[Order per : S.K. Gaule, Member (T)]. - Heard both sides. This appeal is being taken up pursuant to Hon’ble Mumbai High Court’s Order dated 27-1-10 in Writ Petition No. 1443 of 2002 and Writ Petition No. 1802 of 2002.

2. This case has a chequered history. Shri Yakub Ibrahim Yusuf (Yusuf) the appellant was intercepted at N.I.P.T., Module-II, Mumbai on his arrival from London to Mumbai by AI-132 while he was carrying 25 kgs of gold. The 25 kgs. of gold was found in two black colours boxes in the brief case alongwith foreign currency of market value of Indian Rs. 6,54,830/-. The appellant stated before the DRI officers that the gold carried by him belongs to one Shri Illiyas Patel, Smt. Memuda I. Patel, Smt. Munira M. Laly and her two minor sons, Master Shohil M. Laly and Master Faiyaz M. Laly (hereinafter referred to as five persons). In their statements recorded on 19-10-92, Shri Illiyas Patel, Smt. Mamuda Illiyas Patel and Smt. Munira M. Laly stated that the gold carried by Shri Yakub was not belonging to them and they were not carrying any foreign currency for payment of Customs duty. They had also made written declaration before the Customs declaring that they were carrying goods valued at Rs. 2500/-, Rs. 2,300/- and Rs. 2000/- respectively and other two passengers viz. Smt. Memuda I. Patel and Smt. Munira M. Laly had also declared gold ornaments and obtained respective TBREs.

2.1 The appellant in his statement deposed that earlier he had made 6 visits from 5-4-92 to 19-10-92 and during Oct/92 this was his third visit .He also deposed that he had brought gold from abroad and in the present case he brought the gold to India to earn profit and that the profit was not to be shared with Shri Illiyas Patel or Smt. Laly and their family and he was to remove the gold from Mumbai Airport for further disposal and sale in the Mumbai market. The department carried out further investigation in the matter and show-cause notice was issued for confiscation of the gold and currency and for penal action against the appellant, Shri Illiyas Patel, Smt. Memuda I. Patel, Smt. Munira M. Laly and her two minor sons. In his adjudication order dated 24-6-96 the ld. Collector of Customs ordered confiscation of the gold alongwith foreign currency and imposed penalty of Rs. 50 lakhs against the appellant and other co-noticees were exonerated. The said Order-in-Original was challenged by the appellant by way of Writ Petition No. 2436/94. The Hon’ble High Court in their Order dated 24-10-1994 directed the Collector of Customs to decide the case afresh. The Commissioner of Customs in fresh adjudication vide his Order dated 30-5-1996 ordered absolute confiscation of 25 kgs of gold and the foreign currency and imposed penalty of Rs. 50 lakhs against the appellant. The appellant preferred an appeal before this Tribunal against the impugned Order. Vide Order No. C-I/1995/WZB-2001, dated 1-8-2001, the Tribunal allowed the redemption of gold for export on payment of fine of Rs. 10.00 lakhs; the penalty imposed on the appellant was reduced to Rs. 5.00 lakhs and confiscation of foreign currency from the appellant was set aside and allowed to be re-exported in accordance with law. Aggrieved by this, the Department filed Reference Application No. 17 of 2001 before the Hon’ble High Court raising certain important question of law. The Tribunal vide its Order No. C-I/1746/01-WZB dated 13-7-2001 in an application filed by the appellant directed the Department to implement its earlier Order dated 9-11-2000. In subsequent order No. C-I/1995/WZB/2001 dated 1-8-2001, the Tribunal directed the department to release the sale proceeds of the confiscated gold after deducting a sum of Rs. 10.00 lakhs. On not being successful, the appellant moved the Hon’ble High Court and the Hon’ble High Court in WP No. 2371 of 2001 vide its Order dated 9-10-2001 directed the Department to implement the order of the Tribunal within four weeks unless stay was obtained from the Tribunal. The Department accordingly preferred a stay application before the Tribunal staying its Order dated 9-11-2000 [ (Tri. - Mum.)], 13-7-2000, 1-8-2001 & 21-1-2002 [ (Tri. - Mumbai)] pending reference application before the Hon’ble High Court. The Tribunal rejected the stay application and directed the Department to comply with its earlier order. Thereby, the Department again filed a Notice of Motion before the Hon’ble High Court. The Hon’ble High Court did not grant any relief on the Notice of Motion, however, permitted certain amendments as prayed by the Department’s Counsel. The Department carried out the said amendment and WP No. 1802/2002 was filed by the Department in the Hon’ble High Court. The Hon’ble High Court vide its Order dated 27-11-2001 set aside the Order of the Tribunal impugned in WP No. 1802/2002 as also refund order-cum-demand notice dated 6th March impugned in WP No. 1443/2002 and directed the Tribunal to de novo hear and adjudicate upon the issues arising out of the aforesaid Order.

