YAMAL MANOJBHAI versus UNION OF INDIA & ORS on 4 May 2023

1. The present writ petition filed under Article 32 of the Constitutionof India raises an issue of huge importance of personal liberty underArticle 21 of the Constitution of India, regarding the right of an accusedunder the Customs Act, 1962 (hereinafter referred to as the ‘CustomsAct’) to settle the dispute as per provisions contained under chapterXIV A of the Customs Act.

2. The writ petitioner, who is a Non-Resident Indian (for short,‘NRI’), was arrested on 04.10.2022 at the Delhi International Airport. Itis the case of the respondent that petitioner had tried to smuggle highvalue goods, mainly watches through the green channel entrance, inorder to escape from paying duty on the same.

* Ed. Note: In view of divergence of opinion in terms of separate judgments pronouncedby Hon’ble Mr. Justice Krishna Murari and Hon’ble Mr. Justice Sanjay Karol, thematter was directed to be placed Hon’ble the Chief Justice of India for appropriateorders.

A

B

C

D

E

F

G

H

A

A3. On suspicion of the petitioner trying to smuggle goods throughcustoms, a detailed examination of the person and baggage of thepetitioner was conducted, and it resulted in the recovery of seven wristwatches, along with a few other high value goods. Since the petitionerappeared to have committed offences under Sections 132 and 135 ofthe Customs act, he was arrested on 05.10.2022. After the arrest, theBpetitioner herein then filed the present writ petition, wherein he soughtfor the issuance of directions for permission of home cooked food beinggranted to him.

4. The petitioner, being an NRI, has been unable to travel outsideIndia since 06.10.2022, and as such has been amenable to settle theCdispute by approaching the settlement commission under Section 127 ofthe Customs Act, by paying the dues and any interest accrued thereonto the customs department in accordance with law. However, for a wantof notice by the customs authorities to initiate the settlement process,the petitioner filed an I.A. seeking the same.D

5. In the abovementioned I.A. filed by the petitioner, an ex-parteorder dated 20.02.2023 was passed by this Court, wherein theCommissioner of Customs was directed to issue a show-cause notice tothe petitioner, to initiate the proceedings.

6. The respondent then, on being served the abovementioned ex-Eparte order, filed an application for a recall of the said order. Severalgrounds were raised on the issue of jurisdiction of the SettlementCommission to hear the said matter. Both the parties were heard atlength, and vide order dated 20.02.2023, the said ex-parte order wasrecalled.F

7. After the recall of order passed by this Court, both the partiesargued at length on merits, and during the course of the said arguments,an apparent conflict between two judgments of the Bombay High Courtand the Delhi High Court was brought to our notice by the petitioner, byway of an application for placing additional grounds, documents andGprayers. Thereafter, the matter was further argued on merits by thelearned counsel for both the parties, and judgment was reserved.

8. When the abovementioned conflict between the two High Courtjudgments was brought to our notice, it was pointed out to us by thelearned counsel appearing on behalf of the petitioner that such conflictbetween the two High Court judgments, if left unnoticed, has the potentialH

to cause great harm to accused persons charged under the CustomsAct, and deprive them of the power to invoke the remedy of settlement.

ANALYSIS

9. The issue of settlement under the Customs Act, which will bediscussed by us in detail below, essentially has the power to grant anaccused a remedy to obtain immunity from prosecution and penalty asprovided under Section 127(H) of the Customs Act. Such a right, if itremains under a cloud of ambiguity, may not only cause damage to thefundamental rights accrued to accused persons to live a dignified lifewithout fear of incarceration, and may needlessly force certain accusedpersons to be deprived of a free life outside the languish of custody.Further, such a circumstance may also result in contrary views beingtaken by different adjudicating authorities in identical cases, with similarfacts and circumstances.

10. The Settlement Commission, governed by chapter XIV A ofthe Customs Act, was inserted by virtue of Section 102 of the Finance(No.2) Act, 1998 (Act No. XXI of 1998), with the aim of settling issuesof tax evasion by virtue of a disclosure by the tax offender. Such adisclosure, if made bona fide, allowed for the tax evader to gain immunityfrom either fine or penalty. While at first glance, it may seem that sucha provision allows for offenders to escape penal consequences with nobenefit caused to the government, however, a deeper analysis of theprovisions would prove otherwise. The withholding of tax by taxoffenders, unlike most other offences, directly impacts the revenue ofthe country. Further, due to the complexities arising from such disputes,the adjudication of the same often takes a very long time. In such ascenario, wherein a long length of time consumed to resolve tax disputesdirectly affects the revenue, and resultantly the welfare of the country,the legislature found it imperative for the enactment of a beneficial andtime saving remedy, that would not only help the government in helpingreclaim the tax amounts due, but also incentivize persons to do the same.It is out of these considerations that the Settlement Commission wasborn, and as such, this backdrop must always be kept in mind whileadjudicating on issues of jurisdiction of the Settlement Commission.

