Mohamed Fazil v. Deputy Commissioner of Customs (ACC), Air Cargo Complex, Nedumbassery Airport, Cochin-683111 and Chairman, Cochin International Airport, Nedumbassery Airport, Cochin-683111

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT:** ## **THE HONOURABLE MR.JUSTICE A.M.SHAFFIQUE** **TUESDAY, THE 8TH DAY OF NOVEMBER 2016/17TH KARTHIKA, 1938** ## **WP(C).No. 33966 of 2016 (U)** **----------------------------** **PETITIONER :** **--------------------** **MOHAMED FAZIL, S/O.BASHER, R/O. KATTIL PEDIAKKAL HOUSE, KATTACHIRA P.O., B.P.ANGADY, KOOTHUPARAMBU, THIRUR, MALAPPURAM -676 102.** **BY ADVS.SRI.P.A.AUGUSTIAN SRI.M.A.BABY SMT.LINDA.M.J.** **RESPONDENT(S):** **----------------------------** ## **1. DEPUTY COMMISSIONER OF CUSTOMS (ACC) AIR CARGO COMPLEX, NEDUMBASSERY AIR PORT, COCHIN-683 111.** ## **2. CHAIRMAN,** **COCHIN INTERNATIONAL AIR PORT, NEDUMBASSERY AIR PORT, COCHIN-683 111.** **BY SRI.M.GOPIKRISHNAN NAMBIAR SRI.SREELAL N. WARRIER, SC,** **THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 31-10-2016, THE COURT ON 08-11-2016 DELIVERED THE FOLLOWING:** **sts** **WP(C).NO.33966/2016** ## **APPENDIX** ## **PETITIONER'S EXHIBITS:** - **P1 COPY OF THE DESCRIPTION OF THE GOODS BROUGHT BY THE PETITIONER. P2 COPY OF THE ORDER IN ORIGINAL NO.47/2016 DATED 02/09/16 P3 COPY OF THE ORDER IN APPEAL NO.110/2016 DATED 28/09/16. P4 COPY OF THE LIST OF GOODS, ORDER IN ORIGINAL NO.37/2016 DATED 04/08/16 AND ORDER IN APPEAL NO.76/2016 DATED 29/08/16.** ## **RESPONDENT'S EXHIBITS: NIL** **/TRUE COPY/ P.S.TO JUDGE** **sts** ## **A.M. SHAFFIQUE, J.** =============== W.P. (C) No. 33966 of 2016 ================== Dated this, the 8[th] day of November, 2016 ## **J U D G M E N T** This writ petition is filed challenging Exts.P2 and P3 and seeking consequential reliefs. Ext.P2 is an order passed by the Deputy Commissioner of Customs on 2/9/2016 by which the goods covered by Baggage Declaration No.2490 dated 19/7/2016 has been confiscated under Section 111(d) and 111(o) of the Customs Act, 1962. Penalty is also imposed on the importer, the petitioner herein and another person. Petitioner preferred an appeal before the Officer of Commissioner of Customs which resulted in Ext.P3 order dated 28/9/2016 by which the order passed by the adjudicating authority had been confirmed. 2. The short facts involved in the writ petition would disclose that the petitioner brought in a few items of food articles entrusted by some of his family members which were seized at the airport. After conducting an enquiry, the impugned order, Ext.P2, had been passed. 3. The main contention urged by the petitioner in the W.P(C) No.33966/16 -:2:- present writ petition is that instead of confiscation, option should have been granted to the petitioner to pay fine by exercising power under Section 125 of the Customs Act. However, the appellate authority did not consider the said claim proceeding on the basis that petitioner had violated the Baggage Rules, 2016 and the prohibition imposed by the Foreign Trade (Development and Regulation) Act, 1992. It is _inter alia_ contended that the power under Section 125 ought to have been exercised as goods that had been brought in as a registered baggage were neither prohibited by the Customs Act or any other law for the time being in force. 4. On the other hand, learned standing counsel appearing on behalf of the respondent while placing reliance on the Foreign Trade (Development and Regulation) Act and the Baggage Rules, 2016 submits that the baggage imported by the petitioner is not a bonafide baggage and fraud was sought to be perpetrated by the petitioner and therefore, there is no reason why the petitioner should be granted option to pay fine in lieu of confiscation. 5. Learned counsel for the petitioner placed reliance on ## W.P(C) No.33966/16 -:3:- the judgment of the CESTAT, West Zonal Bench, Mumbai in _**Yakub Ibrahim Yusuf v. Commissioner of Customs, Mumbai**_ [2011 (263) E.L.T. 685 (Tri-Mumbai)]. In the said judgment, while considering the scope and effect of Section 125 of the Customs Act, 1962, reliance was placed on the judgment in _**Commissioner of Customs (Preventive), West Bengal v. India Sales International**_ [2009 (241) E.L.T. 182 (Cal.)], wherein it was held that the word ' _prohibited_ ' has to be read as ' _prohibited absolutely_ '. It was further held that the option given under Section 125 of the Act in respect of the 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. 