IN THE SUPREME COURT OF INDIA

CRIMINAL ORIGINAL JURISDICTION

WRIT PETITION (Crl.) NO. 55 OF 2023

YAMAL MANOJBHAI … PETITIONER(S)

VERSUS

UNION OF INDIA & ORS. … RESPONDENT(S)

ORDER

In view of divergence of opinion, Registry is directed to place this matter

before Hon’ble the Chief Justice of India for appropriate orders.

….......…….……....……….,J.

(KRISHNA MURARI)

…..…..…....…................…,J.

(SANJAY KAROL)

NEW DELHI;

04

th

MAY, 2023

1 2023 INSC 498

REPORTABLE

IN THE SUPREME COURT OF INDIA

CRIMINAL ORIGINAL JURISDICTION

WRIT PETITION (Crl.) NO. 55 OF 2023

YAMAL MANOJBHAI …PETITIONER(S)

VERSUS

UNION OF INDIA & ORS. … RESPONDENT(S)

JUDGMENT

KRISHNA MURARI, J.

1.The present writ petition filed under Article 32 of the Constitution of India

raises an issue of huge importance of personal liberty under Article 21 of the

Constitution of India, regarding the right of an accused under the Customs

Act, 1962 (hereinafter referred to as the ‘Customs Act’) to settle the dispute

as per provisions contained under chapter XIV 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. It is the case of the

respondent that petitioner had tried to smuggle high value goods, mainly

1

watches through the green channel entrance, in order to escape from paying

duty on the same.

3.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 wrist watches, 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 herein then filed the

present writ petition, wherein he sought for the issuance of directions for

permission of home cooked food being granted to him.

4.The petitioner, being an NRI, has been unable to travel outside India since

06.10.2022, and as such has been amenable to settle 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 in accordance with law. However, for a want of notice by the

customs authorities to initiate the settlement process, the petitioner filed an

I.A. seeking the same.

5.In the abovementioned I.A. filed by the petitioner, an ex-parte order dated

20.02.2023 was passed by this Court, wherein the Commissioner of Customs

2

was directed to issue a show-cause notice to the petitioner, to initiate the

proceedings.

6.The respondent then, on being served the abovementioned ex-parte order,

filed an application for a recall of the said order. Several grounds were raised

on the issue of jurisdiction of the Settlement Commission to hear the said

matter. Both the parties were heard at length, and vide order dated

20.02.2023, the said ex-parte order was recalled.

7.After the recall of order passed by this Court, both the parties argued at

length on merits, and during the course of the said arguments, an apparent

conflict between two judgments of the Bombay High Court and the Delhi

High Court was brought to our notice by the petitioner, by way of an

application for placing additional grounds, documents and prayers.

Thereafter, the matter was further argued on merits by the learned counsel for

both the parties, and judgment was reserved.

8.When the abovementioned conflict between the two High Court judgments

was brought to our notice, it was pointed out to us by the learned counsel

appearing on behalf of the petitioner that such conflict between the two High

Court judgments, if left unnoticed, has the potential to cause great harm to

accused persons charged under the Customs Act, and deprive them of the

power to invoke the remedy of settlement.

3

ANALYSIS

9.The issue of settlement under the Customs Act, which will be discussed by us

in detail below, essentially has the power to grant an accused a remedy to

obtain immunity from prosecution and penalty as provided under Section

127(H) of the Customs Act. Such a right, if it remains under a cloud of

ambiguity, may not only cause damage to the fundamental rights accrued to

accused persons to live a dignified life without fear of incarceration, and may

needlessly force certain accused persons to be deprived of a free life outside

the languish of custody. Further, such a circumstance may also result in

contrary views being taken by different adjudicating authorities in identical

cases, with similar facts and circumstances.

10. The Settlement Commission, governed by chapter XIV A of the 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 issues of tax evasion by

virtue of a disclosure by the tax offender. Such a disclosure, if made bona

fide, allowed for the tax evader to gain immunity from either fine or penalty.

While at first glance, it may seem that such a provision allows for offenders

to escape penal consequences with no benefit caused to the government,

however, a deeper analysis of the provisions would prove otherwise. The

withholding of tax by tax offenders, unlike most other offences, directly

impacts the revenue of the country. Further, due to the complexities arising

4

from such disputes, the adjudication of the same often takes a very long time.

In such a scenario, wherein a long length of time consumed to resolve tax

disputes directly affects the revenue, and resultantly the welfare of the

country, the legislature found it imperative for the enactment of a beneficial

and time saving remedy, that would not only help the government in helping

reclaim the tax amounts due, but also incentivize persons to do the same. It is

out of these considerations that the Settlement Commission was born, and as

such, this backdrop must always be kept in mind while adjudicating on issues

of jurisdiction of the Settlement Commission.

