Commissioner Of Customs Aliganj Lko. vs. Sri Rajesh Jhamatmal Bhat And Anr.

Held

The Court held that the Commissioner (Appeals) was empowered to modify the order of absolute confiscation under Section 128(A)(3)(a) of the Customs Act, 1962. The Court found the appellant's argument that Section 2(1) (defining adjudicating authority) is a special provision overriding Section 128-A (powers of Commissioner Appeals) to be fallacious, stating that the entire Act must be considered. The Court affirmed the Commissioner (Appeals)'s finding that gold is not a prohibited item, a finding not reversed by the CESTAT. Therefore, the Adjudicating Authority had passed the order of confiscation without considering that gold, not being a prohibited item, should be offered for redemption under Section 125. The CESTAT did not err in upholding the Commissioner (Appeals)'s order. The first substantial question of law was answered in favor of the respondents. The Court noted that other submissions not relating to the substantial questions of law need not be adjudicated. The appeal was dismissed.

Facts

The Directorate of Revenue Intelligence (DRI) was informed by Government Railway Police (G.R.P.) that gold bars, weighing 4,076 grams and valued at Rs.1,09,98,018/-, were recovered from the shoes of the respondents. The Additional Commissioner, Customs, Lucknow, ordered absolute confiscation of the gold and imposed a penalty of Rs.10,00,000/- on each respondent. The Commissioner (Appeals) partly allowed the appeal, holding that gold was not a prohibited item and the offense was non-declaration in the disembarkation slip, making it liable for confiscation under Section 111(1) of the Customs Act. The Commissioner (Appeals) allowed redemption of confiscated gold on payment of a fine of Rs.25,00,000/- and applicable duty. The Commissioner of Customs appealed this order. The Customs, Excise and Service Tax Appellate Tribunal (CESTAT) dismissed the Commissioner's appeal regarding confiscation but partly allowed the respondents' appeal, reducing the redemption fine to Rs.15,00,000/- and penalty to Rs.5,00,000/- each. The Commissioner of Customs appealed to the High Court against the CESTAT's decision on confiscation.

Key Issues

1. Whether the Customs Excise & Service Tax Appellate Tribunal (CESTAT) erred in upholding the Commissioner (Appeals)'s order without addressing the Adjudicating Authority's findings on absolute confiscation of smuggled gold and foreign currency? (Question of law turning on Section 125 of the Customs Act, 1962). The appellant argued that the CESTAT failed to consider the Adjudicating Authority's findings regarding absolute confiscation. The respondents argued that the Commissioner (Appeals) was empowered under Section 128(A)(3)(a) to modify the order, and the object of the Act is to recover duty, not confiscate goods. 2. Whether the CESTAT correctly allowed the release of smuggled gold on redemption fine and reduced the redemption fine? (Question of law turning on Section 125 of the Customs Act, 1962). The appellant abandoned this question during submissions. The respondents argued that the Commissioner (Appeals) acted within powers under Section 128(A)(3)(a) to modify the order. The appellant contended that Section 2(1) is a special provision overriding the general provision of Section 128-A.