6. Reference to is made to another judgment in _**Shaik Jamal Basha v. Government of India**_ [1997 (91) E.L.T. 277 (A.P.) This judgment is by Division Bench of Andhra Pradesh High Court. It was held that Rule 9 of Baggage Rules, 1979 framed under Section 79(2) of the Customs Act, 1962 lists gold in any form other than ornaments in Appendix B of the Rules as articles W.P(C) No.33966/16 -:4:- which shall not be imported free of duty. Hence gold in the form other than ornaments is entitled to be imported on payment of duty. Attempt to import gold unauthorisedly will thus come under the second part of Section 125(1) where the adjudging officer is under a mandatory duty to give option to the person found guilty to pay fine in lieu of confiscation. A similar judgment is rendered by Calcutta High Court in _**Suresh Bhosle v. Commissioner of Customs (Preventive), Kolkata**_ [2009 (246) E.L.T. 77 (Cal.)]. It is therefore contended that in so far as there is no prohibition either under the Baggage Rules or any other statute, the authorities ought to have granted the right to redeem. 7. On the other hand, learned Standing Counsel appearing for the Department placed reliance on two judgments of the Apex Court:- (i) _**Sheikh Mohd. Omer v. Collector of Customs, Calcutta and Others**_ (1970 (2) SCC 728). In this case, the Apex Court was considering the meaning of the word ' _prohibited goods_ ' as defined under Section 2(33) of the Customs Act. The question was whether import of horses or mares is prohibited under the Act W.P(C) No.33966/16 -:5:- or not. While considering the question, it was held that “any prohibition” referred to in that Section applies to every type of “prohibition”. The prohibition is complete or partial. Any restriction on import or export is to an extent a prohibition. Restriction is also one type of prohibition. Para 11 is relevant which reads as under:- _“11. This takes us to the question whether by importing the mare “Jury Maid” the appellant contravened Section 111(d), read with Section 125 of the Act. It was urged on behalf of the appellant that expression “prohibition” in Section 111(d) must be considered as a total prohibition and that expression does not bring within its fold the restrictions imposed by clause (3) of the Imports Control Order, 1955. According to the learned counsel for the appellant clause (3) of that Order deals with the restrictions of import of certain goods. Such a restriction cannot be considered as a prohibition under Section 111(d) of the Act. While elaborating his argument the learned counsel invited our attention to the fact that while Section 111(d) of the Act uses the word “prohibition”. Section 3 of the Imports and Exports (Control) Act, 1947, takes in not merely prohibition of imports and exports, it also includes “restrictions or otherwise controlling” all imports and exports._ -:6:- ## W.P(C) No.33966/16 _According to him restrictions cannot be considered as prohibition more particularly under the Imports and Exports (Control) Act, 1947, as that statute deals with “restrictions or otherwise controlling” separately from prohibitions. We are not impressed with this argument. What clause (d) of Section 111 says is that any goods which are imported or attempted to be imported contrary to “any prohibition imposed by any law for the time being in force in this country” is liable to be confiscated. “Any prohibition” referred to in that section applies to every type of “prohibition”. That prohibition may be complete or partial. Any restriction on import or export is to an extent a prohibition. The expression “any prohibition” in Section 111(d) of the Customs Act, 1962 includes restrictions. Merely because Section 3 of the Imports and Exports (Control) Act, 1947, uses three different expressions “prohibiting”, “restricting” or “otherwise controlling”, we cannot cut down the amplitude of the word “any prohibition” in Section 111(d) of the Act. “Any prohibition” means every prohibition. In other words all types of prohibitions. Restriction is one type of prohibition. From Item (I) of Schedule I, Part IV to Import Control Order, 1955, it is clear that import of living animals of all sorts is prohibited. But certain exceptions are provided for. But nonetheless the prohibition continues.”