PRELIMINARY OBJECTION

11.During the course of the hearing, a preliminary objection has been raised by

the learned counsel appearing on behalf of the respondent stating that since

the original relief sought for was limited to the grant of providing home

cooked meals to undertrial prisoners, this court is not the appropriate forum

to decide on the present question of law and resolve the conflict between the

two High Court judgments.

12. In the present case at hand, as has been mentioned above, the learned

counsels appearing on behalf of both the parties have argued at length on the

merits of the case and the point of law in question. The said ambiguity in the

impugned point of law, caused by the conflicting decisions the two High

5

Courts, has the potential to cause great harm to the fundamental rights of

accused persons presently dealing with similar litigations, and future accused

persons who might also have to deal with similar litigations.

13.In such a scenario, wherein such a length of time has been devoted by the

parties and the court, this court sits in a unique position wherein it is

equipped with all the necessary knowledge to clear the said ambiguity. If

such an opportunity to clear the said ambiguity is not exercised by this court,

it would so happen that, at some point in the future, this court 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, to complete the same task which

could have been dealt with at an earlier time. Such a lack of exercise of its

jurisdiction by the court would not only increase the burden on the pendency

of matters, but will also subject litigants from across the country to further

pendency. It is therefore imperative that this court, at this instance, remedy

such a mischief, to save the court and future litigants from multiplicity of

proceedings and mischief caused by such ambiguity.

14.In so far as maintainability of the present writ petition on grounds of

deviation from the initial prayer is concerned, it has been held in a catena of

judgments that this Court, under writ jurisdiction, is not bound by the relief

sought and can go beyond the original relief in order to meet the ends of

justice. Further, in such a situation where there is a conflict of opinion on a

6

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.

15.The reason why Article 32 is given such importance is because the state as an

organ, if left without checks and balances, has the potential to become a

tyrannical institution that can take the civil and individual liberties of its

people for granted. To curb this inclination of the state at its very roots, the

constitutional scheme envisaged an organ within the state machinery, namely

the judicial organ, which is vested with the powers to interfere with the

tyrannical tendencies of the state. This organ, with the 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 rights conferred by it,

has placed civil and individual liberties at the highest pedestal. These civil

and individual liberties, that act as a sword and a shield against the state, find

their translation from ideal to enforceable rights through Part III of the

Constitution.

17.One such right under Part III of the Constitution, which shields its 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 the constitution, that exists to

7

protect other fundamental rights. By way of Article 32, any action of the state

that violates the fundamental rights of a person, or causes harm to civil or

individual liberties, is within the purview of scrutiny of the Court.

18.During the constituent assembly debates, when the question of the ambit of

Article 32, which was then Article 25 of the draft constitution, was posed, the

makers of the Constitution deliberated extensively on the scope of the said

article and the extent of its powers. It was during these debates when Dr. B.R

Ambedkar, very famously stated that Article 32 is the very soul of the

constitution. The said quote by Dr. B.R Ambedkar is being extracted herein:-

“Now, Sir, I am very glad that the majority of those who

spoke on this article have realised the importance and the

significance of this article. If I was asked to name any

particular 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 the

very soul of the Constitution and the very heart of it and I am

glad that the House has realised its importance.”

19. Further, Father Jerome D’Souza, a Member of the Constituent Assembly,

while emphasizing on the importance of Article 32 of the Constitution of

India stated as follows:-

“I should like to draw the attention of the House, Sir, to the

implications of this article, implications which possibly are not

obvious at the first reading. This House, and through this House

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 Judicature the enforcement

of certain laws and certain principles, and remove them from the

purview and the control of the Parliaments which will be elected

in future years. They wish to put these rights beyond the

8

possibility of attack or change which may be brought about by

the passions and vicissitudes of party politics, by placing them

under the jurisdiction of judges appointed in the manner

provided for later on in this Constitution. Sir, it is because we all

believe,–and that is the implication of this chapter of

fundamental Rights,–that man has certain rights that are

inalienable,that cannot be questioned by any humanly

constituted legislative authority, that these Fundamental Rights

are framed in this manner and a sanction and a protection given

to them by this provision for appeal to the Supreme Court.

