Cus - Compounding of Offence - Considering that no minimum penalty was attracted, denial of compounding meant that he would have to face long trial which ultimately would, in all probability, culminate in small fine - Order of CC is erroneous: HC
By TIOL News Service
NEW DELHI, JUNE 06, 2014: THE petitioner has prayed for quashing the order of the Chief Commissioner (Customs) where under his application for compounding made under Section 137 of the Customs Act was rejected.
The facts are that the petitioner arrived from Hong Kong and was caught by the Customs authorities while smuggling ten thousand pieces of microchips (micro SD cards) valued at Rs.15,80,000/-. While initially he stated that the goods were given to him at Hong Kong by one Rakesh Jain for delivering the same to a person in Jaipur, later he admitted that the articles were procured by him only and that he bought them from the market to sell them in India. Apparently, he also made certain contradictory statements in the bail application presented on his behalf before the Metropolitan Magistrate.
The SCN under the Customs Act, 1962 and lower appellate proceedings culminated in the duty being deposited by the petitioner along with the redemption fine as well as penalty.
In order to avoid prosecution the petitioner applied for compounding but this application was rejected by the Chief Commissioner by relying upon the decision Union of India v. Anil Chanana 2008-TIOL-09-SC-CUS to say that the disclosure was not clear and, on the contrary, was contradicted.
As mentioned, it is against this order that the petitioner is before the Delhi High Court.
It is submitted that the kind of offences which the petitioner could have been charged with in this case did not attract a minimum penalty and that given the gradation of the offences under Section 135 the petitioner most probably would have incurred a fine imposed by the trial court at its discretion. Further, with the acceptance of the adjudication order, depositing the duty, penalty and redemption fine, no purpose would have been served by the Revenue's insistence on his prosecution. Also, the Revenue would have earned an additional Rs.1.83 lakhs being the compounding fee (10% of the value of the goods + redemption fine).
The counsel for the Revenue submitted that the order of the Chief Commissioner was reasonable and did not call for interference.
The High Court extracted the contents of section 137 of the Customs Act, 1962 and observed that the power to permit compounding of offences contained in Section 137 (3) is apparently wide.
After distinguishing the case law of Anil Chanana cited by the Revenue, the High Court observed -
“10. In the given facts of this case, it is apparent that the petitioner after initially refuting ownership later on admitted ownership in his subsequent statements and paid up the duty amount, penalty and redemption fine. In these circumstances, considering that no minimum sentence or penalty was attracted for the offence that the petitioner was charged with, the denial of compounding meant that he would have to face a long trial which ultimately would, in all probability, culminate in a small fine. The impugned order of the Chief Commissioner in our opinion is erroneous, because apart from the initial contradiction and the first denial, there were in fact no subsequent conflicting statements in that that subsequent statements recorded under Section 108 (on 20.07.2011 and 09.08.2011) clearly admit that he purchased the articles for sale in India.”
In fine, the order of the Chief Commissioner was quashed and the respondent department was directed to accept the compounding application and pass consequential orders within four weeks.
The petition was allowed.
(See 2014-TIOL-918-HC-DEL-CUS)