_ ## (ii) _**Om Prakash Bhatia v. Commissioner of Customs,**_ W.P(C) No.33966/16 -:7:- _**Delhi**_ [2003 (155) E.L.T. 423 (S.C)]. In this case, the question was whether over-invoicing the goods for export would mean attempt to export prohibited goods. While referring to Section 113(d) of the Customs Act and Section 2(33) which defines prohibited goods, it was held that if there is any prohibition of import or export of goods under the Act or any other law for the time being in force, it would be considered to be prohibited goods; and if the conditions prescribed for import or export are not complied with, it would be considered to be prohibited goods. The Apex Court also referred to the judgment in _**Sheikh Mohd. Omer**_ (supra). Finally it was held that, in cases where the export value is not correctly stated, but there is intentional overinvoicing for some other purpose, then it would amount to violation of the conditions for import/export of the goods. 8. Learned counsel also placed reliance on Section 7 of the Foreign Trade (Development & Regulation) Act, which reads as under:- _“7. No person shall make any import or export except under an Importer-exporter Code Number granted by the Director General or the officer_ W.P(C) No.33966/16 ## -:8:- _authorised by the Director General in this behalf, in accordance with the procedure specified in this behalf by the Director General.”_ 9. The petitioner had brought in different items in 21 cartons. In a statement obtained by the Customs Department under Section 108, it is stated that he was working as a Driver at Abudhabi for the past 4 years and he arrived in India on one month's leave. While coming, he has sent goods as unaccompanied baggage through a cargo agency. Out of 21 boxes, 4 boxes belong to him and 17 boxes belonged to his friends and relatives. It is stated that the phone number appearing in his Airway bill was the number of his family friend one Nazer K.P. Certain follow up action was taken through the Superintendent of Customs, Preventive Unit, Malappuram who informed that no contraband or incriminating documents could be recovered from the house of the passenger and from the house of Nazer K.P. In a statement of Nazer K.P recorded under Section 108, he stated that he does not know the petitioner and he does not know how his phone number appeared in the Airway bill. He also denied knowledge about the phone number appeared in the W.P(C) No.33966/16 -:9:- Airway bill of two other passengers who sent unaccompanied baggage. 10. Petitioner does not have any dispute regarding the order of confiscation. The only contention urged is that since the goods are not prohibited goods, the appellate authority ought to have granted the petitioner an option to redeem the goods on payment of fine. Learned counsel also referred to Ext.P4, an order passed by the CESTAT wherein the Commissioner of Customs in an almost similar situation permitted clearance of goods on payment of redemption fine. Section 125 reads as under:- _“_ _**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._ _Provided that, without prejudice to the_ W.P(C) No.33966/16 ## -:10:- _provisions of the proviso to sub-section (2) of 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 subsection (1), shall, in addition, be liable to any duty and charges, payable in respect of such goods.”_ On a bare reading of the statutory provision, it is clear that the competent officer is entitled to exercise the discretion permitting the owner or person in possession from whose custody the goods had been seized, an option to pay in lieu of confiscation a fine as the officer thinks fit. However, such an exercise of option is not mandatory in the case of goods, the importation of which is prohibited under the Act or any other law for the time being in force. If there is no such prohibition, the exercise of option is mandatory. 11. Therefore, the only question to be considered is whether the contravention of Baggage Rules, 2016 and breach of the prohibition imposed by the Foreign Trade (Development & Regulation) Act, 1992 amounts to a prohibition under any other W.P(C) No.33966/16 ## -:11:- law for the time being in force. It is true that various authorities had exercised the discretion to permit release of confiscated goods on payment of redemption fine. But such exercise of discretion is not mandatory if the import is prohibited under the Act or any other law in force. Even in such cases, discretion can be exercised which will depend upon the manner in which the authority approves the transaction. Section 7 of the Foreign Trade (Development & Regulation) Act clearly indicates that no person shall make any import or export except under an importerexporter code number granted by the Director General or the officer authorised by the Director General in that behalf and in accordance with the procedure specified. The rules also clearly prescribe the procedure under how the import or export is to be carried out by preparation of a Bill of Entry. 