As I said, Sir, the implication of this is that an individual must be

protected even against the collective action of people who may

not fully appreciate his needs, his rights, his claims. And the

sacredness of the individual personality, the claims of his

conscience, are, I venture to say, based upon a philosophy, an

outlook on life which are essentially spiritual. Sir, if all our

people and their outlook were entirely materialistic, if right and

wrong were to be judged by a majority vote, then there is no

significance in fundamental rights and the placing of them under

the protection of the High Court. It is because we believe that the

fullest and the most integral definition of democracy includes

and is based upon this sacredness of the individual, 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 an

appeal to a moral law and through the moral law to a Supreme

Being, if the highest and the fullest authority is to be given and

the most stable sanction to be secured for these fundamental

rights. Sir, Mahatma Gandhi, in one of his unforgettable phrases,

referring to the desire to have a secular Constitution and to

avoid the name of the Supreme Being in it, cried out, “You may

keep out the Name, but you will not keep out the Thing from that

Constitution”. And, Sir, I believe that these fundamental rights

and their implications are really tantamount to a confession that

beyond human agencies and human legislatures there is a Power

which has to be submitted to, and there are rights which have to

be respected.

By this article we give to our Supreme Judicature a power, a

status and a dignity which will call from them the highest

qualities of integrity and uprightness. The full meaning of this

article should be borne in mind when we come to that Part of the

Constitution beginning with article 103, when we shall have to

scrutinize the steps by which an upright and absolutely fair

9

judiciary will be established in this land. When we consider that

Part, let us recall these Rights and make sure that all these

various provisions will be enforced in a just and fearless

manner.”

20. It is in this background that Article 32 of the Constitution of India has been

brought into force, to ensure that the Supreme Court is always equipped to

tackle the other organs of the state, especially in circumstances wherein civil

and individual liberties guaranteed by the fundamental rights are at risk.

21. Further, It has come to our notice that in the cases of Additional

Commissioner of Customs v. Ram Niwas Verma

1

, Commissioner of

Customs v. Avinash Dawar & Anr

2

, and Commissioner of Customs v.

Jyotsana Chikersal & Anr.

3

, the High Court of Delhi has taken a contrary

view from the decision of the Bombay High Court. In my humble opinion,

such an ambiguity in law has been caused because of the lack of an

authoritative pronouncement on the subject matter by this Court. This lack of

certainty in the law, has led to differential outcomes of similarly situated

persons in different jurisdictions.

22. In such a circumstance, where similarly situated persons are becoming

victim to differential outcomes, this court must clarify such an ambiguity, by

resolving the conflict between the two sets of judgments, to ensure that the

1 2015 SCC Online Del 11542

2 2015 SCC Online Del 13875

3 2019 SCC Online Del 6574

10

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 inclined to agree with

the preliminary objections raised by the respondent, regarding maintainability

of the petition on mere technicalities and accordingly reject the same.

CONFLICT BETWEEN THE TWO SETS OF HIGH COURT

JUDGMENTS

24.During the course of arguments on merits, the learned counsel appearing on

behalf of the petitioner herein placed strong reliance on the judgment of

Union Of India vs Suresh Raheja & Ors

4

. The petitioner in the

abovementioned case was caught trying to smuggle goods through the green

channel of entry. The seizure of the impugned goods therein, similar to the

present case at hand, was conducted within the customs area. Subsequent to

the seizure, the petitioner therein 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. The relevant

paragraph of the said judgement is being extracted herein:-

“It is further required to be borne in mind that in so far origin of

the goods is concerned, there is no dispute in respect of both the

jewellery as well as the watches. Therefore, the contention of the

4 2011 (267) E.L.T. 487 (Bom.)

11

Petitioner that the Respondents had failed to discharge the

burden cast by Section 123 of the said Act is mis-founded. Once

the origin of the goods was not in dispute, the Respondents as

held by the Settlement Commission were entitled to invoke the

jurisdiction of the Settlement Commission and, therefore, the bar

contained in the proviso to Section 127B could not have come in

their way. The finding of the: Settlement Commission in the

aforesaid factual background that the Respondents herein, who

were the Applicants before the Settlement Commission, fulfill all

the conditions laid down in Section 127(B) (1) of the said Act,

can be said to be a possible view in the said factual background."

25.While deciding on the said issue, 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.

26.Learned counsel appearing on behalf of the respondent, per contra, relied on

the judgement of Additional Commission of Customs vs Ashok Kumar

5

. In

this case, while the settlement application of the petitioner was deemed to be

maintainable, however, in paragraph 10 of the said judgment, a passing

reference was made by the court stating that the goods found on the person of

the petitioner, since they did not find mention under Section 123 of the

Customs Act, were not barred by Section 127 of the same Act. The relevant

paragraph of the abovementioned judgment is being reproduced herein:-

“It is not in dispute that the present case is not covered by any of

the provisos to Section 127B(1) of the Act. In other words, it does

5 2016 (336) E.L.T 224 (Del)

12

not fall under any of the excluded categories of cases. It may be

noted at this stage that the decision in Additional Commissioner

of Customs v. Shri Ram Niwas Verma (supra), was a case where

imported goods were covered under the third Proviso to Section

127B(1) and, therefore, the said decision is distinguishable on

facts.”

