Commissioner of Customs Aliganj Lko. Vs Rajesh Jhamatmal Bhat And Anr. (Allahabad High Court)
Summary: Allahabad High Court dismissed the Customs Department’s appeal challenging the CESTAT order which had upheld the Commissioner (Appeals)’ decision permitting redemption of confiscated gold instead of absolute confiscation. The case arose after the respondents were intercepted by the Government Railway Police at Mughalsarai and gold bars weighing 4,076 grams and valued at Rs.1,09,98,018/- were recovered from specially designed cavities in their shoes. The adjudicating authority had ordered absolute confiscation of the gold and certain foreign currency and imposed a penalty of Rs.10 lakh on each respondent. The Commissioner (Appeals), however, held that gold was not a prohibited item under the Foreign Trade Policy or any other applicable law and permitted redemption on payment of Rs.25 lakh fine along with applicable duty and charges.
CESTAT dismissed the Revenue’s appeals and, while deciding the respondents’ appeals, reduced the redemption fine from Rs.25 lakh to Rs.15 lakh and the penalty from Rs.10 lakh to Rs.5 lakh each. Before the High Court, the Revenue ultimately confined its challenge to whether CESTAT was justified in sustaining the Commissioner (Appeals)’ order despite the adjudicating authority having ordered absolute confiscation.
The High Court examined Section 125 of the Customs Act, 1962 and observed that it draws a distinction between prohibited goods and other goods. In the case of prohibited goods, the officer adjudging confiscation may give an option to pay fine in lieu of confiscation, whereas for other goods the provision requires that such an option be given. The Court also considered the Revenue’s reliance on Commissioner of Customs Airport, Mumbai Vs. Alfred Menezes, 2009 (242) E.L.T. 334 (Bom.). No exact TaxGuru page for that precedent was located in the linking search, so no substitute link has been inserted.
