2002.26 gm Gold Bar Smuggling Case: Manipur HC dismisses Revenue's appeal as Value falls Below Threshold Limit of Rs. 1 Cr [Read Order]

R.K. Swami Singh , the respondent was intercepted by the Officers of Imphal Customs at Luwangshangbam near NRL Petrol Pump along National Highway No. 39 at around 2:00 pm and found 12 pieces of gold biscuits, total weighing 2002.26 grams approximately and worth of ₹ 49,74,605/- (Rupees Forty Nine Lakhs Seventy Four Thousand Six Hundred Five) from his possession.

Know Practical Aspects of Tax Planning, Click Here

As the respondent was not having any document for the illicit importation and without payment of customs duty, the gold was seized under Section 110(1) of the Customs Act, 1962. On interrogation, the respondent disclosed that the gold was handed over to him by one Shri Ramaswami at Moreh Bazar on 20.06.2014 for the purpose of transporting from Moreh to Guwahati and promised him to pay ₹ 12,000/- (Rupees Twelve Thousand) only as carrier charges.

Under Section 104 of the Customs Act, 1962, the respondent herein was arrested and produced before the Chief Judicial Magistrate, Imphal West/East on 21.06.2014 and remanded in judicial custody till 05.07.2014. On 14.11.2014, the Additional Commissioner, Customs (Preventive), NER, Shillong issued Show Cause Notice to the respondent to submit explanation within 30 (thirty) days as to why the seized gold biscuits should not be confiscated under section 111(b)(d) of Customs Act, 1962 and as to why penalty should not be imposed upon him under Section 112(b)(ii) of the Customs Act, 1962. However, the respondent herein failed to file reply to the Show Cause Notice.

The Additional Commissioner (Preventive), NER, Shillong directed the respondent herein to pay a penalty of ₹10,00,000/- (Rupees Ten Lakhs) only under Section 112(b)(ii) of the Customs Act, as the seized gold biscuits has been illegally imported from Myanmar to India via Moreh in violation of Section 7(i)(b)(c) of the Customs Act, 1962.

Want a deeper insight into the Income Tax Bill, 2025? Click here

The respondent herein filed an appeal being Order-in-Appeal No. 37/CUS(A)/GHY/15 before the Commissioner (Appeals), Customs and Central Excise, Guwahati and the same was rejected vide order dated 30.11.2015 and the Order-in-Original dated 31.07.2015 was upheld.

The respondent filed an appeal against the Order-in-Appeal before the Customs, Excise & Service Tax Appellate Tribunal (CESTAT), Eastern Zonal Bench Kolkata, Regional Bench, Court No. 1 and vide order dated 29.04.2024, the Customs Appeal No. 75171 of 2016 was allowed with the observation that provisions of Section 123 of Customs Act, 1962 are not applicable, as it was not established that the gold is of foreign origin and the penalty imposed on the respondent herein is not sustainable under Section 112(b)(ii) of the Customs Act, 1962.

The Ministry of Finance, Government of India issued INSTRUCTION dated 11.08.2011 prescribing financial limits for preferring appeals before Supreme Court, High Court and CEGAT as ₹ 25,00,000/- (Rupees Twenty Five Lakhs), ₹ 10,00,000/- (Rupees Ten Lakhs) and ₹ 5,00,000/- (Rupees Five Lakhs) respectively.

The Finance Ministry issued another INSTRUCTION dated 02.11.2023 further enhancing the financial limits for preferring appeal to ₹ 2 crore, ₹ 1 crore and ₹ 50 lakhs for the Supreme Court, High Court and CESTAT respectively and in Para 2, three exceptions are carved out for preferring appeal notwithstanding the financial limits.

Mr. N. Brojendro, the counsel of the appellant submitted that Customs Duty/Tax dispute may arise only in cases of duty payable where goods are legally imported and subjected to assessment of customs duty upon filling the Bill of import, etc. It is also reiterated that the monetary limit for filling Appeal has been prescribed only for such revenue matters/ disputes involving realization of duty and other levies.