27.To clear this cloud of ambiguity, and to settle the conflict between these two

sets of High Court judgments, we must first analyze Section 123 and Section

127 B of the Customs Act. For the sake of convenience, the relevant Sections

are being reproduced herein:-

“123. Burden of proof in certain cases.

(1) Where any goods to which this section applies are seized under

this Act in the reasonable belief that they are smuggled goods, the

burden of proving that they are not smuggled goods shall be—

(a) in a case where such seizure is made from the possession of any

person,—

(i) on the person from whose possession the goods were seized; and

(ii) if any person, other than the person from whose possession the

goods were seized, claims to be the owner thereof, also on such

other person;

(b) in any other case, on the person, if any, who claims to be the

owner of the goods so seized.]

(2) This section shall apply to gold 2[and manufactures thereof]

watches, and any other class of goods which the Central

Government may by notification in the Official Gazette, specify.

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 of a

case, relating to him make an application, before adjudication to

the Settlement Commission to have the case settled, in such form

13

and in such manner as may be specified by rules, and containing

a full and true disclosure of his duty liability which has not been

disclosed before the proper officer, the manner in which such

liability has been incurred, the additional amount of customs duty

accepted to be payable by him and such other particulars as may

be specified by rules including the particulars of such dutiable

goods in respect of which 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 in the manner hereinafter provided: Provided that no

such application shall be made unless,—

(a) the applicant has filed a bill of entry, or a shipping bill, in

respect of import or export of such goods, as the case may be, and

in relation to such bill of entry or shipping bill, a show cause

notice has been issued to him by the proper officer;

(b) the additional amount of duty accepted by the applicant in his

application exceeds three lakh rupees; and

(c) the applicant has paid the additional amount of customs duty

accepted by him along with interest due under section 28AB:

Provided further that no application shall be entertained by the

Settlement Commission under this sub-section in cases which are

pending in the Appellate Tribunal or any court: Provided also that

no application under this sub-section shall be made in relation to

goods to which section 123 applies or to goods in relation to

which any offence under the Narcotic Drugs and Psychotropic

Substances Act, 1985 (61 of 1985) has been committed: Provided

also that no application under this sub-section shall be made for

the interpretation of the classification 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) before the

1st day of June, 2007 but an order under sub section (1) of section

127C has not been made before the said date, the applicant shall

within a period of thirty days from the 1st day of June, 2007 pay

the accepted duty liability failing which his application shall be

liable to be rejected.”

14

28.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 defense. In simpler terms, this would mean that in

such cases, it is the accused who is tasked with proving his innocence, rather

than the prosecution proving the accused person’s guilt.

29.This discharge of burden of proof, in our opinion, can only happen in cases

where there is a reasonable possibility of the accused being innocent. In the

present case at hand, the petitioner herein was caught with the impugned

goods within the customs area. In such a scenario, where the impugned goods

are found on the person of the accused and within the customs area, any

chance of the accused being innocent becomes an impossibility, since the

illegal act is caught in the heat of the crime.

30.Since the discharge of burden proof, rather, the question of burden of proof

itself becomes redundant in cases of seizures within the customs area, by

default, the provision that mandates such a task also becomes redundant. In

light of the abovementioned discussion therefore, in cases of seizure within

the customs area, Section 123 of the Customs Act cannot apply and hence,

the decision in the Suresh Judgement (Supra) passed by the High Court of

Judicature at Bombay states the correct position of law. It must also be noted

that the abovementioned decision of the High Court of Bombay was

15

impugned in appeal before this Court, and vide order dated 14.09.2011, this

Court had concurred with the decision of the High Court and dismissed the

appeal of the revenue. Since the facts and circumstances of the case herein

are identical to the abovementioned case, we find no cogent reason to take a

different view herein.

31.In light of the abovementioned facts and discussions, we are of the opinion

that judgment rendered by the High Court of Bombay in the Suresh

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 Court judgments has been

brought to an end, certain other issues flowing from the 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 77 of the Customs

Act, ousts the jurisdiction of the Settlement Commission. To bring clarity to

the said contention, we must first shed light on the two modes of clearance of

incoming passengers, which are the red channel mode of entry and the green

channel mode of entry.

34.When an incoming passenger goes through customs verification, he has two

options of clearances, which are the red channel mode of entry and the green

16

channel mode of entry. When an incoming passenger avails the red channel

mode of entry, it is accepted by the passenger that they have goods that are

liable for duty, and hence, by virtue of their own admission, are mandated

declare the goods that require duty as per Section 77 of the Customs Act.

35.If a passenger opts for the green channel mode of entry, it implies that the

passenger, by virtue of 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.

