KOMAL JAIN Vs. UNION OF INDIA

JUDGEMENT

(1.) This writ petition concerns the manner of application of Section 127B of the Customs Act, 1962 ("the Act"). The petitioner, was served a show cause notice dated 6th September, 2013, under Section 124 of the Act which alleged that he admitted to smuggling, into India, 36565.33 grams of gold jewellery and coins ("the articles") valued at Rs.9,79,77,154/- and involving customs duty at the applicable baggage rate of 36.50%, which had, consequently, become liable to confiscation under Clause (d), (i), G), (1) and (m) of Section 111 of the Act. Consequently, the said show cause notice called upon him to show cause against confiscation of the articles as well as the packing material and two bags in which they were alleged to be contained. The notice further proposed penalty under Sections 112 and 114AA of the Act.

(2.) The petitioner claims that he is desirous of approaching the Customs and Central Excise Settlement Commission ("Settlement Commission") under Section 127C of the Act. It is however argued that he is handicapped from doing so on account of clause (c) of the first proviso to Section 127B, which prohibits making of any settlement application unless the applicant has paid the additional amount of customs duty accepted by him along with interest due under Section 28AB of the Act. It is argued that in this case, the show cause notice does not propose any duty liability, and thus, in the absence of any demand having been made at this juncture, the application to the Settlement Commission need not be supported by any payment. While the petitioner admits duty liability for the gold sought to be brought into India, it is argued that the said duty is payable only if redemption of the gold jewelry and coins is allowed by the Settlement Commission.

(3.) In support of this proposition, learned counsel for the petitioners places reliance on COMMISSIONER OF CUSTOMS, MUMBAI vs. Jagdish Cancer and Research Centre, 2001 132 ELT 257. Since the show cause notice does not propose any duty demand, argues counsel, no liability has yet arisen. Therefore, any precondition for payment to approach the Settlement Commission is not justified under law. It is argued that such a deposit would lead to an absurdity, in that the money is paid by an assessee even before it is due in law, and if the Settlement Commission were not to allow the redemption of goods, the duty would stand deposited and become practically irrecoverable, even if there was no liability ultimately. Such an interpretation, which results in an arbitrary extraction of property of a citizen, must be avoided, argues learned counsel. In the peculiar circumstances presented in this case, it is argued that the requirement to deposit must be excluded, so as to provide Section 127B a workable meaning.