By TIOL News Service

CHANDIGARH, JUNE 29, 2016: DRI seized Cigarettes and restricted R-22 Gas, which were admittedly imported by the petitioner company by concealment in aluminium scrap and mis-declaration of material particulars in the Bills of Entry filed at ICD, Ludhiana.

The petitioner company is before the High Court and while admittingmis-declaration in these three Bills of Entry expressed their willingness to pay the differential duty on the Cigarettes for seeking its provisional release, and is willing to resort to statutory route of self-surrender by invoking jurisdiction of Settlement Commission for settlement of case upon issuance of show cause cum demand notice in respect of these three Bills of Entry.

It is submitted that although the R-22 Gas is a 'restricted' item for import, and the Cigarettes and the R-22 Gas were imported by concealment, however, none of these goods are expressly notified as 'prohibited' for importation; that imported goods can only be seized u/s 110 of the Act, when there exists a reasonable belief that the same are liable to confiscation u/s 111; that in respect of such goods even if the same are confiscated upon culmination of adjudication u/s 28 r/w s.124, the owner/importer 'shall' be given an option to redeem the goods on payment of redemption fine in terms of s.125 of the Act; thats.110A of the Act provides for provisional release of seized goods even pending adjudication.

By placing reliance on the decisions in Bhargav B. Patel - 2015-TIOL-1951-CESTAT-Mum , Asian Food Industries - 2006-TIOL-147-SC-CUS , Om Parkash Bhatia - 2003-TIOL-06-SC-CUS and T Elavarasan, - 2011-TIOL-762-HC-MAD-CUS , the petitioner submitted that u/s 125 of the Customs Act, unless the importation or exportation of goods is expressly "prohibited" the Adjudication Authority would be obliged to offer to the owner of the goods an option to pay fine in lieu of confiscation.

Inasmuch as in the instant case the Cigarettes and restricted R-22 Gas were admittedly imported by concealment but none of the two goods are expressly "prohibited" for importation and, therefore, ultimately the petitioner company who is owner as well as importer would be entitled for an option to redeem the goods even upon adjudication. So also, Section 110A concerning provisional release would be applicable, the High Court observed.

The DRItook the stand that the goods which have local market value of Rs.10Crores would be absolutely confiscated and would have to be burnt or destroyed, and that such cases of fraud cannot be settled by the Settlement Commission.

Responding to this submission, the Petitioner brought to the notice of the High Court an order passed by the Settlement Commission in the matter of Mohammed Irfan Khwajamiya Shaikh granting complete immunity from prosecution and settling the case against adjustment of duty, fine and penalty where Cigarettes were illegally imported by concealing among Radio Cassette Recorders.

The High Court, therefore, held that the objection by DRI was without merits.

Noting that both the respondents viz. DRI and Commissioner of Customs, Ludhiana have taken contrary stand regarding who amongst them would have to determine the duty i.e. would be the adjudicating authority, the High Court concluded that it is just and expedient to entertain the request of the petitioner company for considering conditional provisional release of the seized Cigarettes instead of relegating the petitioner company to the respondents for deciding this issue of provisional release of seized Cigarettes which are perishable in nature.

The High Court, therefore, permitted provisional release of the seized Cigarettes on submission of a bond for total Rs.6,21,14,598/- indemnifying Respondent Commissioner at Ludhiana for making good all the liabilities that may arise under the Act in respect of the goods imported under the three Bills of Entry along with the further conditions.

Considering that the petitioners had shown shown their willingness to adopt the route of settlement and to discharge their duty liability even before issuance of notice under Section 28, the petition was disposed of with the following further directions -

(a) The Petitioners would co-operate in investigations and would appear as and when summoned. The Respondent DRI would permit the presence of an advocate at visible but not audible distance during interrogation as well as recording of statement which shall be permitted to be recorded in petitioner's own handwriting during reasonable office hours;

(b) The Respondent DRI shall issue a notice in respect of the aforesaid three Bills of Entry under Section 28 read with 124 of the Customs Act, 1962 within four weeks from the date of this Order;

(c) The petitioners would have to file their application for settlement of case not later than four weeks from the date of receipt of such notice;

(d) Settlement Commission would be free to decide all issues in respect of the said three Bills of Entry in accordance with law including release of R-22 gas.

(e) No coercive steps prejudicing personal liberty would be taken against the petitioners on either punitive or preventive basis in relation to the above case.

(f) In the event the petitioner company fails to make payment of duty as aforesaid for provisional release the respondents would be at liberty to move for vacation of the protection granted to the petitioners.

The Writ Petition was disposed of.

(See 2016-TIOL-1239-HC-P&H-CUS)