36.However, if a passenger decides to opt for the green channel of entry, but, is

still found with goods that are subject to the levy of duty, they become liable

to confiscatory and penal action as per the Customs Act. Since they become

subject to the penal provisions of the Customs Act, by default, it must also be

implied that they are given the benefit of settlement as per the same Act. No

surgery in such a scenario can be done, wherein the accused is held liable of

the penal consequences of the act, however, is denied the benefit of remedy

under the same Act.

37.Further, if we were to accept the proposition that a non-declaration under

Section 77 of the Customs Act would automatically bar the incoming

passenger from availing the benefit of settlement, in light of our observation

17

that an entry through the green channel mode implies a declaration of “Nil”

goods under Section 77 of the Act , the provision of settlement would become

irrelevant and defunct, since no accused would ever be able to avail the

benefits of settlement.

38.Therefore, in light of the above discussion, we see no reason as 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 contended that any person who

importing the impugned goods at the instance of another person, is a

smuggler, and as such, the Settlement Commission cannot be approached in

such cases.

40.This contention made by the learned counsel appearing on behalf of the

respondents, in our opinion, is also bad in law. In the case of Tata

Teleservices (Maharashtra) Ltd vs Union Of India 2006

6

, the High Court of

Judicature at Bombay, while deciding on a similar issue,by relying on the

Constitution Bench judgment of this court in the case of Lilavati Bai v. State

Of Mysore

7

, gave the phrase “or otherwise”, as mentioned in Section 127 B

of the Act, an expansive interpretation, and held that the jurisdiction of the

6 (201) ELT 529 (Bom)

7 AIR 1957 SC 521

18

Settlement Commission can be invoked by a person who has committed

smuggling, fraud or deliberate misdeclaration. The relevant paragraph of the

judgment delivered by the High Court of Bombay is being reproduced

herein:-

"46..... On the contrary, in the Customs Act, the provision makes

it mandatory that the Applicant can file an application only after

show cause notice is issued, which show cause notice as we have

pointed out hereinabove, would pertain even to confiscation. i.e.

to say the person who has committed fraud or smuggling or

deliberate misdeclaration would only receive such show cause

notice and such a show cause notice is essential ingredient

before making an application.…"

41.Further, the abovementioned judgment of the Bombay high court was

impugned in the Supreme Court by way of an appeal, and the same was

dismissed by this Court vide order dated 03.08.2011, further fortifying the

judgment of the High Court.

42.On the basis of the abovementioned discussions, we are of the opinion that

the contention of the respondent even in this regard is liable to be rejected.

CONCLUSION

43.By way of additional submissions made by the petitioner, it has been brought

to our notice that the Commissioner of Customs has issued a show cause

notice to the petitioner. Since a show cause notice has already been issued, no

19

direction is that regard is warranted. If an application of settlement is filed by

the petitioner, the same shall be dealt with by the Settlement Commission on

its own merits and in accordance with law and the procedure prescribed u/s

127H of the Customs Act. However, we deem it appropriate to observe that,

if at all, the Settlement Commission would deem fit, it can always seek

further report from the “Commission (Investigation)” appointed within the

Settlement Commission even after issuance of the show cause notice for this

one time opportunity of settlement.

44.We refrain from making any observations on the merits of the case and leave

the same for consideration by the Settlement Commission.

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

….......…………....……….,J.

(KRISHNA MURARI)

NEW DELHI;

04

th

MAY, 2023

20

1

REPORTABLE

IN THE SUPREME COURT OF INDIA

CRIMINAL ORIGINAL JURISDICTION

WRIT PETITION (CRIMINAL) NO. 55/2023

YAMAL MANOJBHAI  …. PETITIONER

V.

UNION OF INDIA & ORS.        ....RESPONDENTS

J U D G M E N T

SANJAY KAROL, J. 

1.I have perused the erudite opinion proposed by my esteemed

brother, Hon’ble Mr. Justice Krishna Murari. Respectfully, I

am unable to persuade myself to agree; hence, I separately pen

down my conclusions. 

2

2.Two issues arise for consideration before us;  One  whether a

settlement remedy under Section 127B of the Customs Act,

1962,   would   be   available   for   the   seized   goods,   which   are

specified under Section 123 of the said Act? Two, would, in the

attending facts, the exercise of powers 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) was

enacted to consolidate the provisions relating to sea customs,

land   customs   and   air   customs   into   one   comprehensive

measure. It is an act to sternly and expeditiously deal with

smuggled goods and curbs the dents on the revenue thus

caused. The act provides for the confiscation of goods and

imposition of penalties when any goods are imported contrary

to prohibitions imposed [Commissioner of Customs v. M.

