Tuesday, September 8, 2015

Matter of smuggling of gold even through baggage can't be entertained by SetCom

In case of matters relating to import/smuggling of 'gold', even as part of a baggage, no settlement application can be filed in view of specific bar contained in third proviso to section 127B(1) read with section 123.


a)  Assessee imported approximately 6.5kg gold as part of his baggage.

b)    Since assessee had not shown same in baggage declaration, department alleged smuggling and issued a show cause notice.

c)  Assessee approached Settlement Commission.

d)   Department argued that since it was a case of import of gold, settlement application was barred under third proviso to section 127B(1). Third proviso to section 127B(1) reads as: “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”

e)  Settlement Commission overruled revenue's objections and settled the matter.

High Court held in favour of revenue:

1) In view of provisions relating to application for settlement, particularly third proviso to section 127B(1), it is evident that no application for settlement can be made if it relates togoods to which section 123 applies and said section specifically provides that it applies to gold.

2)   Third proviso only makes a reference to goods to which section 123 applies and not to section 123 itself. Therefore, there is no question of examining provisions of section 123(1) as also its applicability because that is not context of third proviso to section 127B(1).

3)   Therefore, no application for settlement can be made in relation to gold. Since this case clearly pertains to gold, Settlement Commission did not have jurisdiction to entertain such an application - Additional Commissioner of Customs v. Ram Niwas Verma [2015] 61 taxmann.com 2 (Delhi). 

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