble
Division Bench, a Learned Single Judge of this Court, in
i.W.P.No.2968 of 2016 filed by Palaniappan vs. the Principal
Commissioner of Customs, Chennai and another vide order dated
29.02.2016
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W.P.(MD)No.17259 of 2023
ii. W.P.(MD)Nos.2985 and 3124 of 2018 filed by Tajudeen vs. the
Commissioner of Customs, Trichy and others vide order dated
21.02.2018
iii. W.P.No.5148 of 2018 filed by Barakathnisa vs. The Principal
Commissioner of Customs, Chennai and others vide order dated
20.04.2018
granted relief to the petitioners therein. Thus, the consistent view of the
Division Bench of this Court as well as the learned Single Judges of this
Court is to return the seized gold to the passenger/owner on payment of
50% of the duty. It was also further clarified that if the petitioners therein
are found guilty, it is always open to the authorities to proceed further in
the manner known to law.
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W.P.(MD)No.17259 of 2023
8. Once the gold is seized by the proper officers under Section 110
of the Customs Act, 1962, the petitioner is entitled to release of the gold,
which are detained pending adjudication proceedings, in terms of Section
110-A of the Customs Act, 1962. As per Section 110-A of the Customs
Act, 1962, any goods, documents or things seized or bank account
provisionally attached, pending the order of the adjudicating authority,
may be released to the owner or the bank account holder on taking a
bond from him in the proper form with such security and conditions as
the adjudicating authority may require. Thereafter, even in the case of
option to pay fine in lieu of confiscation, Section 125 of the Customs
Act, 1962 will come into play. As per Section 125 of the Customs Act,
1962, whenever confiscation of any goods is authorized by the Act, the
Officer adjudging finds that the importation or exportation of any goods
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W.P.(MD)No.17259 of 2023
is prohibited under the Act or under any other law for the time being in
force, 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. In case of
prohibited items, an option to pay in lieu of confiscation such fine would
arise. In the present case, the gold chains, which have been seized from
the petitioner, is not a prohibited item. Hence, the Adjudication Officer
ultimately, shall give an option to redeem the confiscated gold jewels. In
the present case, the petitioner is ready and willing to give a bank
guarantee for 50% of the duty involved.
9. The learned Senior Standing Counsel relied on a judgment of
this Court in A.Krishnamoorthy vs. Commissioner of Customs, Trichy
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W.P.(MD)No.17259 of 2023
[2022 (381) ELT 59 (Mad)] and submitted that in a similar circumstance,
this Court in the aforesaid decision directed the petitioner therein to pay
50% of customs duty in cash and furnish 50% security in the form of
bank guarantee for the balance 50% of the customs duty and on
production of such bank guarantee and payment of duty, the seized gold
chains are directed to be released forthwith. Hence, the same condition
may be imposed, so that, the revenue of the Nation would be saved.
10. Considering the rival submissions and on perusal of the
materials this Court has giving its anxious consideration. It is seen that
the respondents have treated the gold as prohibited items. But the
Hon'ble Apex Court in the case of Commissioner of Customs vs. Atul
Automations Pvt. Ltd. [2019 (365) ELT 465 (SC)] distinguished the
prohibited item from restricted item. It would be apposite to extract
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W.P.(MD)No.17259 of 2023
below paragraph 9 of the said judgment,
''9.Unfortunately, both the Commissioner and the Tribunal
did not advert to the provisions of the Foreign Trade Act. The
High Court dealing with the same has aptly noticed that Section
11(8) and (9) read with Rule 17(2) of the Foreign Trade
(Regulation) Rules, 1993 provides for confiscation of goods in
the event of contravention of the Act, Rules or Orders but which
may be released on payment of redemption charges equivalent to
the market value of the goods. Section 3(3) of the Foreign Trade
Act provides that any order of prohibition made under the Act
shall apply mutatis mutandis as deemed to have been made under
Section 11 of the Customs Act also. Section 18A of the Foreign
Trade Act reads that it is in addition to and not in derogation of
other laws. Section 125 of the Customs Act vests discretion in the
authority to levy fine in lieu of confiscation. The MFDs were not
prohibited but restricted items for import. A harmonious reading
of the statutory provisions of the Foreign Trade Act and Section
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W.P.(MD)No.17259 of 2023
125 of the Customs Act will therefore not detract from the
redemption of such restricted goods imported without
authorization upon payment of the market value. There will exist
a fundamental distinction between what is prohibited and what is
restricted. We therefore, find no error with the conclusion of the
Tribunal affirmed by the High Court that the respondent was
entitled to redemption of the consignment on payment of the
market price at the reassessed value by the Customs authorities
with fine under Section 112(a) of the Customs Act, 1962.''
Further, the Delhi High Court in Vaibhav Sampat More vs. National
Investigation Agency, through its Chief Investigation Officer [supra]
held that import of gold is not prohibited, but restricted subject to
prescribed quantity on payment of duty. Thus, import of gold is not
prohibited, but restricted subject to prescribed quantity on payment of
duty.
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W.P.(MD)No.17259 of 2023
11. Section 125 of the Customs Act, 1962, gives rights to the
owner or from whom the goods have been seized to redeem such goods
on payment of fine. Further, the Courts consistently held that goods can
be handed over on executing 50% of the Bank guarantee on the duty
amount. In view of the same, the impugned order is quashed and the
petitioner is directed to pay 50% customs duty and also execute 50% of
the Bank guarantee in lieu of customs duty. And on such payment /
execution of the Bank guarantee, the respondents are directed to hand
over the gold chains to the petitioner within two weeks from thereon.
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W.P.(MD)No.17259 of 2023
12. With the above directions, this Writ Petition is disposed of. No
costs. Consequently, connected Miscellaneous Petition is closed.
Index : Yes / No 01.08.2023
Internet : Yes
NCC : Yes / No
Tmg
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W.P.(MD)No.17259 of 2023
S.SRIMATHY, J
Tmg
W.P.(MD)No.17259 of 2023
01.08.2023
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