PRELIMINARY OBJECTION

11. During the course of the hearing, a preliminary objection hasbeen raised by the learned counsel appearing on behalf of the respondent A

BC

DE

FG

H

Astating that since the original relief sought for was limited to the grant ofproviding home cooked meals to undertrial prisoners, this court is not theappropriate forum to decide on the present question of law and resolvethe conflict between the two High Court judgments.

12. In the present case at hand, as has been mentioned above, theBlearned counsels appearing on behalf of both the parties have argued atlength on the merits of the case and the point of law in question. Thesaid ambiguity in the impugned point of law, caused by the conflictingdecisions the two High Courts, has the potential to cause great harm tothe fundamental rights of accused persons presently dealing with similarlitigations, and future accused persons who might also have to deal withCsimilar litigations.

13. In such a scenario, wherein such a length of time has beendevoted by the parties and the court, this court sits in a unique positionwherein it is equipped with all the necessary knowledge to clear the saidambiguity. If such an opportunity to clear the said ambiguity is not exercisedDby this court, it would so happen that, at some point in the future, thiscourt would again be tasked with answering the same question of law,for which, a great length of time would again be spent by the court, tocomplete the same task which could have been dealt with at an earliertime. Such a lack of exercise of its jurisdiction by the court would notEonly increase the burden on the pendency of matters, but will also subjectlitigants from across the country to further pendency. It is thereforeimperative that this court, at this instance, remedy such a mischief, tosave the court and future litigants from multiplicity of proceedings andmischief caused by such ambiguity.

14. In so far as maintainability of the present writ petition onFgrounds of deviation from the initial prayer is concerned, it has been heldin a catena of judgments that this Court, under writ jurisdiction, is notbound by the relief sought and can go beyond the original relief in orderto meet the ends of justice. Further, in such a situation where there is aconflict of opinion on a legal issue between two High Courts, mereGtechnical objections can not be allowed to stand in the way of exercisingour powers conferred by way of Article 32 of the Constitution of India.

15. The reason why Article 32 is given such importance is becausethe state as an organ, if left without checks and balances, has the potentialto become a tyrannical institution that can take the civil and individualHliberties of its people for granted. To curb this inclination of the state at its very roots, the constitutional scheme envisaged an organ within thestate machinery, namely the judicial organ, which is vested with the powersto interfere with the tyrannical tendencies of the state. This organ, withthe Apex Court being at the helm of it, though functions within the state,in cases of violations of fundamental rights, also combats against it.

16. Further, the Constitution of India, amongst all the other rightsconferred by it, has placed civil and individual liberties at the highestpedestal. These civil and individual liberties, that act as a sword and ashield against the state, find their translation from ideal to enforceablerights through Part III of the Constitution.

17. One such right under Part III of the Constitution, which shieldsits people from the tyranny of the state, is Article 32 of the Constitution,which in itself is a fundamental right falling within part III of theconstitution, that exists to protect other fundamental rights. By way ofArticle 32, any action of the state that violates the fundamental rights ofa person, or causes harm to civil or individual liberties, is within thepurview of scrutiny of the Court.

18. During the constituent assembly debates, when the questionof the ambit of Article 32, which was then Article 25 of the draftconstitution, was posed, the makers of the Constitution deliberatedextensively on the scope of the said article and the extent of its powers.It was during these debates when Dr. B.R Ambedkar, very famouslystated that Article 32 is the very soul of the constitution. The said quoteby Dr. B.R Ambedkar is being extracted herein:- “Now, Sir, I am very glad that the majority of those who spokeon this article have realised the importance and thesignificance of this article. If I was asked to name anyparticular article in this Constitution as the most important–an article without which this Constitution would be a nullity–I could not refer to any other article except this one. It is thevery soul of the Constitution and the very heart of it and I amglad that the House has realised its importance.”

19. Further, Father Jerome D’Souza, a Member of the ConstituentAssembly, while emphasizing on the importance of Article 32 of theConstitution of India stated as follows:- “I should like to draw the attention of the House, Sir, to theimplications of this article, implications which possibly are A

B

C

D

E

F

G

H

A

B

C

D

E

F

G

H

not obvious at the first reading. This House, and through thisHouse the Legislatures that have to rule this country in future,by a laudable and significant act of self-denial or self-abnegation, places under the power of a Supreme Judicaturethe enforcement of certain laws and certain principles, andremove them from the purview and the control of theParliaments which will be elected in future years. They wishto put these rights beyond the possibility of attack or changewhich may be brought about by the passions and vicissitudesof party politics, by placing them under the jurisdiction ofjudges appointed in the manner provided for later on in thisConstitution. Sir, it is because we all believe,–and that is theimplication of this chapter of fundamental Rights,–that manhas certain rights that are inalienable, that cannot bequestioned by any humanly constituted legislative authority,that these Fundamental Rights are framed in this manner anda sanction and a protection given to them by this provisionfor appeal to the Supreme Court.

