Aziz Fakirmohamed Sumbhaniya Vs Union of India (Gujarat High Court)
Gujarat High Court held that looking at the kind of quantum of gold smuggled in India, it is impossible to accept that petitioner has no financial capacity. Accordingly, pre-deposit mandatory under section 129E of the Customs Act for further proceedings.
Facts-
The petitioner is an Indian citizen and was working in Dubai as an Agent for various companies like UNI Globe Tourism, Fardan Tourism LLC and Universal Holidays etc.
A show cause notice was issued in relation to the seizure of gold to various persons including the petitioner proposing to impose personal penalty under section 112 of the Customs Act, 1962.
The Principal Commissioner of Customs passed Order in Original (OIO) which was ex parte without availing any opportunity of hearing. The petitioner also did not receive a copy of the show cause notice nor any notice for personal hearing. The penalty was imposed by the Principal Commissioner of Customs to the tune of Rs. 1,27,00,000/-. It is the grievance of the petitioner that additional penalties have been imposed considering further quantities of gold assumed to have been imported in the past.
The petitioner after receiving the copy of the OIO filed an appeal before the appellate Tribunal. The condition of pre-deposit of 7.5% penalty as per the Clause-II of section 129E of the Customs Act has been substituted from 06.08.2014, which is also another grievance made by the petitioner. According to him, the amount equal to 7.5% would come to about Rs.9,52,500/- and the petitioner is financially incapable of depositing the said amount, as he is in the service with very low income.
Conclusion-
With regard to non-availment of opportunity for want of necessary pre-deposit required under section 129E of the Customs Act, the appellate authority could not adjudicate on merits. Therefore, we are of the opinion that the balance needs to be struck by allowing the petitioner to approach the appellate authority by furnishing the amount of pre deposits of the requisite amount. Resultantly, without making any interference with the OIO, all the petitioners are permitted to approach the appellate authority.
FULL TEXT OF THE JUDGMENT/ORDER OF GUJARAT HIGH COURT
1. This group of matters since raise identical questions of law, they are being decided by a common order.
2. The facts are drawn from Special Civil Application No. 13091 of 2018 for the purpose of adjudication.
3. The petitioner herein is an Indian citizen and was working in Dubai since the year 2010 as an Agent for various companies like UNI Globe Tourism, Fardan Tourism LLC and Universal Holidays since the year 2010.
4. A show cause notice came to be issued in relation to the seizure of gold weighing 46.3 kgs being F.No./DRI/AZU/GRU/Gold Bar/INT-12/2014 dated 09.04.2015 2014 on 09.04.2015 by the Additional Directorate General, DRI to various persons including the petitioner proposing to impose personal penalty under section 112 of the Customs Act, 1962. So far as the present petitioner is concerned, on the basis of the statement of various persons, the show cause notice is issued to the petitioner, namely, Shri Juma Khamisa Bhokal, Shri Hasim Tito, Shri Rakesh Karmata, Shri Mobin Amad Sanghar and Shri Abid Mamad Subhania. The show cause notice reveals that Shri Juma Bhokal in coordination with Shri Hasam Tito have initiated the activity of smuggling. Gold which was arranged through one Shri Ghani. Gold would come from Dubai through one Shri Gulam and 46.3 kgs of gold was smuggled through Shri Mobin in a vessel named Al Habibi through Tuna Port and when the petitioner was going along with Shri Bhokal to deliver the gold, they were intercepted by the DRI officers.
5. According to Rakesh Karanta 21.3 kgs of the gold was seized from his hotel room, which was to be supplied to someone in the same hotel. However, before it was delivered, DRI officers seized the same.
6. Shri Juma Bhokal stated that out of the total six consignments of gold smuggled into India, 46.3 kgs of gold was seized at Surendranagar. Out of this, the total quantity of gold of 21.3 kgs was delivered to Shri Ramesh Kalabhai. 24 kgs was to be delivered to Ahmed Miya and one kg of gold was delivered to the petitioner’s contact.
7. According to the petitioner from the passport details and the Visa issued by the Dubai Government, it is quite apparent that the petitioner during the period from 2014 to 2016 was staying at Dubai
8. On 19.04.2016 the petitioner came to India from Dubai. He was initially arrested at New Delhi by the officers of DRI in connection with another case pertaining to Jamnagar. The Court in April, 2016 granted him bail. It is the say of the petitioner that statement under section 108 of the Customs Act, 1962 was recorded, which was never shared with the petitioner and, therefore, he would not be in a position to know about the pending proceedings against him.