How to Audit Public Charitable Trusts under the Income Tax Act Click Here

The learned counsel further submitted that the issue involved in the present Appeal is not customs duty/tax dispute but a case of outright smuggling of gold and confiscation thereof as well as imposition of penalty. The core issue involved in the present case is illegal importation of gold in violation of the Customs Act, 1962 which is liable to be confiscated by the authorities under the said Act. It is submitted that such cases are not covered within the monetary limit prescribed under the Circular F.No. 390/Misc./30/2023-JC dated 02.11.2023 (Annexure X/3) issued by the central Board of Indirect Taxes & Customs.

The counsel of the appellant further submitted that the circular dated 02.11.2023 prescribing monetary limit for filling appeal by the customs authorities does not cover the present case as the issue involved is smuggling of gold and order has been issued by the competent authority for confiscation of the goods as well as for imposition of penalty without any right to the delinquent/respondent to redeem the goods upon payment of duty, penalty etc. (u/s 125 option to pay fine in lieu of confiscation under Customs Act 62).

It may be noted that Central Board of Excise & Customs [in short, CBEC], Department of Revenue, Ministry of Finance, Government of India issued an INSTRUCTION dated 17.08.2011 stipulating that no appeal shall be filed before CESTAT, High Courts and Supreme Court, if the monetary limits are below₹5,00,000/- (Rupees Five Lakhs), ₹10,00,000/- (Rupees Ten Lakhs) and₹25,00,000/- (Rupees Twenty Five Lakhs) respectively.

However, in Para 3 of theInstruction, it has been mentioned that ‘Adverse judgments’ relating to two aspects- (a) Where the constitutional validity of the provisions of an Act or Rule is under challenge; and (b) Where the Notification/Instruction/Order or Circular has been held illegal or ultra vires. Except for these two conditions, no appeal lies against any order if the amount involved is below the monetary limits prescribed by the Instruction.

CBEC issued another INSTRUCTION dated 02.11.2023 in partial modification of the earlier Instruction dated 17.08.2011 thereby increasing the monetary limits of filing appeal before CESTAT, High Courts and Supreme Court,above ₹50,00,000/- (Rupees Fifty Lakhs), ₹1,00,00,000/- (Rupees One Crore) and ₹2,00,00,000/- (Rupees Two Crore) respectively. Hence, ₹50 lakh, ₹1 Crore and ₹2 Crore are the new monetary limits threshold for filing appeal.

How to Compute Income from Salary with Tax Planning, Click Here

From a bare perusal of the Instruction dated 02.11.2023, it is seen that only on satisfaction of any of the three conditions, i.e., where the matter involves challenge to the constitutional validity of an Act/Rule; where the Notification/Instruction/Order/ Circular has been held illegal; or where classification and refund issues are legal/ recurring in nature, appeal will be maintainable irrespective of the monetary limits. With respect, we are not able to agree with the decision of the Meghalaya High Court that appeal will be maintainable notwithstanding the monetary limits, if the goods under investigation is smuggled.

The ‘smuggled goods’ is not included in any of the three conditions laid down in Para 2 of the Instruction dated 02.11.2023 and the same is incorporated by judicial interpretation. Such a construction of statute cannot be adopted when the wordings in the relevant rules are clear. Even if the ‘smuggled goods’ has to be read into Para 2 as held by Meghalaya High Court, the decision will not be applicable to the facts of the present case.

The Customs, Excise & Service Tax Appellate Tribunal, Kolkata has held that the authority could not establish that the gold bars were smuggled into India.

The Chief Justice, Mr. K. Somashekar and Justice A. Guneshwar Sharma viewed that “Since the total value of the gold bars of ₹49,74,605/- (Rupees Forty Nine Lakhs Seventy Four Thousand Six Hundred and Five) only along with the penalty of ₹10,00,000/- (Rupees Ten Lakhs) only is less than the minimum threshold limit of ₹1 crore for filing appeal before High Court in terms of the Instruction dated 02.11.2023, the present appeal is not maintainable and hence the same is dismissed on this ground alone.”

Support our journalism by subscribing to Taxscanpremium. Follow us on Telegram for quick updates