As I said, Sir, the implication of this is that an individual mustbe protected even against the collective action of people whomay not fully appreciate his needs, his rights, his claims. Andthe sacredness of the individual personality, the claims of hisconscience, are, I venture to say, based upon a philosophy,an outlook on life which are essentially spiritual. Sir, if allour people and their outlook were entirely materialistic, ifright and wrong were to be judged by a majority vote, thenthere is no significance in fundamental rights and the placingof them under the protection of the High Court. It is becausewe believe that the fullest and the most integral definition ofdemocracy includes and is based upon this sacredness of theindividual, of his personality and the claims of his conscience,that we have framed these rights.

I say, Sir, further that in the last analysis we have to make anappeal to a moral law and through the moral law to a SupremeBeing, if the highest and the fullest authority is to be givenand the most stable sanction to be secured for thesefundamental rights. Sir, Mahatma Gandhi, in one of hisunforgettable phrases, referring to the desire to have a secular Constitution and to avoid the name of the Supreme Being init, cried out, “You may keep out the Name, but you will notkeep out the Thing from that Constitution”. And, Sir, I believethat these fundamental rights and their implications are reallytantamount to a confession that beyond human agencies andhuman legislatures there is a Power which has to be submittedto, and there are rights which have to be respected.

By this article we give to our Supreme Judicature a power, astatus and a dignity which will call from them the highestqualities of integrity and uprightness. The full meaning ofthis article should be borne in mind when we come to thatPart of the Constitution beginning with article 103, when weshall have to scrutinize the steps by which an upright andabsolutely fair judiciary will be established in this land. Whenwe consider that Part, let us recall these Rights and makesure that all these various provisions will be enforced in ajust and fearless manner.”

20. It is in this background that Article 32 of the Constitution ofIndia has been brought into force, to ensure that the Supreme Court isalways equipped to tackle the other organs of the state, especially incircumstances wherein civil and individual liberties guaranteed by thefundamental rights are at risk.

21. Further, It has come to our notice that in the cases ofAdditionalCommissioner of Customs v. Ram Niwas Verma1,Commissionerof Customs v. Avinash Dawar & Anr2,and Commissioner of3Customs v. Jyotsana Chikersal & Anr., the High Court of Delhihas taken a contrary view from the decision of the Bombay High Court.In my humble opinion, such an ambiguity in law has been caused becauseof the lack of an authoritative pronouncement on the subject matter bythis Court. This lack of certainty in the law, has led to differentialoutcomes of similarly situated persons in different jurisdictions.

22. In such a circumstance, where similarly situated persons arebecoming victim to differential outcomes, this court must clarify such anambiguity, by resolving the conflict between the two sets of judgments, 1 2015 SCC Online Del 115422 2015 SCC Online Del 138753 2019 SCC Online Del 6574

AB

C

D

E

F

G

H

Ato ensure that the mischief caused by the conflicting views is erased,and the certainty in law is restored.

23. In light of the abovementioned discussions, we are not inclinedto agree with the preliminary objections raised by the respondent,regarding maintainability of the petition on mere technicalities andBaccordingly reject the same.CONFLICT BETWEEN THE TWO SETS OF HIGHCOURT JUDGMENTS

24. During the course of arguments on merits, the learned counselappearing on behalf of the petitioner herein placed strong reliance on theC4judgment ofUnion Of India vs Suresh Raheja & Ors. The petitionerin the abovementioned case was caught trying to smuggle goods throughthe green channel of entry. The seizure of the impugned goods therein,similar to the present case at hand, was conducted within the customsarea. Subsequent to the seizure, the petitioner therein was amenable toDsettle the dues, and seek relief under Section 127 of the Customs Act,however, the goods seized were explicitly mentioned in Section 123 ofthe Customs Act, which put a bar on settlement of cases under Section127 B of the said Act. The relevant paragraph of the said judgement isbeing extracted herein:- E“It is further required to be borne in mind that in so far originof the goods is concerned, there is no dispute in respect ofboth the jewellery as well as the watches. Therefore, thecontention of the Petitioner that the Respondents had failedto discharge the burden cast by Section 123 of the said Act ismis-founded. Once the origin of the goods was not in dispute,Fthe Respondents as held by the Settlement Commission wereentitled to invoke the jurisdiction of the Settlement Commissionand, therefore, the bar contained in the proviso to Section127B could not have come in their way. The finding of the:Settlement Commission in the aforesaid factual backgroundGthat the Respondents herein, who were the Applicants beforethe Settlement Commission, fulfill all the conditions laid downin Section 127(B) (1) of the said Act, can be said to be apossible view in the said factual background.”

25. While deciding on the said issue, it was held by the High Courtof Bombay that if an accused is caught within the customs area, the baron Section 127 of the Customs Act on goods mentioned under Section123 of the same Act is redundant, and the accused is entitled to theremedy of settlement.

