Availability of Settlement Remedy to NRI for Mis-Declaration of Goods under Customs Act: Supreme Court gives Split Verdict, Refers Matter to CJI [Read Order]

The Supreme Court of India in its recent judgement gives a split Verdict directing to place the matter before the Chief Justice of India for appropriate orderssince there was a divergence of opinion on the availability of settlement remedy to Non-Resident Indian (NRI) for misdeclaration of goods under Customs Act, 1962. Yamal Manojbhai, the writ petitioner is an NRI who was arrested on 04.10.2022 at the Delhi International Airport as he had tried to smuggle high-value goods, mainly watches through the green channel entrance, to escape from paying duty on the same. On suspicion of the petitioner trying to smuggle goods through customs, a detailed examination of the person and baggage of the petitioner was conducted, and it resulted in the recovery of seven wristwatches, along with a few other high-value goods. Since the petitioner appeared to have committed offences under Sections 132 and 135 of the Customs Act, he was arrested on 05.10.2022. After the arrest, the petitioner filed the writ petition, wherein he sought the issuance of directions for permission for home-cooked food to be granted to him. The petitionerhas been unable to travel outside India since 06.10.2022, and as such has been amenable to settling the dispute by approaching the settlement commission under Section 127 of the Customs Act, by paying the dues and any interest accrued thereon to the customs department by law. In situations like where there is a conflict of opinion on a legal issue between two High Courts, mere technical objections can not be allowed to stand in the way of exercising our powers conferred by way of Article 32 of the Constitution of India. The petitioner placed strong reliance on the judgment of Union Of India vs Suresh Raheja & Ors . and stated that the petitioner therein case was amenable to settle the dues and seek relief under Section 127 of the Customs Act, however, the goods seized were explicitly mentioned in Section 123 of the Customs Act, which put a bar on settlement of cases under Section 127 B of the said Act. It was held by the High Court of Bombay that if an accused is caught within the customs area, the bar on Section 127 of the Customs Act on goods mentioned under Section 123 of the same Act is redundant, and the accused is entitled to the remedy of settlement. Section 123 of the Customs Act 1962, states that if an accused is caught by the authorities in the act of smuggling goods, the burden of proof, which originally vests with the prosecution, is reversed, and the same is transferred from the prosecution to the defence. The court observed that the discharge of the burden of proofcan only happen in cases where there is a reasonable possibility of the accused being innocent. It was observed that if a passenger opts for the green channel mode of entry, it implies that the passenger, by not opting for the red channel mode of entry, is stating that he has no goods that are liable to duty, and hence, it is deemed that they are making a declaration under Section 77 of the Customs Act of carrying “Nil” dutiable goods. Justice Krishna Murari held that the respondent cannot object to the petitioner from statutory remedy of settlement. In the dissenting judgement, Justice Sanjay Karol observed that even without any controversy about the origin of the goods, Section 127B of the Act would not apply for settlement in respect of the goods enumerated under Section 123 as this goes against the statutory scheme of penal consequences for committing certain offences such as for evading duty, as alleged in the present case, under Section 135. It was held that the contention of the Petitioner that the legislative intent is for the settlement of all cases cannot be accepted. He further dismissed the present application on maintainability since there is no infringement of Fundamental rights. Further held that “the practice of circumventing the wellestablished principles for the exercise of the power of Article 32 should not be encouraged.” Support our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates