ORDER
S.S. Sekhon, Member (T)
1. Sri Mansuklal Parmar, a permanent resident of London, arrived alongwith his wife, Mrs. Jyotsna Parmar, from London by flight No. AI 808 via Mumbai at 04:30 hours on 27-04-2002 at Hyderabad, They were carrying two checked in baggage (zipper suitcases in black and grey colour), one handbag stroller and another handbag (shoulder bag). After collecting their checked in baggage, they opted for Green Channel, wherein Sri Parmar, carrying one stroller handbag had declared the value of his goods as NIL and his wife, carrying two checked in baggage and one shoulder hand bag, declared the value of her goods as Rs. 10,000/-. While Shri Parmar and his wife were proceeding towards the exit gate of Customs Arrival Hall, the officers of Air Intelligence Unit intercepted them, near the exit gate, on reasonable belief that they are in possession of some dutiable goods kept in the two checked in baggage. The officers, in the presence of two independent witnesses, questioned Smt. and Sri Parmar whether they had anything to declare for which they replied that they did not have anything to declare, except for some chocolates, food items and personal effects. The officers then opened the baggage of Smt. and Sri Parmar. Examination of their baggage revealed concealment in black polythene sheets of huge quantities of medicines, which were in the form of tablets, capsules, ointments, patches etc. The medicines were concealed in the black polythene sheets of both the top and bottom sides of the two checked in suitcases. The polythene sheets were also placed in between two layers of medicines. The checked in baggage was booked in the name of Shri Parmar. The goods were seized as the same were attempted to be smuggled without declaring to the Customs in contravention of the provisions of the Customs Act, 1962 liable for confiscation under the Customs Act, 1962. During the examination of the baggage the officers found the personal effects of Smt. & Sri Parmar, which were returned to them in the presence of the witnesses.
2. Statements of Sri Parmar and Smt. Jyotsna Parmar were recorded wherein they disclosed they were aware of the facts that dutiable goods found in the baggage cannot be brought. Investigation conducted revealed that the value of the medicines was around Rs. 25 lakhs and the Customs duty involved is around Rs. 10 lakhs. Further investigations in this case with reference to violation of Drug Control order and follow up action was immediately initiated. The said passengers were to be arrested under Section 104 of the Customs Act, 1962 at this stage. However, even before the passengers could be arrested, Sri Parmar got himself inflicted with knife injury on his body on the intervening night of 27th and 28th April, 2002 around 01:00 hours. He was taken immediately to Gandhi General Hospital. Smt. Parmar was also allowed to be with her husband. Both Smt. & Sri Parmar were arrested on 29-4-2002 at CDR Hospital.
3. Hon’ble Spl. Judge for Economic Offences, Hyderabad vide orders dated 5-6-2002 favourably disposed the petition filed by the accused by permitting her to go back to London subject to the conditions. The accused requested through their Counsel to adjudicate the case without issue of show cause notice and complete the adjudication proceedings. Both the accused were further questioned on 30-5-2002 and their final statements were recorded under summons in which they, inter alia, deposed that on their earlier visits to Hyderabad, they had brought Electronic goods and Medicines and passed through green channel and provided only the physical features of the receiver one Mr. Shiva at Hyderabad that they do not have the address and telephone No. of the said receiver.
4. Personal hearing was held on 10-6-2002, Shri C.R. Hirani, Advocate appeared for the personal hearing alongwith Smt. and Sri Parmar. Shri Hirani stated that both Smt. and Sri Parmar accepted that they had attempted to take the impugned goods without declaring the same in order to avoid payment of duty and that they had indulged in such activities on a few occasions in the past. Shri Hirani further stated that such a behaviour on the part of Smt. and Sri Parmar was purely for the monetary considerations offered by the party who send the impugned goods through them. Shri Hirani pointed out that the goods were life saving drugs and other drugs to help people to overcome from addiction to smoking. They were not in the nature of any harmful goods and that such goods probably needed a licence for import from the Drug Control Authority under the Drugs Act. He further urged that the value fixed at Rs. 25 lakhs by the Department was certainly on the higher side as against the actual C.I.F. value of Rs. 10 lakhs for which his clients had already submitted proof to the investigation officers which in turn indicated that only about Rs. 6 lakhs was attempted to be evaded on the impugned goods. Shri Hirani further requested that his clients be permitted to re-export the impugned goods after payment of fine which would enable them to come out of the liability they owed in this regard to the party who supplied the goods to them in England. He also stated that his clients were middleclass citizens of United Kingdom whose daughter aged 19 years was mentally retarded and son aged 15 years was in school and that Sri Parmar worked as a driver and also helped physically handicapped people and that therefore considering the status and employment of Sri Parmar, a sympathetic view may be taken while adjudicating the case.