26. Learned counsel appearing on behalf of the respondent, percontra, relied on the judgement ofAdditional Commission of Customsvs Ashok Kumar5. In this case, while the settlement application of thepetitioner was deemed to be maintainable, however, in paragraph 10 ofthe said judgment, a passing reference was made by the court statingthat the goods found on the person of the petitioner, since they did notfind mention under Section 123 of the Customs Act, were not barred bySection 127 of the same Act. The relevant paragraph of theabovementioned judgment is being reproduced herein:- “It is not in dispute that the present case is not covered byany of the provisos to Section 127B(1) of the Act. In otherwords, it does not fall under any of the excluded categoriesof cases. It may be noted at this stage that the decision inAdditional Commissioner of Customs v. Shri Ram Niwas Verma(supra), was a case where imported goods were covered underthe third Proviso to Section 127B(1) and, therefore, the saiddecision is distinguishable on facts.”

27. To clear this cloud of ambiguity, and to settle the conflictbetween these two sets of High Court judgments, we must first analyzeSection 123 and Section 127 B of the Customs Act. For the sake ofconvenience, the relevant Sections are being reproduced herein:- “123. Burden of proof in certain cases.

(1) Where any goods to which this section applies are seizedunder this Act in the reasonable belief that they are smuggledgoods, the burden of proving that they are not smuggled goodsshall be—

(a) in a case where such seizure is made from the possessionof any person,—

(i) on the person from whose possession the goods were seized;and 5 2016 (336) E.L.T 224 (Del)

A

B

C

D

E

F

G

A

B

C

D

E

F

G

H

(ii) if any person, other than the person from whose possessionthe goods were seized, claims to be the owner thereof, alsoon such other person; (b) in any other case, on the person, if any, who claims to bethe owner of the goods so seized.]

(2) This section shall apply to gold 2[and manufacturesthereof] watches, and any other class of goods which theCentral Government may by notification in the OfficialGazette, specify.

127B Application for settlement of cases.

(1) Any importer, exporter or any other person (hereinafterreferred to as the applicant in this Chapter) may, in respect ofa case, relating to him make an application, beforeadjudication to the Settlement Commission to have the casesettled, in such form and in such manner as may be specifiedby rules, and containing a full and true disclosure of his dutyliability which has not been disclosed before the proper officer,the manner in which such liability has been incurred, theadditional amount of customs duty accepted to be payable byhim and such other particulars as may be specified by rulesincluding the particulars of such dutiable goods in respect ofwhich he admits short levy on account of misclassification,under-valuation or inapplicability of exemption notification[ 254][or otherwise] and such application shall be disposed of inthe manner hereinafter provided: Provided that no suchapplication shall be made unless,—

(a) the applicant has filed a bill of entry, or a shipping bill, inrespect of import or export of such goods, as the case maybe, and in relation to such bill of entry or shipping bill, ashow cause notice has been issued to him by the proper officer; (b) the additional amount of duty accepted by the applicantin his application exceeds three lakh rupees; and

(c) the applicant has paid the additional amount of customsduty accepted by him along with interest due under section28AB:

Provided further that no application shall be entertained bythe Settlement Commission under this sub-section in caseswhich are pending in the Appellate Tribunal or any court:Provided also that no application under this sub-section shallbe made in relation to goods to which section 123 applies orto goods in relation to which any offence under the NarcoticDrugs and Psychotropic Substances Act, 1985 (61 of 1985)has been committed: Provided also that no application underthis sub-section shall be made for the interpretation of theclassification of the goods under the Customs Tariff Act, 1975(51 of 1975).

(1A) Notwithstanding anything contained in sub-section (1),where an application was made under sub-section (1) beforethe 1st day of June, 2007 but an order under sub section (1)of section 127C has not been made before the said date, theapplicant shall within a period of thirty days from the 1st dayof June, 2007 pay the accepted duty liability failing whichhis application shall be liable to be rejected.”

28. Section 123 of the Customs Act 1962, states that if an accusedis caught by the authorities in the act of smuggling goods, the burden ofproof, which originally vests with the prosecution, is reversed, and thesame is transferred from the prosecution to the defense. In simpler terms,this would mean that in such cases, it is the accused who is tasked withproving his innocence, rather than the prosecution proving the accusedperson’s guilt.

29. This discharge of burden of proof, in our opinion, can onlyhappen in cases where there is a reasonable possibility of the accusedbeing innocent. In the present case at hand, the petitioner herein wascaught with the impugned goods within the customs area. In such ascenario, where the impugned goods are found on the person of theaccused and within the customs area, any chance of the accused beinginnocent becomes an impossibility, since the illegal act is caught in theheat of the crime.

30. Since the discharge of burden proof, rather, the question ofburden of proof itself becomes redundant in cases of seizures within thecustoms area, by default, the provision that mandates such a task also A

B

C

D

E

F

G

H

Abecomes redundant. In light of the abovementioned discussion therefore,in cases of seizure within the customs area, Section 123 of the CustomsAct cannot apply and hence, the decision in the Suresh Judgement(Supra)passed by the High Court of Judicature at Bombay states thecorrect position of law. It must also be noted that the abovementioneddecision of the High Court of Bombay was impugned in appeal beforeBthis Court, and vide order dated 14.09.2011, this Court had concurredwith the decision of the High Court and dismissed the appeal of therevenue. Since the facts and circumstances of the case herein are identicalto the abovementioned case, we find no cogent reason to take a differentview herein.