9. The Principal Commissioner of Customs passed Order in Original (OIO) being OIO KDL/COMMR/PVRR/123/2016-17 on 31.01.2017, which was ex parte without availing any opportunity of hearing. The petitioner also did not receive a copy of the show cause notice nor any notice for personal hearing. The penalty was imposed by the Principal Commissioner of Customs to the tune of Rs. 1, 27,00,000/-. It is the grievance of the petitioner that additional penalties have been imposed considering further quantities of gold assumed to have been imported in the past. The said quantity was never found to have been brought in India and, therefore, the figure given is on an assumption basis. The petitioner came to know about the imposition of this penalty only after the same had been proposed to be recovered.
10. The petitioner after receiving the copy of the OIO filed an appeal before the appellate Tribunal. The condition of pre-deposit of 7.5% penalty as per the Clause-II of section 129E of the Customs Act has been substituted from 06.08.2014, which is also another grievance made by the petitioner. According to him, the amount equal to 7.5% would come to about Rs.9,52,500/- and the petitioner is financially incapable of depositing the said amount, as he is in the service with very low income.
10.1 The application for waiver of condition of pre-deposit was moved along with the appeal filed against the order of Commissioner of Customs, Kandla.
11. The petitioner was not having knowledge of appeal having been listed on 10.04.20218. No notice was served upon the petitioner nor to any authorized representative nor to any other person for and on behalf of the petitioner. The Tribunal, after hearing the authorized representative or the Department, dismissed the appeal ex parte on the ground of the same being not maintainable, as the petitioner has not deposited the pre-deposit as mandated by the Customs Act, 1962. The petitioner’s passport was taken away from him, and he has been in India and, he received a copy of the appellate Tribunal’s order on 14.05.2018 .
12. It is the grievance of the petitioner that he never received a notice to show cause as to why 22.3 kgs of gold be not confiscated under section 111 of the Customs Act and as to why the penalty be not imposed under section 112 of the Customs Act. Principal Commissioner in an order in OIO imposed penalty on the petitioner with an assumed quantity of gold, which was never there. According to the petitioner, OIO passed by Principal Commissioner is ex facie illegal and it is in utter disregard to the principles of natural justice. Moreover, the penal liability on the petitioner is on the basis of the statement of persons without any independent corroboration and that itself is an illegal act. This happened without being given any opportunity of being heard. The principles of natural justice being the backbone of any quasi judicial proceedings , according to the petitioner, any order passed by the adjudicating authority is ex facie illegal and in violation of the principles of natural justice. It is the grievance of the petitioner that he has not been given adequate and effective opportunity of being heard. Certain authorities are pressed in service to substantiate the version. Following are the prayers sought:
“14. In the above premises, the petitioner most respectfully prays as under: –
(A) That Your Lordships may be pleased to issue a Writ of Certiorari or any other appropriate Writ, Order or Direction quashing and setting aside OioKDL/COMMR/PVRR/123/2016-17 dated 31.01.2017 (Annexure-”D”) passed by the Commissinoer of Customs, Kandla;
(B) That Your Lordships may be pleased to issue a Writ of Certiorari or any other appropriate Writ, Order or Direction quashing and setting aside Order No.A/10983-10985/2018 dated 10.04.2018 (Bannexure-”E”) passed by Appellate Tribunal;
(C) That Your Lordships may be pleased to issue a Writ of Mandamus or any other appropriate writ, direction or order, directing the Commissioner of Customs, Kandla, the 2nd Respondent herein to decide show cause Notice SCN.F.No.DRI/AZU/GRU/Gold Bar/INT-12/2014 dated 09.04.2015 (Annexure-”B”) in accordance with law and upon observing principles of natural justice by allowing the Petitioner to file a reply and also an opportunity of effective hearing tot he Petitioner;
(D) Pending hearing and final disposal of the present petition, Your Lordships may be pleased to stay implementation and execution of OIO KDL/COMMR/PVRR/ 123/2016-17 dated 31.01.217 (Annexure-”D”) passed by the Commissioner of Customs, Kandla;
(D) An ex-parte ad-interim relief in terms of para 14 (C) above may kindly be granted.
(E) Any other further relief that may be deemed fit in the facts and circumstances of the case may also please be granted.”