Ambalal, (2011) 2 SCC 74 (2­Judge Bench)]. 

4.To   understand   the   legislative   intent   behind   the   Act,   it   is

important to discuss the scheme therein. 

5.Chapter II of the Act relates to the appointment of customs

officers and their powers under the Act. 

3

6.Chapter III specifies the appointment of customs ports and

airports wherein imported goods shall be unloaded, and export

goods shall be loaded & cleared.

7. Chapter IV empowers the Central Government to prohibit the

importation   or   exportation   of   goods   for   the   purposes

mentioned therein, such as maintaining the security of India

and preventing smuggling. 

8.Chapter IVA provides for the detection of illegally imported

goods and the prevention of their disposal.

9.Chapter   V   specifies   the   imposition   of   customs   duties   and

exemption therefrom. 

10.Chapter VII pertains to the clearance of imported and exported

goods. This chapter also deals with the procedure employed

when goods are not cleared.   

11.Chapter XI elucidates special provisions regarding baggage,

goods imported or exported, and the required declaration. In

this Chapter, Section 83 allows for the duty rate and tariff to

be imposed on goods imported or exported. 

12.Chapter XIII provides for powers relating to searches, seizure

and arrest. In this Chapter, an officer of customs is empowered

4

to arrest a person under Section 105 if he has reason to

believe that such a person may have made a false declaration

(Section 132), obstructed a customs officer (Section 133) or

evaded customs duty that is liable to be paid (Section 135).

Furthermore,   Section   108B   penalises   failure   to   furnish

information as directed by the proper officer. 

13.Chapter   XIV   allows   for   the   confiscation   of   goods   and   the

imposition   of   penalties.   Sections   111   and   112   thereunder

enumerate a list of goods which are liable for confiscation and

the penalty thereof. Section 123 reverses the burden of proofs

of certain specified seized goods. 

14.Chapter XIVA  contains the mechanism for the settlement of

cases. 

15.Chapter XVI of the Act lays down offences and prosecution

under the Customs Act. This chapter imposes, as a penalty,

imprisonment for certain offences. They are: making a false

declaration relating to customs (Section 132; may extend to 1

year), obstruction of an officer of customs (Section 133; may

extend to 1 year), refusal to be X­rayed (Section 134; may

extend   to   6   months)   and   evasion   of   duty   or   prohibitions

(Section 135; may extend to seven years).

5

16.Given the above, it is evident that the scheme of the act

involves the imposition of customs duty, confiscation of goods

and consequences of skirting or attempting to skirt the same

in   the   form   of   varied   penal   consequences,   including

imprisonment. This follows the purpose of the Act, as noted by

this   Court   in  Ambalal  (supra),   which   is   to   sternly   and

expeditiously   deal   with   goods   smuggled   into   India   in

contravention of the prohibitions within the law.  

17.Considering the intention of the Act as above, I now discuss

the sections pertaining to the controversy at hand: Section 123

and Section 127B of the Act. 

18.Section 123 of the Act elucidates the burden of proof in certain

cases. It reads as follows:

“123. Burden of proof in certain cases.—

(1) Where any goods to which this section applies are seized

under this Act in the reasonable belief that they are smuggled

goods, the burden of proving that they are not smuggled goods

shall be—

(a) in a case where such seizure is made from the possession

of any person,—

(i) on the person from whose possession the goods were

seized; and (ii) if any person, other than the person from whose

possession the goods were seized, claims to be the owner thereof,

also on such other person;

6

(b) in any other case, on the person, if any, who claims to be

the owner of the goods so seized.

(2) This section shall apply to gold [and manufactures thereof],

watches,   and   any   other   class   of   goods   which   the   Central

Government may by notification in the Official Gazette, specify.”

19.Section 127B of the Act pertains to the application procedure

for the settlement of cases by a person in respect of a case

pending   adjudication.  Importantly,   the   proviso   to   the   said

states that no application shall be made concerning goods to

which Section 123 applies. It reads as 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 of a

case, relating to him make an application, before adjudication to

the Settlement Commission to have the case settled, in such form

and in such manner as may be specified by rules, and containing

a full and true disclosure of his duty liability which has not been

disclosed before the proper officer, the manner in which such

liability has been incurred, the additional amount of customs duty

accepted to be payable by him and such other particulars as may

be specified by rules including the particulars of such dutiable

goods in respect of which he admits short levy on account of

misclassification, under­valuation or inapplicability of exemption

notification [or otherwise] and such application shall be disposed

of in the manner hereinafter provided : 

Provided that no such application shall be made unless,— 

(a) the applicant has filed a bill of entry, or a shipping bill, in

respect of import or export of such goods, as the case may

be, and in relation to such bill of entry or shipping bill, a

show cause notice has been issued to him by the proper

officer; 