3. The contention of the appellant is that he was merely carrying the said gold and foreign currency for and on behalf of his relatives of NRI and there was every intention to pay the requisite amount of Customs duty by the NRI. The appellant submitted that the declaration contemplated under Sec. 77 of the Customs Act, 1962 need not be always written declaration and in case the entitled passenger is moved with permissible gold, then it is not an offence. The appellant further submitted that the adjudicating authority has failed to appreciate if his relatives NRI were not claiming the gold, there was no need for them to wait for the appellant. The contention of the appellant is that the said NRIs at the first instance not only retracted the statements made before the Chief Metropolitan Magistrate by filing respective affidavits but had also clearly inter alia asserted that the said gold seized from the appellant belonged to them. The contention of the appellant is that the appellant had affirmed/executed the affidavit on 27-7-95 in the United Kingdom and that was not taken into consideration by the ld. Commissioner. The appellant has also placed reliance on the following case law :-

(1)     Union of India v. Dhanak M. Ramji [ (Bom.)]

(2)     Sapna Sanjeev Kohli v. Commissioner of Customs, Mumbai [ (Bom.)]

(3)     Dhanak Madhusudan Ramji v. CC (Airpot), Mumbai [ (Tri.-Mumbai)]

(4)     Dinker Khindria v. CC, New Delhi [ (Tri.-Delhi)]

(5)     Shabir Ahmed Abdul Rehman v. Union of India [ (Bom.)]

4. The ld. SDR reiterated the findings of the adjudicating authority. The contention of the Department is that the absolute confiscation of the gold is sustainable since the gold is a prohibited item. The contention is that the appellant has never claimed to be the owner of the gold, therefore, the gold cannot be redeemed to him. The contention is that on redemption the duty has to be paid. The Department also placed reliance on the following case law :-

(1)     Om Prakash Bhatia v. CC, Delhi [ (S.C.)]

(2)     CC(Exports) Chennai v. Bansal Industries [2006 (09) LCX 0013 = (Mad.)]

(3)     Union of India v. Mohammed Aijal Ahmed [2009 (07) LCX 0144 = (Bom.)]

(4)     CESTAT Order No. 1980-1995/09, Chennai [ (Tri.-Chennai)]

5.1 We have perused the records and considered the submissions from both sides. The ld. Commissioner vide his Order dated 6-5-1996 confiscated 25 kgs. of gold under Section 111(d) of the Customs Act, 1962 read with Section 3 of the Foreign Trade (Development & Regulation) Act, 1962 and ordered for confiscation of brief case and foreign currency equivalent to Rs. 6,54,830/- under Section 118(a) and 119 of the Customs Act, 1962 and imposed a penalty of Rs. 50.00 lakhs on the appellant and exonerated Shri Illiyas Patel, Smt. Memuda I. Patel, Smt. Munira M. Daly and her two minor sons, Master Sonil M. Laly and Master Faiyaz M. Laly. However, all of them preferred appeals before the Tribunal against the Order of the Commissioner dated 6-5-1996.

5.2 The Tribunal vide its Order dated 8-11-2000 upheld the confiscation of the gold, however, permitted it to be redeemed for re-export on payment of fine of Rs. 10.00 lakhs. Penalty on the appellant was reduced from Rs. 50.00 lakhs to Rs. 5.00 lakhs and the confiscation of foreign currency brought by the appellant was also set aside. The appeals filed by the five persons were dismissed. They did not challenge the Tribunal’s Order, nor did the Department challenge this aspect in their WP No. 1802/2002. Therefore, so far as the appeals filed by the five persons are concerned, the same reached finality.