12. It is not in dispute that the Baggage Rules is an exemption to the general provision. Rule 3 of the Foreign Trade (Exemption from Application of Rules in certain cases) Order, 1993 indicates that nothing contained in the Rules shall apply to the import of any goods by the person as passenger baggage to W.P(C) No.33966/16 ## -:12:- the extent admissible under the Baggage Rules for the time being in force. Baggage Rules of 2016 have been framed under Section 79 of the Customs Act, 1962. It has come into effect from 01/04/2016. Unaccompanied baggages are dealt with under Rule 8 which indicates that all the rules shall apply to unaccompanied baggage also. Rule 6 is relevant, which reads as under:- _**“6. Transfer of residence** - (1) A person, who is engaged in a profession abroad, or is transferring his residence to India, shall, on return, be allowed clearance free of duty in addition to what he is allowed under rule 3 or, as the case may be, under rule 4, articles in his bonafide baggage to the extent mentioned in column (2) of the Appendix below, subject to the conditions, if any, mentioned in the corresponding entry in column (3) of the said Appendix.”_ A perusal of the Appendix to the rules would show the nature of goods that could be brought depending upon the duration of stay abroad. The goods are mainly used personal and household articles, other than such articles mentioned in Annexures I, II and III. In any case, none of the materials now produced relate to those coming under Annexures I, II and III. Therefore, in order to W.P(C) No.33966/16 ## -:13:- become a bonafide baggage, the articles should be used personal and household articles. In the case on hand, petitioner is unable to explain under what circumstances he had carried the other 17 cartons. He claims ownership only in respect of 4 cartons. Most of them are household articles and various consumer products which are not prohibited items but it clearly amounts to an import which is not a bonafide baggage. If it was a bonafide baggage, either the petitioner should own the cartons or he should be aware of the particulars of the persons to whom the cartons are to be supplied. The word 'prohibited' had been defined under Section 2(33) and that apart, the judgment of the Apex Court in _**Om Prakash Bhatia**_ (supra) clearly indicates the scope and effect of what is “prohibited goods”. If there are restrictions in importing certain goods and if the conditions for importing has not been complied with, it definitely amounts to a prohibition under the relevant statutes. In the case on hand, though the items are household items, the baggage not being bonafide is not permissible to be imported as per Rule 8 read with Rule 6 of the Baggage Rules, 2016 and when such goods are W.P(C) No.33966/16 -:14:- brought in, it amounts to violation of Section 7 of the Foreign Trade (Development & Regulation) Act. 13. When the statutory authority considered the relevant aspects and forms an opinion that it is not a bonafide baggage and has observed that such baggage is prohibited, I am of the view that there is justification on the part of the appellate authority to have not exercised the power to grant option in favour of the petitioner. 14. Further, I do not think that I am persuaded by the views expressed by the CESTAT as well as the judgment of the Mumbai and Calcutta High Courts. In that case, gold ornaments were permitted to be imported. That was a case in which ornaments were brought in, but it was not declared. It was held that when goods had been permitted to be imported subject to such restrictions, it would not amount to a prohibition as stated under Section 125. I do not think I can agree with the aforesaid view in view of the judgment in _**Sheikh Mohd. Omer**_ (supra) which is relied upon in _**Om Prakash Bhatia**_ (supra). Of course in _**Yakub Ibrahim Yusuf**_ (supra), Apex Court refers to _**Om**_ W.P(C) No.33966/16 -:15:- _**Prakash Bhatia**_ (supra). But nothing has been stated in the said judgment. In yet another case, Commissioner has exercised the power under Section 125 and granted option to another person. But each case depends upon its own facts. The question that could be considered by this Court is whether by not exercising the power under Section 125, any illegality had been committed by the authorities. In view of my finding that it is not a _bona fide_ baggage and such materials could not have been imported without a valid licence, it amounts to a prohibition under any other law in force which squarely applies to the facts. Writ petition is, therefore, dismissed. Sd/- ## **A.M. SHAFFIQUE, JUDGE** Rp //True Copy// P.S to Judge