C

31. In light of the abovementioned facts and discussions, we areof the opinion that judgment rendered by the High Court of Bombay intheSuresh judgment (Supra)expounds the correction position of law,and we concur and approve the same.

32. While the conflict between the two sets of High CourtDjudgments has been brought to an end, certain other issues flowing fromthe said interpretation, in our opinion, must also be clarified.

33. The learned counsel for the respondent, through his submissions,contended that a non-declaration of goods, as mandated by Section 77of the Customs Act, ousts the jurisdiction of the Settlement Commission.ETo bring clarity to the said contention, we must first shed light on the twomodes of clearance of incoming passengers, which are the red channelmode of entry and the green channel mode of entry.

34. When an incoming passenger goes through customs verification,Fhe has two options of clearances, which are the red channel mode ofentry and the green channel mode of entry. When an incoming passengeravails the red channel mode of entry, it is accepted by the passenger thatthey have goods that are liable for duty, and hence, by virtue of theirown admission, are mandated declare the goods that require duty as perSection 77 of the Customs Act.G

35. If a passenger opts for the green channel mode of entry, itimplies that the passenger, by virtue of not opting for the red channelmode of entry, is stating that he has no goods that are liable to duty, andhence, it is deemed that they are making a declaration under Section 77of the Customs Act of carrying “Nil” dutiable goods.

H

36. However, if a passenger decides to opt for the green channelof entry, but, is still found with goods that are subject to the levy ofduty, they become liable to confiscatory and penal action as per theCustoms Act. Since they become subject to the penal provisions of theCustoms Act, by default, it must also be implied that they are given thebenefit of settlement as per the same Act. No surgery in such a scenariocan be done, wherein the accused is held liable of the penalconsequences of the act, however, is denied the benefit of remedyunder the same Act.

37. Further, if we were to accept the proposition that a non-declaration under Section 77 of the Customs Act would automaticallybar the incoming passenger from availing the benefit of settlement, inlight of our observation that an entry through the green channel modeimplies a declaration of “Nil” goods under Section 77 of the Act , theprovision of settlement would become irrelevant and defunct, since noaccused would ever be able to avail the benefits of settlement.

38. Therefore, in light of the above discussion, we see no reasonas to why such a person cannot opt for a statutory remedy of settlement,and therefore reject the objection of the respondents in this regard.

39. We then come to the last issue that warrants our consideration.The learned counsel appearing on behalf of the respondent contendedthat any person who importing the impugned goods at the instance ofanother person, is a smuggler, and as such, the Settlement Commissioncannot be approached in such cases.

40. This contention made by the learned counsel appearing onbehalf of the respondents, in our opinion, is also bad in law. In the caseof Tata Teleservices (Maharashtra) Ltd vs Union Of India 20066,the High Court of Judicature at Bombay, while deciding on a similarissue, by relying on the Constitution Bench judgment of this court in thecase ofLilavati Bai v. State Of Mysore7, gave the phrase “or otherwise”,as mentioned in Section 127 B of the Act, an expansive interpretation,and held that the jurisdiction of the Settlement Commission can be invokedby a person who has committed smuggling, fraud or deliberate 6 (201) ELT 529 (Bom)

7 AIR 1957 SC 521

A

B

C

D

E

F

G

Amisdeclaration. The relevant paragraph of the judgment delivered by theHigh Court of Bombay is being reproduced herein:- “46..... On the contrary, in the Customs Act, the provisionmakes it mandatory that the Applicant can file an applicationonly after show cause notice is issued, which show causeBnotice as we have pointed out hereinabove, would pertaineven to confiscation. i.e. to say the person who has committedfraud or smuggling or deliberate misdeclaration would onlyreceive such show cause notice and such a show cause noticeis essential ingredient before making an application.…”

C

41. Further, the abovementioned judgment of the Bombay highcourt was impugned in the Supreme Court by way of an appeal, and thesame was dismissed by this Court vide order dated 03.08.2011, furtherfortifying the judgment of the High Court.

42. On the basis of the abovementioned discussions, we are ofDthe opinion that the contention of the respondent even in this regard isliable to be rejected.

CONCLUSION

43. By way of additional submissions made by the petitioner, itEhas been brought to our notice that the Commissioner of Customs hasissued a show cause notice to the petitioner. Since a show cause noticehas already been issued, no direction is that regard is warranted. If anapplication of settlement is filed by the petitioner, the same shall be dealtwith by the Settlement Commission on its own merits and in accordancewith law and the procedure prescribed u/s 127H of the Customs Act.FHowever, we deem it appropriate to observe that, if at all, the SettlementCommission would deem fit, it can always seek further report from the“Commission (Investigation)” appointed within the Settlement Commissioneven after issuance of the show cause notice for this one time opportunityof settlement.