5.3 The Department did not challenge the impugned Orders of the Commissioner and the Tribunal so far as the confiscation of gold is concerned. The findings recorded by the Tribunal regarding the confiscation of gold in the impugned order are reproduced hereunder :

“3. Let us first consider the purchase of the gold. The gold was purchased by Yakub Yusuf from a company at Zurich in Switzerland. There is no documentary evidence to show that Yakub Yusuf was merely acting on instructions from and on behalf of the other five, when he purchased the gold. The sale document issued by the seller of the gold at Zurich only refers to him. No documentary evidence was produced before the Commissioner, in the form of correspondence or authorizations given to Yakub Yusuf to support the contention that he was carrying the gold from Zurich to Mumbai via London on behalf of the other five. Yakub Yusuf’s route was from Zurich to London, where he was a transit passenger at the airport and then on to Mumbai. There is also no claim, or evidence, that each or any of them paid Yakub Yusuf for the gold or reimbursed him for it. The version which was earlier put forward on behalf of the appellant is that the five others ran into Yakub Yusuf at London airport, apparently by coincidence, and enlisted his assistance in carrying the gold in Mumbai. This claim is difficult to accept. The gold, as we have noted, was purchased by Yakub Yusuf at Zurich. This was what is claimed and there is no rebuttal of this by any of the others. The version earlier put forward is difficult to accept in view of this fact, in the absence of any explanation as to why Yakub Yusuf should choose to come back to London and to travel through the airport, before proceeding to Mumbai. It would then follow thatw the gold was purchased by Yakub Yusuf on his own initiative - otherwise the theory of a chance meeting at London airport cannot be supported, since none of the other five had the gold with them.

4. There is thus insufficient documentary evidence existing at the time of the incidence to show that the gold was purchased by Yakub Yusuf for and on behalf of the other five.

5. Let us now consider what transpired at Mumbai airport. The claim put forward by the appellant is that in view of the heavy weight of the gold and other factors such as inexperience. Yakub Yusuf carried the gold on behalf of the other five and would have declared it, if given sufficient opportunity. He was not given this opportunity. As soon as he completed the formalities at the immigration counters, he was confronted by the officers of the Directorate of Revenue Intelligence (DRI for short). It is contended that the evidence of the two of the officers of the DRI during cross examination supports this view in the proceedings before the Commissioner. These officers are Patil and A. V. Radekar, Intelligence officers of the DRI. Patil says that he was keeping a watch on Yakub Yusuf on the day in question. He was Yakub Yusuf being intercepted by Shirodkar, Senior Intelligence Officer of the DRI. Yakub Yusuf told Shirodkar that he was carrying 25 kilograms of gold, which belongs to some other people, pointing to a group of people standing in the baggage hall. Radekar says that Shirodkar identified Yakub Yusuf who was in the arrival hall after coming through immigration.

6. Radekar’s statement is of no value in the proceedings. It does not support the view that Yakub Yusuf did not have sufficient opportunity to declare the gold. What Patil says certainly does lend support to the claim that Yakub Yusuf had indicated he was carrying the gold, that the gold did not belong to him although it does not support the claim of ownership of the other appellants.

7. A declaration of dutiable goods brought in as baggage has to be made by the owner of the baggage for clearance. This is what Section 77 of the Act provides. The persons who claim ownership of the baggage in this matter have not at any stage made a declaration. We are not aware of any provision of law which empowers the declaration to be made for baggage by a person other than the owner. There may be, it is true, in exceptional circumstances, the declaration may be made by a person other than the owner, such as when the owner, for the reason that he not able to make it or is an infant. It is not however claimed that this claim applies to any of the passengers. There were no minors but were accompanied by their parents. There is no explanation as to why any of these persons did not declare the gold. Their utter silence in this regard is highly significant. On the contrary, two of the passengers had declared jewellery belonging to them for the purpose of being able to re-export, for which purpose a necessary certificate was issued to each of them. When they had enough ability and knowledge to declare the gold ornaments, why they could not declare the gold which belongs to them is not explained. There is also total lack of explanation as to why I.N. Patel, a grown up man who was in the group could not make the declaration. It is claimed that he was working in the United Kingdom. He surely had enough experience of worldwide affairs to make a declaration. Yet he does not do so. Each of them gives a statement that the gold did not belong to them. No doubt, subsequently, these statements have been retracted.

8. This failure by them to make a declaration before the baggage officers assumes greater significance in the light of the submissions made on behalf of Yakub Yusuf. If as is claimed he was intercepted without being given sufficient opportunity is natural to expect that the others would have protested vehemently after all what was happening with gold belonging to each of them. They are in effect being the ownership of the gold valued at Rs. 1.00 Crore approx.. Yet they meekly accepting the position.