13. Affidavit-in-reply is filed for and behalf of respondent No.2 denying all averments. According to the respondent, the intelligence was gathered by the officers of Directorate of Revenue Intelligence (DRI) suggesting that gang of smugglers was active in smuggling gold at Tuna Port of Kutch district. Some persons carrying consignment of two parcels of smuggled gold from the vicinity of Tuna port had planned to deliver one part of smuggled gold to a person at Hotel Regency at Rajkot-Ahmedabad highway, Chotila and another part to other person on the same highway near Chotila. Office of DRI mounted surveillance on various places on 19.04.2014 and they spotted Juma Khamisha Bhokal, resident of Jam-Khambhalia and Hasam Tito, a resident of Mota Salaya, Mandvi (Kutch), who arrived in a Tata Indica car at Hotel Regency, Chotila. Ramesh Kalabhai Karmata, who was staying in that hotel received a bag from Juma Khamisha Bhokal. After a few minutes Juma Khamisha Bhokal and Hasam Tito left the place in the very car and went towards Ahmedabad. A team of officers of DRI searched room of the hotel, where Ramesh Kalabhai Karmata was staying and the DRI recovered 21.300 kgs of gold in 213 gold bars of 100 grams each. It was apparent from the marking that the gold bars were of foreign made. Vide Panchnama dated 19.04.2014, the gold had been recovered.
14. In the meanwhile, another team of officers chased the person in Tata Indica car and availed the assistance of officers of Central Excise and Local Crime Branch (LCB), Surendranagar police. Juma Khamisha Bhokal and Hasam Tito were brought to LCB office at Gandhinagar and in presence of two independent panchas, a total of 25 kgs of gold were recovered. They also admitted that the gold bars were smuggled at Tuna Port at Kutch using sea route in a country craft vessel. Out of the total quantity, 21.300 kgs had been delivered to Ramesh Kalabhai Karmata at Hotel Regency, Chotila highway and remaining 25 kgs gold bars were with them.
15. It is grievance of the petitioner that the show cause notice was issued as to why the smuggled gold seized by DRI should not be confiscated under section 111 of the Customs Act. The show cause notice was served upon his wife (Reshma Ajij Sumbhainya) on 13.04.2015 and the name of the petitioner was mentioned in the dispatch register of the DRI. According to the petitioner, there was yet another case in which he was arrested by the officer of DRI. It was investigated by DRI, Jamnagar. He was found smuggling gold seized by DRI, Jamnagar. According to the respondents, six summons were issued to the petitioner by DRI, Gandhidham. The petitioner, however, did not appear. He was not available in India for his statement and, therefore, he was a wanted criminal declared by DRI, Jamnagar. A red alert also was issued against him and during February, 2016, the petitioner was intercepted at New Delhi Airport. The DRI, Jamnagar recorded his statement. Due to constraint of time only preliminary statement of his was recorded on 21.02.2016. After his bail, DRI issued him six notices, but, he did not appear under one or the other pretext. The DRI, Jamnagar moved a complaint No.3783 of 2016 before the Court of learned Chief Judicial Magistrate against the petitioner, which is still pending. He was intimated of the show cause notice and four letters of intimation of personal hearing had been sent. It was further the say of the respondent that Dispatch Register of Customs House, Kandla was indicative of the fact that at Sr.No.8941, OIO was sent to the petitioner by speed post. It is, therefore, not correct to say that the petitioner did not receive the show cause notice letters of personal hearing or OIO. The case, of course, is based on the confessional statements, but they are not contradictory. They are also supported by other independent evidence viz stay of persons in hotel, arrival of vessels in India etc. Reliance is placed on the decision of the Apex Court as to how the confessional statement of section 108 of the Customs Act is admissible. It is further contended that looking at the kind of quantum of gold smuggled in India, it is impossible to accept that he has no financial capacity. The provision of pre-deposit is mandatory under section 129E of the Customs Act and, therefore, such an application is not maintainable.
16. According to respondent No.4, opportunities of personal hearing had been granted to the petitioner on 04.12.2015, 22.01.2016, 03.03.2016 and 15.12.2016. However, the petitioner or his authorized representative failed to remain present at the date and time of personal hearing. He did not submit any written submission and, therefore, the case was adjudicated ex parte. Considering the evidence and role of the petitioner in outright smuggling of huge quantity of gold, in OIO, the penalty of Rs.1.27 crores has been imposed. According to the respondents, a show cause notice was handed over to his wife and four times personal hearing notices have been given. Thus, there is a sufficient opportunity of hearing made available to the petitioner and, there is no violation of principles of natural justice. Moreover, the mandatory pre-deposit of Rs.7.5% of the amount of penalty has not been deposited by him. Therefore, also his application was not maintainable. He chose not to appear before the Tribunal on the date of hearing and days of hearing also can be ascertained from the website of Tribunal and, therefore, his contentions are flimsy and false. According to him, the prosecution under sections 174 and 175 of the Indian Penal Code has been initiated against the petitioner, which is pending before the learned Chief Judicial Magistrate. As he never appeared before the Investigating Officer, no further details of involvement of other persons in repeated smuggling of gold could be ascertained.
