High Court · 2025

Petition under Article 226 of the Constitution of lndia praying that in the circumstances stated in the affidavit filed therewith, the High Court may be pleased to issue a writ of certiorari or any other appropriate writ/order quashing the rejection order dated 22.01 .2025 passed by Respondent No. ',l and direct the Respondent No.1 to consider the Petitioner's compounding application in accordance with law and be pleased be to such other order or orders as it deems fit and proper in the circumstances of the case and in the interest of justice. lA NO: 1 OF 2025 Petition under Section 151 cPC praying that in the circumstances stated in the affidavit filed in support of the writ petition, the High court may be pleased to grant stay of proceedings in cc No. 5 of 2018 pending on the file of Vlll MSJ cum Special Judge For Economic Offences At Hyderabad, until reconsideration and intimation of the Petitioner's compounding application by Respondent No.1 in accordance with law. Counsel for the Petitioner: SRI UZAIR AHMED KHAN Counsel for the Respondents: SRI DOMINIC FERNANDES, Sr. SC FOR CBIC The Court made the following: ORDER Page I of 8 THE HONOURABLE SRI JUSTICE P'SAM KOSHY AND THE HONOURABLE SRI JUSTICE NARSING RAO NANDIKONDA Itrrit Petition No. 4996 of2o.25 ORDER: {per Hon'ble Sri Justie P'SAM KOSIJ!. The instant Writ Petition has been filed by the petitioner under Article 226 of the Constitution of lnrtia prayin$ the Court for issuance of a Wnt of Certiorari or any other appropriate writ f ord.erto quash the rejection order dated 22'Ol'2O25 passed by respondent No.l herein and to direct respondent No'1 to consider the petitioner's compounding application in accordance with law. learned counsel for the

2. Heard Mr. Uzair Ahmed Khan' petitioner and Mr. Dominic Fernandes' learned Standing Counsel for Central Board of lndirect Taxes and Customs (C.B.I.C.) for the respondents'

3. Vide the impugned order, the l"t respondent had rejected an application hled by the petitioner herein seeking compounding of the offence under Section 137 of the Customs Act, 1962 read with Rule 4(3) of the Customs (Compounding of Offences) Rules, 2OO5'

4. The challenge to the impugned order is on the ground that tJee respondent-Authorities concerned have not followed the instructions arrd guidelines issued by ttre respondents \ themselves. Further, the order is also bad for the reason that the respondents have not followed the recent decisions of the Hon'ble Supreme Court and also of the various High Courts.

5. The brief facts which led to hling of the instant case are that the petitioner herein was alleged to harre found. to be involved in the smuggling of foreign currency out of India in violation of the Foreign Exchange Rules and Regulations. On

26.07.2OL6, upon secret information received by the Directorate of Revenue Intelligence (D.R.l.), Hyderabad Z,onal Unit, the petitioner after having reported to the Airport and on completion of tl.e check-in forma.lities, immigration and security check, proceeded to the departure hall of the Rajiv Gandhi International Airport, Shamshabad, Hyderabad. It was then that oflicials of the D.R.I. approached the petitioner and intimar_ed him of ttreir intention to examine his checked-in b2ggage. I-lpon examining the checked-in baggage of the petitioner, the offir:ials found that the petitioner was carrying 1,25,00O Saudi Rials which is equivalent to Rs.21,68,750/-. A Panchnama w.ls prepared on the same day. The otficials, having found the petitioner carrying \- the said foreign currency with an intention- to sm uggle the same Page 3 of I out of the countr5l, proceeded to initiate proceedings against the petitioner including arrest of the petitioner.

6. Thereafter, the adjudicating authority drew up appropriate proceedings against the petitioner and a show-cause notice was also issued to the petitioner on 13.O1.2017. However, the petitioner did not respond to the same nor did he participate in the adjudication proceedings that followed the show-cause notice in spite of proper service to the petitioner. Finally, the adjudicating authority, i.e., the Deputy Commissioner of Customs, Hyderabad, passed the Order in Original NO.39/2017' dated 28.04.2017, ordered confiscation of the seized currency and imposed a penalty of Rs.2,OO,OOO/- on the petitioner under Section 1la(i) of the Customs Act. It is pertinent to mention here that the petitioner has not 7. questioned the veracity of the said order in original dated 28-04.2017 in any appellate forum or in any High Court' By efflux of time, the Order in Original had attained finality. In fact, the petitioner had also accepted the same and paid the penalty amount of Rs.2 takhs imposed on him on 13.08.2O24 towards compliance of the Order in Original.