7

(b) the additional amount of duty accepted by the applicant

in his application exceeds three lakh rupees; and 

(c) the applicant has paid the additional amount of customs

duty accepted by him along with interest due under section

28AB: 

Provided further that no application shall be entertained by the

Settlement Commission under this sub­section in cases which are

pending in the Appellate Tribunal or any court : Provided also that

no application under this sub­section shall be made in relation to

goods to which section 123 applies or to goods in relation to which

any   offence   under   the   Narcotic   Drugs   and   Psychotropic

Substances Act, 1985 (61 of 1985) has been committed : Provided

also that no application under this sub­section shall be made for

the   interpretation   of   the   classification   of   the   goods   under   the

Customs Tariff Act, 1975 (51 of 1975).”

(Emphasis Supplied)

20.The Petitioner contends that Section 123 of the Act would not

apply  in the   present  case for  Settlement,  as  the  goods  of

admitted foreign origin stand seized within the customs area

upon crossing the green channel. The Petitioner has placed

reliance on the judgment of the Bombay High Court in Union

of India v. Suresh Raheja, 2011 (267) E.L.T. 487 (Bom.) ,

wherein the High Court observed that in a situation where

there is no dispute as to the origin of the goods, the bar

contained in the proviso to Section 127B would not come in

the way, in respect of the specified goods under Section 123. 

8

21.Furthermore, the Petitioner contends that the legislative object

is to open doors for settlement and not to rigidly construe

beneficial   provisions   in   a   mechanical   manner   that   would

prevent settlement of cases.

Analysis and Reasoning

22.This is the plan and simple construction of the statute. On a

plain reading of Sections 127B and 123, it is evident that the

proviso to Section 127B(1) specifies certain categories of goods

are barred from the jurisdiction of the settlement commission.

These include goods mentioned under Section 123 and goods

relating to the NDPS Act. Therefore, recourse under Section

127B cannot be made if any of the above goods are involved

23.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.

24.Hence,  the   contention  of   the  Petitioner  that   the   legislative

intent is for settlement of all cases cannot be accepted. 

9

25.Further, Section 127B lays down specific conditions for its

application,   and   the   proviso   provides   categories   of   goods

wherein   settlement   cannot   be   undertaken.   This   makes   it

evident that Section 127B is not meant to be applied in all

categories of cases. Only in the following circumstances can an

application be made to the settlement commission:

a) the applicant has filed a bill of entry, or a shipping bill, in

respect of the import or export of such goods, as the case 

may be, and in relation to such bill of entry or shipping bill, 

a show cause notice has been issued to him by the proper 

officer; 

(b) the additional amount of duty accepted by the applicant 

in his application exceeds three lakh rupees; 

(c) the applicant has paid the additional amount of customs 

duty accepted by him along with interest due under section 

28AB: and

(d) the proviso to Section 127B is not attracted.

26.Furthermore,   as   discussed   above,   the   scheme   of   the   Act

involves payment of fines and/or imprisonment for offences

enumerated under Chapter XVI. All offences, under the Act,

cannot be permitted to go before the Settlement Commission

under Section 127B. This would make the legislative intent

10

behind the proviso to Section 127B, which bars certain goods,

including those mentioned under Section 123 and goods which

are   prohibited   under   the   Narcotic   Drugs   Psychotropic

Substances   Act,   1985,   redundant.  Importantly,   as   a

consequence of such an interpretation being accepted, the

power to prohibit the importation of goods for the maintenance

of security of India under Section 11, the powers of arrest

under Section 105, the power to summon under Section 108,

confiscation   under   Section   111   and   offences   for   which

imprisonment may be given from Sections 132 to Section 135

would   have   no   application,   thereby   making   the   respective

legislative   provisions   in   effect,   null.   As   prayed   for   by   the

Petitioner,   such   an   interpretation   would   allow   a   person

importing goods without declaration to evade confiscation and

criminal prosecution by simply taking recourse under Section

127B.   The   deterrent   of   criminal   prosecution   would   stand

vitiated.  

It is observed that the Delhi High Court has taken a view

contrary to that taken by the Bombay High Court in this

regard.

11

26.1In  Additional Commissioner of Customs v. Ram Niwas

Verma, 2015 SCC Online Del 11542   (2­Judge Bench of

the Delhi High Court), there was a recovery of 6452 grams

of   gold   from   the   Respondent   therein.   He   was   crossing

through   the   green   channel   but   was   intercepted   by   the

Customs Officer. The Court stated that it is evident that no

application for settlement can be made if it relates to goods

to which S.123 applies. 