17. So far as this petitioner is concerned, he has not filed affidavit-in-rejoinder, whereas in the group matters, others have filed the rejoinder, details of which are as follows:
17.1 Rejoinder affidavit has been filed by the petitioner Ajij Sumbhainya, wherein he reiterated that he was not given the opportunity to defend the show cause notice before passing the order by the adjudicating authority. According to him, right of the cross-examination of the witnesses relied upon by the respondent must be given to enable the petitioner to clear all the points and falsehood of the witnesses. Moreover, for the documents like the Panchnama etc. no legal proof were on record and the contents of the panchnama and other documents have been denied by him. Proper opportunity of cross-examination of concerned persons was to be given before relying upon the same, despite this legal position, a request to cross-examine was denied.
18. We have extensively heard Mr. Amal Dave, learned advocate for the petitioner, who has argued along the line of the memo of petition. He also has urged strongly that there is gross violation of the principles of natural justice, inasmuch as the show cause notice has not been served upon the petitioner, but upon his wife. None of the details of personal hearing also has been made available to him and straight away what was received by him was the intimation of OIO and after getting the copy of the same, he realized that how the same has resulted into imposing the penalty, which is in gross violation of principles of natural justice. According to him, any reliance on the part of the respondents or any of the statements, even if it is permissible under the law, the principles of natural justice cannot be overlooked and, hence, he has urged that the pre-deposits may not be insisted upon and the opportunity of hearing be given. He also urged the Court that the Court may consider his request for cross-examination as equity changes with Chancellor’s foot. He has relied upon the following authorities to substantiate his submissions:
1) Saral Wire Craft Pvt. Ltd. vs. Commr. of Cus., C. Ex. And Service Tax, 2015 (322) E.L.T. 192 (S.C.).
2) Jindal Drugs Pvt. Ltd. vs. Union of India, 2016 (340) E.L.T.67 (P &H).
3) G-Tech Industries vs. Union of India, 2016(339) E.L.T. 209 (P & H).
4) J & K Cigarettes Ltd. vs. Collector of Central Excise, 2009 (242) E.L.T. 189 (Del.).
5) Manoj Kumar Jha vs. D.R.I., 2019 (365) E.L.T. 166(Del.).
6) Rajkamal Textile Printery vs. Union of India, 2016 (332) E.L.T. 99 (Guj.).
7) ARCL Organics Ltd. vs. Commissioner of Central Excise, Kolkata-V, 2019 (366) E.L.T.55 (Cal.)
8) Jewel vs. Commissioner of Customs, Surat, 2019(366) E.L.T.106(Guj.).
9) Decision of this Court in the case of Commissioner of Customs vs. Pravin R. Ajudiya decided on 08.05.2019 in Civil Application(for stay) No.1 of 2019 in Tax Appeal No.59 of 2019.
10)Decision of Pravin R. Ajudiya vs. Commissioner of Customs of Gujarat High Court decided on 25.07.2019 in Civil Application(for direction) No.2 of 2019 in Tax Appeal No.59 of 2019.
11) Decision in the case of Dharmesh Pansuriya vs. Commissioner of GST and Central Excise, Surat decided on 03.04.2018 by this Court in Civil Application (OJ) No.2 of 2018 in Tax Appeal no.62 of 2018.
19. Mr. B.B.Naik, learned Senior Advocate appearing with Mr. P.S. Rachh for the petitioner has vehemently urged that these are the quasi judicial proceedings imposing huge monetary penalty and, therefore, the person, who recorded the statement also ought to have been a witness and, there has been non-supply of the documents and even non-production through the proper channel. According to him, there has been a gross violation of the principles of natural justice and, therefore, the High Court has authority to issue notice under Articles 226 of the Constitution of India. According to him, the penal provisions are attracted and right to cross-examination is a must.
20. According to learned Senior Counsel, it is a duty, which is payable, as the gold was dutiable goods and not prohibited goods in stricto senso.
21. Mr. Parth Divyeshwar, learned Central Government Standing Counsel submits that there is no force in the submission on the part of the petitioner herein. The appeal would have been already preferred under section 130 of the Customs Act instead of approaching this Court. There is neither an absolute right to ask for cross-examination, nor can the same be denied in toto. According to the learned Standing Counsel, there is a period of limitation of 90 days under section 128 of the Customs Act. According to him, the interest of witnesses should be of a paramount consideration and the same should not be jeopardized. According to him, there being no violation of principles of natural justice, the Court need not interfere. He, further urged that the appeal would have been a right remedy. However, injury caused needs to be established in each case. The appeal was preferred in the year 2019. The cross-examination is not an absolute right. Therefore, it cannot be insisted upon. He also further urged that there are two families essentially of Shri Juma Khamisa Bhokal and Mohamed Sumbhaniya involved in this act of smuggling.