G

44. We refrain from making any observations on the merits ofthe case and leave the same for consideration by the SettlementCommission.

45. The Writ petition along with application therein are,accordingly, disposed of.H

SANJAY KAROL, J.

1. I have perused the erudite opinion proposed by my esteemedbrother, Hon’ble Mr. Justice Krishna Murari. Respectfully, I am unableto persuade myself to agree; hence, I separately pen down myconclusions.

2. Two issues arise for consideration before us; One whether asettlement remedy under Section 127B of the Customs Act, 1962, wouldbe available for the seized goods, which are specified under Section 123of the said Act? Two, would, in the attending facts, the exercise ofpowers under Article 32 of the Constitution of India be appropriate?

Nature, Scope, Purpose and Scheme of Customs Act

3. The Customs Act, 1962 (hereafter referred to as the Act) wasenacted to consolidate the provisions relating to sea customs, landcustoms and air customs into one comprehensive measure. It is an actto sternly and expeditiously deal with smuggled goods and curbs thedents on the revenue thus caused. The act provides for the confiscationof goods and imposition of penalties when any goods are imported contraryto prohibitions imposed [Commissioner of Customs v. M. Ambalal,(2011) 2 SCC 74 (2-Judge Bench)].

4. To understand the legislative intent behind the Act, it is importantto discuss the scheme therein.

5. Chapter II of the Act relates to the appointment of customsofficers and their powers under the Act.

6. Chapter III specifies the appointment of customs ports andairports wherein imported goods shall be unloaded, and export goodsshall be loaded & cleared.

7. Chapter IV empowers the Central Government to prohibitthe importation or exportation of goods for the purposes mentionedtherein, such as maintaining the security of India and preventingsmuggling.

8. Chapter IVA provides for the detection of illegally importedgoods and the prevention of their disposal.

9. Chapter V specifies the imposition of customs duties andexemption therefrom.

A

B

C

D

E

F

G

H

A10. Chapter VII pertains to the clearance of imported and exportedgoods. This chapter also deals with the procedure employed when goodsare not cleared.

11. Chapter XI elucidates special provisions regarding baggage,goods imported or exported, and the required declaration. In this Chapter,BSection 83 allows for the duty rate and tariff to be imposed on goodsimported or exported.

12. Chapter XIII provides for powers relating to searches, seizureand arrest. In this Chapter, an officer of customs is empowered to arresta person under Section 105 if he has reason to believe that such a personCmay have made a false declaration (Section 132), obstructed a customsofficer (Section 133) or evaded customs duty that is liable to be paid(Section 135). Furthermore, Section 108B penalises failure to furnishinformation as directed by the proper officer.

13. Chapter XIV allows for the confiscation of goods and theDimposition of penalties. Sections 111 and 112 thereunder enumerate a listof goods which are liable for confiscation and the penalty thereof. Section123 reverses the burden of proofs of certain specified seized goods.

14. Chapter XIVA contains the mechanism for the settlement ofcases.

E15. Chapter XVI of the Act lays down offences and prosecutionunder the Customs Act. This chapter imposes, as a penalty, imprisonmentfor certain offences. They are: making a false declaration relating tocustoms (Section 132; may extend to 1 year), obstruction of an officerof customs (Section 133; may extend to 1 year), refusal to be X-rayed(Section 134; may extend to 6 months) and evasion of duty or prohibitionsF(Section 135; may extend to seven years).

E

16. Given the above, it is evident that the scheme of the act involvesthe imposition of customs duty, confiscation of goods and consequencesof skirting or attempting to skirt the same in the form of varied penalconsequences, including imprisonment. This follows the purpose of theGAct, as noted by this Court in Ambalal (supra), which is to sternly andexpeditiously deal with goods smuggled into India in contravention of theprohibitions within the law.

17. Considering the intention of the Act as above, I now discussthe sections pertaining to the controversy at hand: Section 123 and SectionH127B of the Act.

18. Section 123 of the Act elucidates the burden of proof in certaincases. It reads as follows:

“123. Burden of proof in certain cases.—

(1) Where any goods to which this section applies are seizedunder this Act in the reasonable belief that they are smuggledgoods, the burden of proving that they are not smuggled goodsshall be—

(a) in a case where such seizure is made from the possessionof any person,—

(i) on the person from whose possession the goods were seized;and (ii) if any person, other than the person from whosepossession the goods were seized, claims to be theownerthereof, also on such other person; (b) in any other case, on the person, if any, who claims to bethe owner of the goods so seized.

(2) This section shall apply to gold [and manufacturesthereof],watches, and any other class of goods which theCentral Government may by notification in the OfficialGazette, specify.”

