IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
WRIT PETITION NO.2488 OF 1998
Shabir Ahmed Abdul Rehman, )
presently residing at post Ambat, )
Tal. Mahasale, Dist. Raigad, )
Maharashtra State - 402 101. )..Petitioner.
V/s.
1) The Union of India )
Having office at Ayakar Bhavan, )
new Marine Lines, Mumbai-20. )
)
2)
The Joint Secretary to the
Govenment of India, having his
office at 3rd floor, Jeevan Deep,
)
)
)
Parliament Street, Sansad Marg, )
New Delhi - 110 001. )
)
3) Commissioner of Customs (Appeals) )
having his office at 1st floor, )
Air Cargo Complex, NIPT, Sahar, )
Andheri (East), Mumbai-400 099. )
)
4) Commissioner of Customs, having )
his office at Sahar International )
Airport, Mumbai-400 099. )
)
5) Deputy Commissioner of Customs, )
having his office at Air Customs )
Pool, Sahar International )
Airport, Mumbai-400 099. )..Respondents.
Mr.Sujay Kantawala with N.M.Shah, Ramesh Purwani and
Brijesh Pathak for petitioner.
Mr.R.V.Desai, senior advocate with Pradeep Jetly for
respondents.
CORAM : P.B.MAJMUDAR AND
J.P.DEVADHAR, JJ.
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DATED : 3RD DECEMBER, 2008.
ORAL JUDGMENT (PER J.P.DEVADHAR, J)
1. During the pendency of an appeal filed
against the confiscation order, whether the customs
authorities could sell the confiscated gold and when it
is ultimately held that the petitioner is entitled to
redemption of the confiscated gold, whether the sale
proceeds could be returned after deducting the customs
duty from the sale proceeds, is the question raised in
this petition.
2. In the present case, on 17/4/1997 the
petitioner on his arrival from Muscat was apprehended
at the Airport as he was carrying 41 gold bars valued
at Rs.18,88,337/- (international market value) /
Rs.23,16,500/- (local market value) concealed in a
pouch. The said gold bars were seized from the
petitioner on the reasonable belief that they are
liable to be confiscated.
3. Thereafter, on completion of investigation,
a show cause notice was issued to the petitioner on 3rd
July, 1997 and by an order in original dated 11/11/1997
(despatched on 25/11/1997) it was ordered that the
seized gold bars are liable to be confiscated and
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penalty of Rs.3,00,000/- was also imposed.
4. Being aggrieved by the aforesaid order, the
petitioner filed an appeal before the Commissioner of
Customs (Appeals) who by his order dated 23/2/1998
directed reshipment of the gold in question subject to
payment of reshipment fine of Rs.6,00,000/-. The
Commissioner (A) reduced the personal penalty from
Rs.3,00,000/- to Rs.1,00,000/-.
5.
Being aggrieved by the aforesaid order, both
the Commissioner of Customs as also the petitioner
filed revision application before the Government of
India. By the impugned order dated 21/9/1998 the Joint
Secretary to the Government of India held that the
petitioner is entitled to redeem the confiscated gold
subject to payment of duty and also fine and penalty
imposed by Commissioner (A). As the gold was already
disposed off, the Commissioner was directed to return
the sale proceeds subject to payment of duty, fine and
penalty. Challenging the aforesaid order, the present
petition is filed. The revenue has accepted the
decision of the revisional authority.
6. Mr.S.N.Kantawala, learned counsel appearing
on behalf of the petitioner submitted that the order in
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original dated 11/11/1997 was received by the
petitioner on 25/11/1997 and by a letter dated
28/11/1997 the petitioner had informed the customs
authorities that the petitioner is filing an appeal
against the adjudication order and the confiscated gold
should not be disposed of. As per circular dated
16/11/1994, the customs authorities ought not to have
disposed of the confiscated gold during the pendency of
the appeal. Relying upon the decision of the Delhi
High Court in the case of Kailash Ribbon Factory Ltd.
V/s. Commr.
of Cus. & C. Ex., New Delhi reported in
2002(143) E.L.T. 60 (Del.), Collector of Customs,
Madras V/s. Meena A.Bharwani reported in 2006 (194)
E.L.T. 273 (Mad.) and the decision of this Court in
the case of Girdharlal Kalyandas Advani V/s. Union of
India reported in 1992(58) E.L.T. 453 (Bom.),
(Bom.)
Mr.Kantawala submitted that the petitioner is entitled
to the market value of the confiscated goods together
with interest thereon at the rate fixed by this Court
from the date of auction till payment.
