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The Hon’ble Customs, Excise & Services Tax Appellate Tribunal, Bangalore (“CESTAT”) in the matter of Sherly Sany v. C.C, Cochin [Final Order No. 20812 / 2021 dated October 28, 2021], while quashing an order of the customs authorities, held that the order of confiscation without offering an option to pay fine to the person in possession of gold is arbitrary since the provisions of law provide such an option to the person.
Sherly Sany (“the Appellant”) filed the current appeal being aggrieved by the Order-in-Appeal (“OIO”) No. COC-CUSTM-000-APP-104/2019-20 dated December 19, 2019 passed by the Commissioner of Customs, wherein the issue that arises in the present appeal is whether the impugned order is correct insofar as it relates to the upholding of absolute confiscation ordered by the adjudicating authority without giving an option to the appellant for redemption as per Section 125 of the Customs Act, 1962 (“the Customs Act”) and penalty imposed under Section 112(a) & (b) of the Customs Act.
The Appellant is an individual and argued that the gold did not belong to her but to her neighbor in Kerala and that she had no intention to smuggle the gold. A finding is recorded thereafter that by virtue of the Appellant being not the owner of the gold in question which was not declared before the Customs authorities had rendered the gold liable for absolute confiscation under Section 111 ibid read with Section 3(3) of the Foreign Trade (D&R) Act, 1992. The said authority has also imposed a penalty of Rs. 1,00,000/- under Section 112(a) & (b) of Foreign Trade (D&R) Act, 1992
The Hon’ble CESTAT, Delhi after analyzing the provisions of the law observed that the heading of the relevant Section 125 of the Customs Act makes it clear that an option to pay a fine in lieu of confiscation is available. Further the CESTAT said that an amendment w.e.f. July 12, 1985 is made to include the person from whose possession or custody, the goods have been seized if the owner of such goods is not known who shall be offered an option to pay fine in lieu of confiscation. Therefore, the CESTAT is of the view that it is in the nature of a mandate that the officer shall extend in the case of any other goods an option to the person from whom the gold is seized since the gold is not a prohibited item.
Hence, non-offering of such an option clearly provided by the statute amounts to arbitrariness which cannot be sustained.
Relevant Provisions:
“SECTION 125. Option to pay fine in lieu of confiscation. - (1)Whenever confiscation of any goods is authorised by this Act, the officer adjudging it may, in the case of any goods, the importation or exportation whereof is prohibited under this Act or under any other law for the time being in force, and shall, in the case of any other goods, give to the owner of the goods [or, where such owner is not known, the person from whose possession or custody such goods have been seized,] an option to pay in lieu of confiscation such fine as the said officer thinks fit.
(Author can be reached at info@a2ztaxcorp.com)
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