19. Section 127B of the Act pertains to the application procedurefor the settlement of cases by a person in respect of a case pendingadjudication. Importantly, the proviso to the said states that no applicationshall be made concerning goods to which Section 123 applies. It readsas follows:

“127B. Application for settlement of cases.—

(1) Any importer, exporter or any other person (hereinafter referred to as the applicant in this Chapter) may, in respect ofa case, relating to him make an application, beforeadjudication to the Settlement Commission to have the casesettled, in such form and in such manner as may be specifiedby rules, and containing a full and true disclosure of his dutyliability which has not been disclosed before the proper officer,the manner in which such liability has been incurred, theadditional amount of customs duty accepted to be payable byhim and such other particulars as may be specified by rules A

B

C

D

E

F

G

H

A

including the particulars of such dutiable goods in respect ofwhich he admits short levy on account of misclassification,under-valuation or inapplicability of exemption notification[or otherwise] and such application shall be disposed of inthe manner hereinafter provided :

BProvided that no such application shall be made unless,—

(a) the applicant has filed a bill of entry, or a shippingbill, in respect of import or export of such goods, as thecase may be, and in relation to such bill of entry or shippingbill, a show cause notice has been issued to him by theproper officer; C

(b) the additional amount of duty accepted by the applicantin his application exceeds three lakh rupees; and

(c) the applicant has paid the additional amount of customsduty accepted by him along with interest due under sectionD28AB:

Provided further that no application shall be entertained bythe Settlement Commission under this sub-section in caseswhich are pending in the Appellate Tribunal or any court :Provided also that no application under this sub-section shallEbe made in relation to goods to which section 123 applies orto goods in relation to which any offence under the NarcoticDrugs and Psychotropic Substances Act, 1985 (61 of 1985)has been committed : Provided also that no application underthis sub-section shall be made for the interpretation of theFclassification of the goods under the Customs Tariff Act, 1975(51 of 1975).”

E

(Emphasis Supplied)

20. The Petitioner contends that Section 123 of the Act would notapply in the present case for Settlement, as the goods of admitted foreignorigin stand seized within the customs area upon crossing the greenGchannel. The Petitioner has placed reliance on the judgment of theBombay High Court in Union of India v. Suresh Raheja, 2011 (267)E.L.T. 487 (Bom.), wherein the High Court observed that in a situationwhere there is no dispute as to the origin of the goods, the bar containedin the proviso to Section 127B would not come in the way, in respect ofHthe specified goods under Section 123.

21. Furthermore, the Petitioner contends that the legislative objectis to open doors for settlement and not to rigidly construe beneficialprovisions in a mechanical manner that would prevent settlement of cases.

A

Analysis and Reasoning

22. This is the plan and simple construction of the statute. On aplain reading of Sections 127B and 123, it is evident that the proviso toSection 127B(1) specifies certain categories of goods are barred fromthe jurisdiction of the settlement commission. These include goodsmentioned under Section 123 and goods relating to the NDPS Act.Therefore, recourse under Section 127B cannot be made if any of theabove goods are involved B

C

23. Even without any controversy about the origin of the goods,Section 127B of the Act would not apply for settlement in respect of thegoods enumerated under Section 123 as this goes against the statutoryscheme of penal consequences for committing certain offences such asfor evading duty, as alleged in the present case, under Section 135.

D

24. Hence, the contention of the Petitioner that the legislativeintent is for settlement of all cases cannot be accepted.

25. Further, Section 127B lays down specific conditions for itsapplication, and the proviso provides categories of goods whereinsettlement cannot be undertaken. This makes it evident that Section127B is not meant to be applied in all categories of cases. Only in thefollowing circumstances can an application be made to the settlementcommission:

E

a)the applicant has filed a bill of entry, or a shipping bill, inrespect of the import or export of such goods, as the caseFmay be, and in relation to such bill of entry or shipping bill,a show cause notice has been issued to him by the properofficer; (b)the additional amount of duty accepted by the applicant inhis application exceeds three lakh rupees; G

(c) the applicant has paid the additional amount of customs dutyaccepted by him along with interest due under section 28AB:and (d)the proviso to Section 127B is not attracted.

H

A26. Furthermore, as discussed above, the scheme of the Actinvolves payment of fines and/or imprisonment for offences enumeratedunder Chapter XVI. All offences, under the Act, cannot be permitted togo before the Settlement Commission under Section 127B. This wouldmake the legislative intent behind the proviso to Section 127B, whichbars certain goods, including those mentioned under Section 123 andBgoods which are prohibited under the Narcotic Drugs PsychotropicSubstances Act, 1985, redundant. Importantly, as a consequence of suchan interpretation being accepted, the power to prohibit the importation ofgoods for the maintenance of security of India under Section 11, thepowers of arrest under Section 105, the power to summon under SectionC108, confiscation under Section 111 and offences for which imprisonmentmay be given from Sections 132 to Section 135 would have no application,thereby making the respective legislative provisions in effect, null. Asprayed for by the Petitioner, such an interpretation would allow a personimporting goods without declaration to evade confiscation and criminalprosecution by simply taking recourse under Section 127B. The deterrentDof criminal prosecution would stand vitiated.

It is observed that the Delhi High Court has taken a view contraryto that taken by the Bombay High Court in this regard.