5. The Commissioner found :-
“It is not reported that the impugned goods were spurious in nature or that they were not fit for consumption or were harmful in any manner. However, the provision of the Drugs and Cosmetics Act, 1940 and the rules made there under impose certain restrictions and procedures for the import, stocking, exhibition and sale of such drugs and medicines. Very clearly Smt. and Sri Parmar were catering to the grey-market for such drugs and medicines prevailing in the country in general and in Hyderabad in particular. Smt. and Sri Parmar acted as conduits in the smuggling process. The parties interested in receiving the impugned goods in India and marketing the same in the grey-market have not been traced.
As commission of offences under the provisions of the Customs Act, 1962 and the Drugs and Cosmetics Act, 1940 has been proved beyond doubt there also cannot be any question of releasing the impugned goods even on payment of fine to Smt. and Sri Parmar for re-export to U.K. This is not the first time that Smt. and Sri Parmar have indulged in such illegal activities. They have themselves admitted to having successfully smuggled goods into India on a few occasions in the past. Therefore it will be relevant for me to bear this fact in mind while deciding the quantum of penalty to be imposed on them.
Smt. & Sri Parmar have also claimed that the value of Rs. 24,83,830/- determined for the impugned goods by the investigating officers was not correct and that the correct value for the same was only Rs. 10,00,000/-. In support of this claim Smt. and Sri Parmar produced a price list issued by M/s. Flameglobe Pharmacy, Wembley, Brent, United Kingdom. I have carefully examined the said price list produced by Smt. and Sri Parmar and find that it is not the invoice or receipt issued for procuring the impugned goods. On the other hand, it is merely a letter sent by fax. When such large quantities of drugs are purchased, bills/invoices are bound to have been issued especially as such sales are governed by strict regulations in the U.K as they concern the health of citizens. Smt. & Sri Parmar have not come forward to produce the bills/invoices issued in U.K when these goods were purchased. On the contrary it is reported that the investigating officers have ascertained the value of the impugned goods by contacting an established drug store in Hyderabad and after showing the samples; and that the estimated price of Rs. 24,83,830/-is the landed cost of the impugned goods. I therefore do not accept the claim of Smt. & Sri Parmar that the value of the impugned goods should be treated as Rs. 10 lakhs.”
And passed the following Order :-
(i) Under Section 111(d) and Section 111(m) of the Customs Act, 1962, I confiscate the drugs and medicines seized from Shri Mansuklal Par-mar and Smt. Jyotsna Parmar on 27-4-2002 when they alighted at Hyderabad by flight AI 808 from London via Mumbai. However, under Section 125 of the Customs Act, 1962, I allow Smt. and Sri Parmar to redeem the said goods by paying a fine of Rs. 5,00,000/-(Rupees five lakhs only). Smt. & Sri Parrnar will have to also fulfil the requirements prescribed under the Drugs and Cosmetics Act, 1940 and the rules made thereunder before redeeming the said impugned goods.