8. Upon receipt of the application for compounding of the petitioner / application under Sub-Rule (3) of Rule 4 of the Customs (Compounding of Offence) Rules. 2005, dated

27.08-2024, and upon scrutiny o[ the antecedents of the petitioner, it was found that there was no registered offence against the petitioner anywhere in India. 'Ihereupon, the petitioner was called upon for personal hearing on 10.01.2025. The petitioner appeared before the authoritier; and accepted commission of offence and prayed for accr:ptance of the compounding application by taking a lenient viers and to impose necessa-rJr compounding fee thereupon. How1y61, since the compounding authority, upon verihcation of the contents of the application for compounding of offence as to whether the applicant has made full and true disclosure of facts relating to the offence or not, found that there were contradictory statements made by the petitioner to the respondent- Department. The compounding authority fc,un6 *., *" confessional statement recorded of the petitioner under Section 108 revealed a different narration of facts than the statement he subsequently made in the compounding application. The compounding oflicer also found that the contents of the Panchnama prepared at the time of seizure of thr: illegal foreigrr currency which the petitioner tried to smuggle out of India to be also at variance to the stand that he has taken in the compounding application. Thus, the compounCing authorit5r found that the petitioner has not made the full and true disclosure of facts while seeking for compounding of the offence and had perhaps moved the petition only with a malafide intention of evading the subsequent prosecution by the competent court of law. Accordingly, the respondent No.l passed the impugned order of rejection of compounding application on 22.01.2025 which is under challenge in the instant writ petition.

9. Learned counsel for the petitioner contended that before rejection of the compounding application by the authority, the authority ought to have disclosed its mind so far as the rejection of the application, and the authority ought to have given a show- cause notice to the petitioner seeking certain explanation as to why the compounding application need not be rejected on the ground that the petitioner should have been intimated in advance before the impugned order was passed, and why the compounding oflicer was not inclined to allow the same.

10. In support of his contentions, learned counsel for the petitioner relied on the foltowing decisions of the High Court of Delhi and also that of the Kerala High Court, i.e., (il Union of India vs. Anil Chananat; liif Deepesh Mamodiya vs. Chief t w.P.(C).13s48/ 2006, datcd 03.05.2016, I.liqh cotrrt of l)clhi' at Nerv Delhi Commissioner of Customs (Dzl2; (iii| Hemant Aggarwal vs. Union of India3; and (ivl Assistant Commissioner of Customs, Prosecution Cell, Customs House, Cochin vs Edwin Andrew Minihan+.

11. However, perusal of the aforesaid judgments and the facts and contents thereof, what we find is that the principle or ratio laid down in the above judgments indicate that before passing the impugned order on the compounding application, the compounding offlcer has to give an opportunity of hearing to the applicalt so as to get satis{ied as to the c()ntents of the application for compounding being full and true clisclosure of aII the relevant facts. Further, the said judgments do not prescribe that the adjudicating oIficer has to give a notice of hearing before passing the impugned order, and to disclose his intention and of rejection of the compounding application before passing the irnpugrred order. L2. In the instant case, after the applicant had submitted his application, the application was first got scrurinized by the compounding officer within the Department and thereafter the petitioner was called for personal hearing. The tetitioner had availed the opportunit5r of personal hearing, appeared before the I 20 l4 DLT 2rt ttZ, decided on 2A.OS.2O]4 by rhe Dethi ,,*i aot,., r w.P.(C) 1336i/20O9, dated l3.O i.20 11, High Court of Delhi, ar N,r!\, Delhi t 2023 Ker 7 6297 Page 7 of E compounding oflicer, accepted his guilt and offence and prayed for allowing the compounding application and also expressed his willingness to pay the compounding fees.

13. In the grven factual circumstances, we are of the considered opinion that there is no need for another show-cause notice to be issued to the petitioner or the applicant seeking compounding of an offence. Secondly, what also weighs more in the minds of this Bench is the fact that, every application for compounding of offence need not be accepted as a matter of routine. There has to be an element of scrutiny to be done and in addition there has also to be the subjective satisfaction of the compounding oflicer for reaching to the conclusion that the contents of the compounding application is full and true disclosure of the relevalt facts. It would be difficult to accept the situation where the petitioner at the first instance takes a different stand both in his statement under Section 108 and also in the statement at the time of preparation of Panchnama ald later to take a somersault and take an entirelv different version while applying for compounding of the offence. L4. In the instant case, admittedly there is a vast variance in the contents in the statement under Section 108 that which is recorded in the Panchnama when compared to the contents made in the application for compounding ol the offence. Surprisingly, there has been no statement availaltle on record to show that the petitioner had retr-acted from the statement that he had given under Section 108 as aJso in ttre panchnama. Moreover, with the said statement under Ser:tion 1Og, the petitioner has accepted the Order in Original al<l has also paid the penalty imposed. In the said circumstances, if the compounding officer found substantial variance in the statements so made by the petitioner, the rejection of the compounding application cannot be held to be bad in law or being contrarlz to the circulars governing the field of determining the compounding application.

15. Therefore, for all the aforesaid reasons, this Court is of the firm opinion that the instant petition being devoitl of any merit, deserves to be and is accordingly dismissed. No costs.

16. Consequently, miscellaneous petitions pending, if any, shall stand closed. //TRUE COPY// ,\t\r SD/- L. VIJAYA LAXMI ASSISTANT REGISTRAR SECTION OFFICER ,\ \

1. One CC to SRI UZAIR AHMED KHAN, Advocate tbpu 2. One CC to SRI DOMINIC FERNANDES, Sr. SC FOR CBIC IOPUC] 3. Two CD Copies cI To, BSR GJP ,?{ HIGH COURT DATED: 1910312025 \ \ ORDER WP.No.4996 of 2025 itrE srAIF Y ? )3 30','IAYZU * )95;,4rCSgO P o DISMISSING THE WRIT PETITION, WITHOUT COSTS 6*PKL W