7. Mr.R.V.Desai, learned senior Advocate
appearing on behalf of the respondents, on the other
hand submitted that in the present case, although the
petitioner had informed by his letter dated 28/11/1997
that the petitioner would be filing an appeal against
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the adjudication order, by a letter dated 5/12/1997
Advocate or the petitioner was informed that the
confiscated gold had already been handed over to the
basement warehouse of New Custom House for disposal.
Accordingly, the gold bars in question were sold on
12/2/1998 and the sale proceeds received were in the
sum of Rs.18,98,965/-. He submitted that in the light
of the Notification No.42/89-Cus.(NT) dated 30th June,
1989 the customs authorities were justified in
disposing off the confiscated gold.
8. Mr.Desai, further submitted that as per the
order passed by the revisional authority, the amount
payable to the petitioner after deducting the baggage
rate of duty, redemption fine and penalty from the sale
proceeds comes to Rs.2,16,724/-. Mr.Desai submitted
that the respondents were ready and willing to pay the
said amount to the petitioner, however, since the
whereabouts of the petitioner was not known, the
customs authorities could not pay the balance amount of
Rs.2,16,724/-. Accordingly, Mr.Desai submitted that in
the facts of the present case, since the customs
authorities were always ready and willing to pay the
balance amount of Rs.2,16,724/-, there is no question
of paying the said amount with interest.
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9. We have carefully considered the rival
submissions. Admittedly, the order in original dated
11/11/1997 was despatched on 25/11/1997 and by a letter
dated 28/11/1997 the petitioner had informed the
customs authorities that he is filing an appeal against
the order in original. No doubt that by the letter
dated 5/12/1997 the customs authorities had informed
the petitioner that the confiscated gold has already
been handed over for disposal. Handing over the
confiscated gold immediately after serving the order of
confiscation
itself was improper. In any event after
receiving letter from the petitioner, the customs
authorities ought to have stopped the auction sale of
the confiscated gold. However, the gold was sold on
12/2/1998 during the pendency of the appeal filed by
the petitioner before Commissioner (A). The finding
recorded by the revisional authority and accepted by
the revenue is that the action of the customs
authorities in selling the gold during the pendency of
the appeal is against the existing departmental
instructions and is not in good taste. Therefore, the
argument of the revenue in selling the gold during the
pendency of the appeal cannot be accepted.
10. Since the petitioner seeks redemption of the
confiscated gold as per the order passed by the
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revisional authority, the first question to be
considered is, whether the petitioner is justified in
claiming market value of the said gold ? It is not in
dispute that the market value of the gold was falling
at the relevant time. In fact, the specific case of
the petitioner before the Commissioner (A) was that the
prices of the gold had fallen sharply (see page 106 of
the petition). In these circumstances, the claim of
the petitioner in seeking market value of the gold
cannot be accepted.
11. The question then to be considered is,
whether the petitioner is entitled to the sale proceeds
after deducting duty, fine and penalty imposed upon the
petitioner ? Since the petitioner is seeking
redemption of the confiscated gold, he cannot escape
payment of fine and penalty. In fact, counsel for the
petitioner offered to pay fine and penalty. As regards
payment of duty is concerned, in our opinion, duty
would be payable only if the gold was actually allowed
to be redeemed. In the present case, what is being
given is the sale proceeds and not the gold as such.
In such a case, the question of paying duty in respect
of the sale proceeds would not arise.
12. The argument of the revenue that they were
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ready to pay the balance amount of Rs.2,16,724/-, but
the petitioner was not available cannot be accepted,
because, firstly, nowhere in the affidavit in reply
filed on behalf of the revenue it is so stated and such
contention is being raised for the first time during
the course of arguments. Secondly, the petitioner has
filed the present petition through an Advocate in the
year 1998 and nothing prevented the customs authorities
in addressing a letter to the Advocate for the
petitioner in that behalf.
13. In this view of the matter, in our opinion,
the customs authorities are liable to return the entire
sale proceeds without deducting therefrom the duty but
subject to deduction of fine of Rs.6,00,000/- and
penalty of Rs.1,00,000/- imposed by the Commissioner
(A) with interest.
14. Accordingly, we direct the customs
authorities to deduct Rs.7,00,000/- towards fine and
penalty from the amount of Rs.18,98,965/- and pay the
balance amount of Rs.11,98,965 with interest at the
rate of 9% p.a. from the date of the revisional order
dated 21/9/1998 till payment.
15. Rule is made absolute in the above terms
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with no order as to costs.
(P.B.MAJMUDAR J.)
(J.P.DEVADHAR, J.)
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