(ii) Under Section 118 of the Customs Act, 1962 I confiscate two zipper suitcases and one stroller which were used as package to smuggle the impugned goods. However, these packages may be returned to Smt. & Sri Parmar if the impugned goods are redeemed as per terms and conditions prescribed above. (iii) Under Section 112(a) of the Customs Act, 1962 I impose a penalty of Rs. 3,00,000/- (Rupees three lakhs only) on Sri Mansuklal Parmar and a penalty of Rs. 1,00,000/- on Smt. Jyotsna Parmar. 6. We have heard both sides in appeal against the order, considered the material on records and find :- (a) We find from the impugned order that the Commissioner has not determined how the value of the goods has been arrived at. His finding as regards the valuation that "the estimated price of Rs. 24,83,830/- is the landed cost of impugned goods" and reasons thereof are not clear from the order, he is relying on the officers determination of the same, which is not disclosed in the order. Customs Valuation (Determination of Price of Imported Goods) Rules, 1988 provides that "those rules shall apply to imported goods, where the duty of customs is chargeable by reference to their value". Once the declared value of Rs. 10 lakhs as claimed by the importer, Sri Parmar as not acceptable, then the Customs Officer was bound to follow these Valuation Rules and determine how and under what rule the value is to be determined. Since such an exercise has not been effected, we do not and cannot uphold the Valuations as arrived at. Once, the CIF value arrived is not acceptable, we are not in a position to arrive at any justification to uphold the redemption fine determined at Rs. 5 lakhs offered to Smt. & Sri Parmar, alongwith the direction to fulfil the requirements prescribed under the Drugs and Cosmetics Act, 1940 and the rules claimed therein. (b) We find that the goods are in commercial quantities. Such goods imported in baggage, will have to be cleared on filing of necessary Bill of Entries, by classifying the goods under the relevant chapter heading, if the goods are otherwise permissible for imports. As regards liability for confiscation under Section 111(d), as we find that the import of items, by a passenger as baggage, which are otherwise freely importable, the Tribunal in the case of Irfan Abdul Haque [2001 (131) E.L.T. 441], after examining the provisions of EXIM Policy, especially Para 5.2 and 5.6 thereof came to the following findings :- "5. We are therefore of the view that the policy does not restrict import by passengers of goods, which are otherwise freely importable without a licence. Even assuming that this conclusion is incorrect, it would still be correct to say that the appellant had not declared these goods to be baggage. The position would have been different if the officers waited till the appellant filed a baggage declaration form. But they did not. In theory, the appellant could no doubt file a bill of entry for clearance of these goods".
Following the same, and in view of the fact, that no material was laid before us by Revenue, that the goods are not freely importable, we cannot find and uphold the confiscation under Section 111(d) for breach of the import Trade Control Laws prohibitions. As regards the liability for confiscation for not complying with the provisions of Drugs and Cosmetics Act, 1940 and the rules made thereunder, we find that the Commissioner cannot uphold the liability for confiscation under Section 111(d) for a prohibition under any other Act i.e., Drugs & Cosmetics Act, 1940 and thereafter direct the compliance with the same provisions of that Act/ non-performance of which had initially cast the liability for confiscation as made by him in the present order. Once the goods are confiscated and ordered to be redeemed, there is no question of further directing the performance of the liability cast by the other Acts. We therefore do not uphold the confiscation as arrived at under Section 111(d) and set it aside.
(c) There is no doubt about the mis-declaration made as regards the contents of the two checked-in suitcases. The suitcases were checked in by Sri Parmar, as his baggage, is an admitted fact. It is his baggage, Smt. Parmar was only found removing the same through the Green channel. While Sri Parmar has made a completely untrue declaration of the contents, knowing fully well the goods in the two suitcases, were given by one Patel to be handed over to Shiva, on the other hand Smt. Parmar has made a declaration of her baggage contents to be of Rs. 10,000/-. No convincing evidence other than belated confession has been brought on record to substantiate that she was privy, to the fact, of the two checked in suitcases of Sri Parmar were having dutiable goods. In view of the same, we would find that when untrue declaration of the contents have been made by Sri Parmar of the contents of the two checked in baggage where dutiable goods were found, these suitcases and the contents thereof cannot be allowed re-shipment simplicitor, under Section 80 of the Customs Act, 1962. Sri Parmar should be only held to be liable for mis-declaration of the contents in his checked-in suitcases, and the two suitcases with the contents are liable for confiscation under Section 111(m). Sri Parmar is liable for a penalty under Section 112(a) of the Customs Act, since he in relation to the said goods omitted to declare the same rendering them liable for confiscation under the provisions of the Customs Act. Just because husband and wife were travelling together and wife sought to assist the movement of “pooled baggage” at Hyderabad Airport, by assisting her husband, she cannot be held to be liable for non-declaration of the contents. She in fact made a declaration of Customs Value of dutiable goods as regards her baggage and there is no finding whether that declaration was incorrect. Therefore, we cannot find any conscious concert or effort on part of Smt. Parmar to have performed any act or omission, in relation to the goods rendering the said goods liable for confiscation, under Section 111(m); or her having abetted in mis-declaring the contents of the suitcases. She was not required to declare the contents of her husband’s suitcases. Therefore, having not performed any act rendering the goods liable for confiscation under Section 111(m), she is not liable for a penalty under Section 112(a) of the Customs Act, 1962 as imposed. Similarly, she cannot be held liable for abetting in assisting in removing the two suitcases of her husband through the green channel as she was only assisting her husband. Therefore she would not be liable for penalty under Section 112(a).
