Guj HC | Goods seized by Customs Authority can be released after imposing fine and subjecting the party concerned to certain conditions

Gujarat High Court:  A Division Bench of Harsha Devani and Bhargav D. Karia, JJ. partially allowed a stay order for the release of diamonds confiscated by the Customs Department after imposing fine and some subsequent conditions. 

Custom Department seized rough diamonds valued at Rs 1,05,58,474 from the respondent herein for importing the same without Kimberley Processing Certificate (KPC), which is necessary for importing diamonds in India. The Adjudicatory Authority ordered absolute confiscation of the diamonds. Later, Customs, Excise and Service Tax Appellate Tribunal (CESTAT) reversed the order passed by the Adjudicatory Authority and ordered the release of the diamonds. The present application was filed by the Customs Department requesting a stay on the order of CESTAT.

Learned Counsel for the appellant, Dhaval D. Vyas, contended that an immediate stay should be put on the order passed by CESTAT because the respondent had failed to show lawful possession of diamonds. Furthermore, he had failed to show that the diamond had been imported after obtaining the KPC certificate, and in absence of the same, the Customs Department had discretionary authority in confiscating the diamonds. He further contended that the release of diamonds would put them into and irreversible situation.

Opposing the application, Paresh Dave, learned advocate for the respondent, submitted that the seized goods, namely, rough diamonds were not harmful goods and have no impact on the society. Moreover, rough diamonds are freely importable and are not dutiable. Thus, the violation committed was not so grave that the respondent should be deprived of his property and, therefore, redemption may be allowed subject to conditions. He relied on the judgment of the High Court in Commr. of GST v. Dharmesh Pansuriya, Tax Appeal No. 62 of 2018, dated 22-2-2018, wherein the Court had  permitted the gold bars valued at Rs 6.75 crores to be released upon payment of redemption fine of Rs 40 lakhs [5.92 per cent of the value of goods] and penalty of Rs 6 lakhs [1 per cent of the value of goods] and bank guarantee of Rs 1 crore.

The Court after hearing both the sides observed that to protect the interest of the revenue, the goods may be permitted to be released subject to certain conditions. Such conditions would be in line with the earlier orders. The Court finally ordered the release of the diamonds after paying 10 per cent as redemption fee and 1 per cent as fine. The Court further added that the respondent shall also file an undertaking before this Court that in the event, the applicant succeeds in the appeal and if absolute confiscation of the goods is ordered or the respondent is held liable to pay an amount more than the amount paid under this order, the respondent shall pay the differential amount that he may become liable to pay under such order.[Commr. of Custom v. Pravin R. Ajudiya, 2019 SCC OnLine Guj 808, decided on 08-05-2019 ]

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