Satish Mehta Vs C.C. (CESTAT Ahmedabad)
The brief facts of the case are that the officers of DRI intercepted Skoda Rapid Car owned by Shri Nitin Jain, Proprietor of M/s. Dhanishta Gold on the intelligence that the said car was allegedly carrying smuggled gold bars. After completion of interception and inquiry, the DRI seized the gold. The investigation was culminated into issuance of the show cause notice whereby the proposal for absolute confiscation of the gold was made with imposition of penalties upon the Appellant and Co-appellants under Section 112(a) of the Customs Act. The Adjudicating authority confirmed the charges levelled in the show cause notice and absolutely confiscated the gold seized under panchnama dtd. 13.11.2016 from Skoda Car and office of the PGM Joyeria, Ahmedabad. The Appellants challenged the adjudication order before the Tribunal and the Tribunal vide final order No. A/1056110568/2019 dtd. 25.03.2019 allowed the appeals of Appellants and quashed and set aside the confiscation of the seized goods with consequential relief. In terms of CESTAT order the Appellant requested for release of confiscated gold and return the amount deposited at the time of preferring the appeal before the Tribunal. The appellant received response from the department that the confiscated gold belongs to the Appellants was deposited in the I.G. Mint, Mumbai and the said Gold was disposed of through SBI Bullion at market price on 01.08.2018. The department provided the cheques to the Appellants. The Appellants requested the department to refund the differential value of gold that was calculated by comparing the value of the gold melted on 01.08.2018 and date on which cheque was given to the Appellants. The department rejected the request for refund of the differential value of gold with interest. The Appellants requested the Deputy Commissioner to provide the information whether the decisions for granting the refund was taken by Principle Commissioner of Customs or the other officer so as to enable to take an appropriate decisions for filing the Appeal . The Deputy Commissioner informed the Appellant that decision for return of sale proceed of confiscated gold was taken by the Principal Commissioner of Customs. Being aggrieved, the appellants are before CESTAT.
During the pendency of the appeal, it appears that the department took steps to dispose of the said disputed Gold, through the SBI Bullion Branch. During the pendency of the appeal before the CESTAT, it would not be appropriate for the Department to dispose the disputed seized goods, especially when the Appellants had filed appeals challenging the impugned order before the Tribunal and department also aware about the filing of Appeals by the Appellant. Therefore, the Department has to necessarily await the decision of the Tribunal and abide by the direction that has been issued by the Tribunal.
It is very clear that the department has disposed of /sold the goods on the understanding that the first order of the adjudicating authority is the final order. At the same time the department was well aware about the pendency of the appeals before this Tribunal. Therefore the action of the department is clearly in gross violation of principles of natural justice, hence the same cannot be allowed to sustain.
For the reasons discussed above, we are of the considered view that the appellants are entitled for the refund of differential value of the gold as claimed by them alongwith interest and we hold so.
FULL TEXT OF THE CESTAT AHMEDABAD ORDER
In the present Appeals both the Appellants have challenged the letters/ order issued by the revenue granting refund of sale proceeds of Gold.
2. The brief facts of the case are that the officers of DRI intercepted Skoda Rapid Car owned by Shri Nitin Jain, Proprietor of M/s. Dhanishta Gold on the intelligence that the said car was allegedly carrying smuggled gold bars. After completion of interception and inquiry, the DRI seized the gold. The investigation was culminated into issuance of the show cause notice whereby the proposal for absolute confiscation of the gold was made with imposition of penalties upon the Appellant and Co-appellants under Section 112(a) of the Customs Act. The Adjudicating authority confirmed the charges levelled in the show cause notice and absolutely confiscated the gold seized under panchnama dtd. 13.11.2016 from Skoda Car and office of the PGM Joyeria, Ahmedabad. The Appellants challenged the adjudication order before the Tribunal and the Tribunal vide final order No. A/1056110568/2019 dtd. 25.03.2019 allowed the appeals of Appellants and quashed and set aside the confiscation of the seized goods with consequential relief. In terms of CESTAT order the Appellant requested for release of confiscated gold and return the amount deposited at the time of preferring the appeal before the Tribunal. The appellant received response from the department that the confiscated gold belongs to the Appellants was deposited in the I.G. Mint, Mumbai and the said Gold was disposed of through SBI Bullion at market price on 01.08.2018. The department provided the cheques to the Appellants. The Appellants requested the department to refund the differential value of gold that was calculated by comparing the value of the gold melted on 01.08.2018 and date on which cheque was given to the Appellants. The department rejected the request for refund of the differential value of gold with interest. The Appellants requested the Deputy Commissioner to provide the information whether the decisions for granting the refund was taken by Principle Commissioner of Customs or the other officer so as to enable to take an appropriate decisions for filing the Appeal . The Deputy Commissioner informed the Appellant that decision for return of sale proceed of confiscated gold was taken by the Principal Commissioner of Customs. Being aggrieved, the appellants are before us.
3. Shri Hardik Modh learned counsel appearing on behalf of the Appellants submits that since gold is included in the sensitive list, the department ought to have followed the procedure as prescribed under Section 110(1A). The department without following due process of law, as mandated under Section 110(1A) of the Customs Act, disposed of the gold. The procedure prescribed under the Act is not mere formalities.
3.1. He also submits that Section 150 of the Customs Act provides procedure for sale of goods and application of sale proceeds. Section 150 provides that where any goods not being confiscated goods are to be sold under any provisions of this Act, the same shall be sold through public auction or by tender or with the consent of the owner after notice to the owner. Central Board of Excise and Customs vide Circular No. 711/4/2006-Cus dated. 14.02.2006 issued the clarification in respect of requirement of issuing notice to the owner of the goods as contemplated under Section 150 of the Customs Act in the case where seizure of the goods has been culminated into issuance of the order of confiscation. The circular clarified that the notice should be even issued in case of the goods that have been confiscated but in respect of which, the appeal/ legal remedies have not been exhausted by the owner of the goods. In the present matter department neither issued notice to the appellant nor had taken any consent for disposal of the goods. The department ordered for disposal of the confiscated gold without following due process of law. Therefore, such action is considered as violation of provisions of Section 110(1A) of the Customs Act read with Section 150 of the Customs Act. Had the Appellant been issued the notice for disposal of the gold, the Appellant would have adopted legal remedies available in the law. He placed reliance on the following
decisions:-