(d) We find that there is force in the argument being made before us that re-export of the subject goods should be allowed. The ld. Advocate has relied upon the case of Escorts Herion Ltd. v. Commissioner [1999 (107) E.L.T. 599] and the ld. DR has drawn our attention that the said case law holds that as regards re-export there is no provision to permit re-export subsequent to the confiscation of the goods. Once confiscation is set aside this bar would not be there. We find that in the case of Groves Overseas Pvt. Ltd. [1990 (46) E.L.T. 129, the Western Regional Bench of this Tribunal, has held as follows :-
“Import – REP licence – Re-export without fine of blended Silk wool yarn supplied instead of spun silk yarn ordered not allowed – Goods having been held liable to confiscation, therefore, allowed to be redeemed on payment of fine with condition to reexport – Section 125 of the Customs Act, 1962 – Once the goods are held liable for confiscation, if they are allowed to be redeemed, they can be subjected to such conditions as may be prescribed by the adjudicating authority. One such condition, may be to reexport the goods with suitable fine. The goods imported are admittedly not covered by valid licences and appellants were aware of this at the time of filing the Bill of Entry. It is, however, deemed just and proper to allow the appellants to redeem the goods with conditions to re-export and on payment of fine.”
Therefore, there appears to be no bar to permit re-shipment. Moreover in the present case, the question is a permission for reexport of checked-in baggage (i.e. two suitcases) with the contents thereon. We find that in case of Baggage, the Government of India has, consistently, held, that for baggage re-export, Chapter XI of Customs Act, 1962 is not the only provision for confiscation redemption fine etc. of baggage and upheld the orders of Collector (Appeals) permitting re-export of goods on fine as valid relying upon the case of Groves Overseas Pvt. Ltd. (supra). The Government of India has also held in the case of CCE v. Mrs. Patel. N [1992 (62) E.L.T. 674] in case of mis-declaration of contents of baggage:-
“6. Quite independently as held by the Government, in a number of cases, option to re-export, on fines can be given under Section 125 of the Customs Act even when the goods were not declared for the purposes of Section 77 ibid. In the circumstances of the case and looking into the amount of redemption fine imposed, it is not possible to discern any irregularity or unreasonableness in the order-in-appeal passed by the Collector (Appeals). He has given detailed reasoning and has taken into consideration all the material facts before granting the option to re-export.”
Thus, when Government of India is permitting re-shipment of mis-declared baggage, we cannot, but allow this plea of the appellant. This decision has been followed by the Government of India in Revision, in a series of cases and the position is well settled; especially when we find no reason not to allow the reexport of the baggage items in the present case when we find that the confiscation thereof and the redemption fine as imposed cannot be upheld. We would therefore, allow the re-shipment of goods imported in baggage. However, since the confiscation under 111(m) for a mis-declaration made by Sri Parmar is found and is being upheld by us, we would permit such re-export, only after ordering confiscation of the goods and offering a redemption for the purpose of re-export only. Re-shipments should be allowed on nominal token fines. We would consider therefore a fine of Rs. 1.50 lakhs (Rs. One Lakh & Fifty thousand only) to be sufficient in the case, when we consider that the goods are anti-smoking and/or nicotine addiction cure remedies and like goods; we would reduce the fine from Rs. 5 lakhs to Rs. 1.50 lakhs (Rs. One lakh & fifty thousand only) and order that the re-shipment be made under Customs supervision within a period of three months from the date of receipt of this order.
(e) Since we do not find Smt. Parmar to be liable for a penalty, we would order that the penalty of Rs. 1 lakh under Section 112(a) of the Customs Act imposed on her is set aside. Considering the facts and circumstances of the case, we would also accept the plea of Sri Parmar and reduce the penalty from Rs. 3 lakhs imposed under Section 112(a) to Rs. 50,000/- (Rs. Fifty thousand only). 7. In view of our findings, these appeals are disposed of in the above terms.