26.1 In Additional Commissioner of Customs v. Ram NiwasEVerma, 2015 SCC Online Del 11542 (2-Judge Bench of the DelhiHigh Court), there was a recovery of 6452 grams of gold from theRespondent therein. He was crossing through the green channel butwas intercepted by the Customs Officer. The Court stated that it isevident that no application for settlement can be made if it relates togoods to which S.123 applies.F

26.2 In Commissioner of Customs v. Avinash Dawar & Anr.,2015 SCC Online Del 13875 (2-Judge Bench of the Delhi High Court),the Settlement Commission held that since there is an admission of illicitimportation, shifting of burden as contemplated under Section 123 ofCustoms Act, is not required. The Court, while setting aside this order,Gstated that upon a plain reading of the provisions, an application underSection 127B could not be made in respect of ‘gold’, which is specificallyan item listed under Section 123 applies.

26.3 The decisions in Ram Niwas Verma (Supra) and AvinashDawar (Supra) have been followed in Commissioner of Customs v.HJyotsna Chikersal and Anr., 2019 SCC Online Del 6574 (2-Judge Bench of the Delhi High Court)where a recovery of 6 gold bars wasmade from the Respondent therein. No declaration or disclosure wasmade in the disembarkation slip or the customs area. The Court heldthat a conjoint reading of these two provisions clearly bears out that thejurisdiction of the Commission to settle cases involving goods referred toin Section 123(2) is excluded.

26.4 Significantly, in the abovementioned cases, the decision ofthe Delhi High Court in Commissioner of Customs v. Ashok KumarJain, 2013 (292) ELT 32 (Del), wherein settlement application under127B was allowed for watches recovered, has been distinguished on theground that the said decision did not consider Section123 and theconsequent bar therein.

26.5 It is also pertinent to note that the reasoning in Suresh Raheja(supra) was given in the facts and circumstances of that case, whereinthe entire baggage, including the watches, had become wet and affectedby the floods.

27. In the present case, the recovery from the Petitioner was oncrossing the green channel at the Delhi airport on 05.10.2022, whereinthe officers of the Investigating Agency apprehended him with dutiablegoods, including watches of admitted foreign origin. Watches is one ofthe categories of goods mentioned in Section 123 of the Act. Since thereis a recovery of goods to which Section 123 applies, the same is a barfor the Petitioner to approach the Settlement Commission. The matter,in my view, is fit to be remitted to the adjudicating authorities to takeappropriate action, as per law.

Writ Jurisdiction under Article 32

28. I have considered the law on the merits of the dispute; however,it is also essential to consider the maintainability of the presentproceedings since the Petitioner has invoked Article 32 of the Constitutionof India.

29. It is well-settled law that this Court has wide powers whenthe violation of fundamental rights is alleged under Article 32 of theConstitution. However, such intervention must be made on a case-by-case basis and only when a fundamental right question arises.

30. In Northern Corporation v. Union of India, (1990) 4SCC 239 (2-Judge Bench), this Court dealing with the issue ofenforcement of the provisions of the Customs Act, in a petition filed A

B

C

D

E

F

G

H

Aunder Article 32, observed that the Petitioner has no fundamental rightas such to clear any goods imported in accordance with the law.Furthermore, it was held that it could not be contended that enforcingprovisions of the Act would breach fundamental rights which entitle acitizen to seek recourse to Article 32 of the Constitution. Therefore, thewrit petition was rejected.B

31. In Dalip Singh v. State of U.P. & Ors., (2010) 2 SCC 114(2-Judge Bench), the imperative nature of putting forward all facts andseeking an appropriate relief was reiterated.

32. The Petitioner approached this Court through Writ PetitionCNo. 55/2023, praying only for the grant of a writ of mandamus for home-cooked food for under-trial prisoners (This question is pendingconsideration by this Court in other writ petitions). Only subsequentlywas an Interlocutory Application filed seeking the relief concerning themerits of the present dispute, i.e. direction to Respondent No. 2 (CustomsAuthority) for settlement under Section 127B of the Customs Act, 1962.D

33. This approach taken by the Petitioner, in my view, isunwarranted and undesirable if not malafide for not exhausting theappropriate alternative remedies. Under the garb of relief purportedlyrelating to fundamental rights, the relief sought in the instant IA, is statutoryin nature- under the Act i.e. for an application of settlement to be decided.

E

34. Recourse to the fundamental right to approach this Court hasto be permitted in cases where the fundamental rights of the Petitionerhave been infringed. Herein, no such infringement is made out. Nomaterial has been brought on record displaying that the CustomsDepartment has proceeded in a manner contravening the ConstitutionalFmandate.

35. Therefore, given the above, the present application is liable tobe dismissed on maintainability. It is also to be noted that the practice ofcircumventing the well-established principles for the exercise of the powerof Article 32 should not be encouraged.

G

In the abovementioned terms, the writ petition, along withinterlocutory applications, are disposed of.

H

Divya Pandey(Assisted by : Roopanshi Virang, LCRA)

Matter to be placed before Hon’ble CJI.