9. Much was sought to be made of the fact that the statements which these five passengers give disowning the gold shortly after they came to India was retracted later and they put forward their claim to gold. The result of such a retraction would be that the admission made in the statement if they are such would require corroboration. It is in fact the gold they admit. A person who makes a statement according to which he has not brought any dutiable goods is not making a statement damaging himself. We are not really concerned with the possible claims of ownership of gold between Yakub Yusuf and on others. What we are concerned with is whether the gold belongs to Yakub Yusuf or to others. The claims made in the retractions are completely belied by the conducts of these persons in the Customs which was discussed in some details above.

10. There are however contradictions at the subsequent stages. Replying to the show cause notice proposing confiscation of the gold, and imposition of penalty. These five persons had taken the stand that the gold does not belong to them. At the same time, a letter written by Mr. Dave, their common advocate to the Commissioner take a different stand that the gold was claimed by them. The Commissioner finds that Mr. Dave did not have vakalatnamas signed by the three out of five persons who are majors. In the light of this finding that the Commissioner records, with regard to the absence of vakalatnamas, we do not find any error in his having accepted the replies signed by these three passengers in preference to that the purported advocate stated.

11. The position would in any event, be the same, even otherwise. As we have discussed earlier, there is not the slightest evidence to show that the gold was purchased at Zurich, brought to London and from London to Mumbai by Yakub Yusuf at the request of and on behalf of these passengers. None of the three majors among them declared the gold as would be expected had it belonged to them when they arrived at Mumbai airport notwithstanding, that two of them made Customs declarations for other goods. The total absence of evidence to show purchase by or on behalf of these persons or ownership of the gold, and the significant conduct on the part of these three passengers out of five out belie any claim made by the advocate for the appellants which is again not substantiated by evidence. The fact that Magistrate’s order permitting bail to be granted to Yakub Yusuf in which he makes certain observation about the claim by these passengers, was not interfered with by the High Court is entirely for no relevance in this regard. The observation of the Magistrate in his interim order can not be said to be a finding of fact on final determination of issues. No can such a finding in any case bind us.

12. The net result would be that the gold was upheld to have been belonged to Yakub Yusuf and have been imported by them. Yakub Yusuf was not entitled to clearance under the notification, since when he brought the gold, the benefit of notification was not available to him, since he has already availed of it. This is admitted by his advocate. The gold has therefore rightly been ordered confiscation.”

5.4 The appellant also did not challenge so far as the confiscation of gold is concerned, what they have challenged in the WP 1443/2002 is the refund order-cum-demand notice dated 6-3-2002. Now, again the appellant has made a feeble attempt regarding the retraction of the statement and the affidavits filed by the said persons. The above contentions have also been considered, at length, by the Tribunal in the findings reproduced (supra). That the above contentions are not sustainable, is also fortified by the fact that the five persons have not challenged the Tribunal’s impugned Order. From the above, it emanates that the gold is liable for confiscation, the gold is not belonging to the five persons and the gold belonged to the appellant, however, the benefit of the Notification No. 117/92-Cus. as amended, is not available to the appellant since he has already availed the said benefit.

5.5 The Department has contended that since the gold is prohibited item, it cannot be redeemed on payment of fine and since the appellant is not owner of the gold, it cannot be redeemed to him and therefore, the order of absolute confiscation of gold under Section 125 of CA, 1962 by the ld. Commissioner is sustainable. Section 125 of the Customs Act, 1962 is reproduced below for proper appreciation :

“S. 125. Option to pay fine in lieu of confiscation. - (1) Whenever confiscation of goods is authorized by this Act, the office 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 for, 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 :

Provided that, without prejudice to the provisions of the proviso to sub-section (2) to Section 115, such fine shall not exceed the market price of the goods confiscated, less in the case of imported goods the duty chargeable thereon.

(2) Where any fine in lieu of confiscation of goods is imposed under sub-section (1), the owner of such goods or the person referred to in sub-section (1), shall, in addition, be liable to any duty and charges payable in respect of such goods.”

From the above, it follows that the prohibition relates to goods which cannot be imported by any one, such as arms, ammunition, addictive substance viz. drugs. The intention behind the provisions of Section 125 is clear that import of such goods under any circumstances would cause danger to the health, welfare or morals of people as a whole. This would not apply to a case where import/export of goods is permitted subject to certain conditions or to a certain category of persons and which are ordered to be confiscated for the reason that the condition has not been complied with. In such a situation, the release of such goods confiscated would not cause any danger or detriment to public health. Admittedly, import of gold is permitted in case of certain category of persons, subject to certain conditions in terms of Notification No. 117/92-Cus., as amended, therefore, it would not fall under the prohibited category as envisaged under the said provisions. The above view is also supported by Hon’ble High Court of Calcutta’s decision in the case of Commr. of Customs (Preventive), West Bengal v. India Sales International reported in (Cal.). Hon’ble High Court while deciding whether ‘prohibited’ has to be read as ‘prohibited absolutely’, held that the Court cannot insert any word in the statute since it is in the domain of the legislators. The Hon’ble High Court has also held that option given under Section 125 of the said Act in respect of prohibited goods and right given to authorities for redemption of the confiscated goods cannot be taken away by Court by inserting a particular word therein. The Hon’ble High Court further held that power has been given by legislators to a particular authority to act in a particular manner and the said authority must act accordingly and not otherwise at all. Therefore, the redemption of confiscated gold, on an option to pay fine in lieu of confiscation is not against the provisions of Section 125 of the Customs Act.