26.2In Commissioner of Customs v. Avinash Dawar & Anr.,

2015 SCC Online Del 13875  (2­Judge Bench of the Delhi

High Court), the Settlement Commission held that since

there   is   an   admission   of   illicit   importation,   shifting   of

burden as contemplated under Section 123 of Customs Act,

is not required. The Court, while setting aside this order,

stated   that   upon   a   plain   reading   of   the   provisions,   an

application   under   Section   127B   could   not   be   made   in

respect of 'gold', which is specifically an item listed under

Section 123 applies. 

26.3The decisions in Ram Niwas Verma (Supra)  and Avinash

Dawar   (Supra)  have   been   followed   in  Commissioner   of

12

Customs   v.   Jyotsna   Chikersal   and   Anr.,   2019   SCC

Online Del 6574 (2­Judge Bench of the Delhi High Court)

where   a recovery   of   6   gold   bars   was   made   from the

Respondent therein. No declaration or disclosure was made

in the disembarkation slip or the customs area. The Court

held that a conjoint reading of these two provisions clearly

bears out that the jurisdiction of the Commission to settle

cases   involving   goods   referred   to   in   Section   123(2)   is

excluded. 

26.4Significantly, in the abovementioned cases, the decision of

the   Delhi   High   Court   in  Commissioner   of   Customs   v.

Ashok Kumar Jain, 2013 (292) ELT 32 (Del),   wherein

settlement application under 127B was allowed for watches

recovered, has been distinguished on the ground that the

said   decision   did   not   consider   Section123   and   the

consequent bar therein. 

26.5It is also pertinent to note that the reasoning in  Suresh

Raheja (supra) was given in the facts and circumstances of

that   case,   wherein   the   entire   baggage,   including   the

watches, had become wet and affected by the floods. 

13

27.In the present case,  the recovery from the Petitioner was on

crossing the green channel at the Delhi airport on 05.10.2022,

wherein the officers of the Investigating Agency apprehended

him with dutiable goods, including watches of admitted foreign

origin. Watches is one of the categories of goods mentioned in

Section 123 of the Act. Since there is a recovery of goods to

which Section 123 applies, the same is a bar for the Petitioner

to approach the Settlement Commission. The matter, in my

view, is fit to be remitted to the adjudicating authorities to take

appropriate 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   present   proceedings   since   the   Petitioner   has   invoked

Article 32 of the Constitution of India.

29.It is well­settled law that this Court has wide powers when the

violation of fundamental rights is alleged under Article 32 of

the Constitution. However, such intervention must be made on

a   case­by­case   basis   and   only   when   a   fundamental   right

question arises.

14

30.In  Northern Corporation v. Union of India, (1990) 4 SCC

239  (2­Judge Bench), this Court dealing with the issue of

enforcement of the provisions of the Customs Act, in a petition

filed under Article 32, observed that the Petitioner has no

fundamental right as such to clear any goods imported in

accordance with the law. Furthermore, it was held that it could

not be contended that enforcing provisions of the Act would

breach   fundamental   rights   which   entitle   a   citizen   to   seek

recourse to Article 32 of the Constitution. Therefore, the writ

petition was rejected.

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 and seeking an appropriate relief was reiterated. 

32.The Petitioner approached this Court through Writ Petition No.

55/2023, praying only for the grant of a writ of mandamus for

home­cooked food for under­trial prisoners (This question is

pending consideration by this Court in other writ petitions).

Only   subsequently   was   an   Interlocutory   Application   filed

seeking the relief concerning the merits of the present dispute,

15

i.e.direction   to   Respondent   No.   2   (Customs   Authority)   for

settlement under Section 127B of the Customs Act, 1962. 

33.This   approach   taken   by   the   Petitioner,   in   my   view,   is

unwarranted   and   undesirable   if   not   malafide   for   not

exhausting the appropriate alternative remedies. Under the

garb of relief purportedly relating to fundamental rights, the

relief sought in the instant IA, is  statutory in nature­ under

the Act i.e. for an application of settlement to be decided.

34.Recourse to the fundamental right to approach this Court has

to be permitted in cases where the fundamental rights of the

Petitioner have been infringed. Herein, no such infringement is

made out. No material has been brought on record displaying

that the Customs Department has proceeded in a manner

contravening the Constitutional mandate. 

35.Therefore, given the above, the present application is liable to

be dismissed on maintainability. It is also to be noted that the

practice of circumventing the well­established principles for

the   exercise   of   the   power   of   Article   32   should   not   be

encouraged. 

16

In the abovementioned terms, the writ petition, along with

interlocutory applications, are disposed of. 

­­­­­­­­­­­­­­­­­­­­­­­­­­J.

(SANJAY KAROL)

DATED: 4

TH

 MAY, 2023

PLACE: NEW DELHI