22. Having thus heard both the sides and also having closely examined the material on the record, the preposition of law authorities shall need to be firstly looked into.
23. Reliance is placed on the decision of M/s. Cannon India Limited vs. Commissioner of Customs, [2022] 138 taxmann.com 496 (SC), whereas the Apex Court has held that DRI has no jurisdiction to issue show cause notice under the Customs Act inasmuch as only such officer of Customs who has been assigned specific function would be a “a proper officer” under the Central Government in terms of section 2(34) of the Act to issue notice, while exercising the powers under section 6 of the Customs Act. Therefore, the show cause notice issued to the petitioner by the DRI is invalid and this decision would be binding to the Courts within the territory of India under Article 141 of the Constitution of India. Therefore, the show cause notice is urged to be quashed.
23.1 Relevant findings and observations of the M/S.CANNON INDIA PRIVATE LIMITED V/S. COMMISSIONER OF CUSTOMS are necessary to be reproduced at this juncture profitably hereinbelow:
“14. It is well known that when a statute directs that the things be done in a certain way, it must be done in that way alone. As in this case, when the statute directs that “the proper officer” can determine duty not levied/not paid, it does not mean any proper officer but that proper officer alone. We find it completely impermissible to allow an officer, who has not passed the original order of assessment, to reopen the assessment on the grounds that the duty was not paid/not levied, by the original officer who had decided to clear the goods and who was competent and authorised to make the assessment. The nature of the power conferred by Section 28 (4) to recover duties which have escaped assessment is in the nature of an administrative review of an act. The section must therefore be construed as conferring the power of such review on the same officer or his successor or any other officer who has been assigned the function of assessment. In other words, an officer who did the assessment, could only undertake re-assessment [which is involved in Section 28 (4)].
15. It is obvious that the re-assessment and recovery of duties i.e. contemplated by Section 28(4) is by the same authority and not by any superior authority such as Appellate or Revisional Authority. It is, therefore, clear to us that the Additional Director General of DRI was not “the” proper officer to exercise the power under Section 28(4) and the initiation of the recovery proceedings in the present case is without any jurisdiction and liable to be set aside.
16. At this stage, we must also examine whether the Additional Director General of the DRI who issued the recovery notice under Section 28(4) was even a proper officer. The Additional Director General can be considered to be a proper officer only if it is shown that he was a Customs officer under the Customs Act. In addition, that he was entrusted with the functions of the proper officer under Section 6 of the Customs Act. The Additional Director General of the DRI can be considered to be a Customs officer only if he is shown to have been appointed as Customs officer under the Customs Act.
17. Shri Sanjay Jain, learned Additional Solicitor General, relied on a Notification No.17/2002 – Customs (NT) dated 7.3.2002 to show all Additional Directors General of the DRI have been appointed as Commissioners of Customs. At the relevant time, the Central Government was the appropriate authority to issue such a notification. This notification shows that all Additional Directors General, mentioned in Column (2), are appointed as Commissioners of Customs.
18. The next step is to see whether an Additional Director General of the DRI who has been appointed as an officer of Customs, under the notification dated 7.3.2002, has been entrusted with the functions under Section 28 as a proper officer under the Customs Act. In support of the contention that he has been so entrusted with the functions of a proper officer under Section 28 of the Customs Act, Shri Sanjay Jain, learned Additional Solicitor General relied on a Notification No.40/2012 dated 2.5.2012 issued by the Central Board of Excise and Customs. The notification confers various functions referred to in Column (3) of the notification under the Customs Act on officers referred to in Column (2). The relevant part of the notification reads as follows:-
[To be published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (ii)] Government of India Ministry of Finance (Department of Revenue) Notification No.40/2012-Customs (N.T.) New Delhi, dated the 2nd May, 2012 S.O. (E). – In exercise of the powers conferred by sub-section (34) of section 2 of the Customs Act, 1962 (52 of 1962), the Central Board of Excise and Customs, hereby assigns the officers and above the rank of officers mentioned in Column (2) of the Table below, the functions as the proper officers in relation to the various sections of the Customs Act, 1962, given in the corresponding entry in Column (3) of the said Table: –