5.6 The Department has also contended that the appellant has never claimed the ownership of the gold. Therefore gold cannot be redeemed to the appellant. In support they have placed reliance on Hon’ble Bombay High Court’s decision in the case of Mohammed Aijaj Ahmed (supra). In that case the owner of gold was known still the redemption was allowed to the carrier. In the instant case the five persons are not the owner of the gold as already discussed (supra). The Department’s entire case is based on the statement of the appellant wherein he has deposed that he had brought the gold to earn profit and the profit is not to be shared with five persons. Therefore the above-cited case is not applicable to the facts of the case. The department has also placed reliance on Tribunal’s Order No. 1980 to 1995/09 (supra) which in turn relied upon above-cited decision of Hon’ble Bombay High Court, hence the decision is not applicable to the case. The issue in the High Court of Madras in the case of Bansal Industries (supra) related to whether mens rea is required for imposition of punishment which is not in dispute in the instant case, hence the cited case by department is not also relevant. A plain reading of sub-section (2) of Section 125 of CA, 1962, shows that an option has to be given to the owner of the goods or where the owner is not known, the person from whose possession or custody such goods have been seized. Undoubtedly, the gold has been seized from the possession of the appellant. Therefore, the aforesaid contention of the Department is not sustainable.

5.7 In the result, the Commissioner’s Order is sustainable in so far as confiscation of gold is concerned, however, the gold is liable to be redeemed on payment of fine and penalty, however, since the gold has been sold by the Department while the appellant was pursuing the appellate remedies available to him, he would be entitled for return of the sale proceeds. Hon’ble Bombay High Court in the case of Shabir Ahmed Abdul Rehman (supra) held that the gold sold during the pendency of appeal before the Commissioner (Appeals) which is against the existing departmental instructions, is not justified. The Hon’ble High Court also held that the petitioner, who is seeking redemption of the confiscated gold, cannot be escaped from payment of redemption fine and penalty. As regards payment of duty, the Hon’ble High Court has held that the duty would be payable only if the gold was actually allowed to be redeemed and what is given to the petitioner is the sale proceeds. Therefore, the question of paying duty in respect of sale proceeds would not arise. The ratio of the above decision is fully applicable to the facts of the case. In the result, we direct the department to return the entire sale proceeds after deducting therefrom, the fine and penalty. We make it amply clear that duty is not deductible from the sale proceeds as already discussed (supra). The ld. Commissioner has confiscated the gold absolutely; accordingly, the issue relating to quantification of the redemption fine was not before him. Therefore, the quantification of the redemption fine is required to be done in terms of the proviso to sub-section (1) of Section 125 of CA, 1962.

5.8 As regards confiscation of the foreign currency from the appellant, he had declared it; therefore, there is no ground for confiscation. Accordingly, the same is set aside.

5.9 The Commissioner has imposed penalty of Rs. 50.00 lakhs against the appellant. The Tribunal vide its Order dated 8-11-2000 [ (Tri. - Mum.)] reduced the penalty to Rs. 5.00 lakhs. We find that the same is reasonable. Therefore, the penalty is reduced to Rs. 5.00 lakhs (Rupees five lakhs only) from Rs. 50.00 lakhs (Rupees fifty lakhs only) imposed by the Commissioner. In the result, the case is remitted to the Commissioner for limited purpose of quantification of redemption fine in lieu of confiscation in terms of the proviso to sub-section (1) of Section 125 of CA, 1962. Needless to say, a reasonable opportunity of hearing may be given to the appellant. Thereafter, the sale proceeds should be returned to the appellant after deducting penalty of Rs. 5.00 lakhs and redemption fine as quantified.

6. The impugned order is modified to the above extent and the appeal is accordingly disposed of.

(Pronounced in Court on 28-10-2010)