Rajesh Kumar Sharma Vs.
Union of India &
Ors.  Insc 97 (2 February 2007)
Dr. ARIJIT PASAYAT & S.H. KAPADIA
Dr. ARIJIT PASAYAT, J.
Though we are not granting leave, in view of re-iteration of plea taken in
this special leave petition in several cases, the petition is being disposed of
by a detailed order.
Challenge is to the order passed by a Division Bench of the Delhi High Court
dismissing the writ petition filed by the petitioner. Challenge in the writ
petition was to the order dated 28th July, 2006 passed by the Chief
Commissioner of Customs, Gujarat Zone, Ahmedabad.
Background facts in a nutshell are as follows:
Petitioner had applied for compounding of an offence committed by him under
Section 135 (1)(a) of the Customs Act, 1962 (in short the 'Act'). After
considering the application filed by the petitioner, the Compounding Authority
allowed the application and imposed compounding amount of Rs.
10,00,000/-. In the writ petition stand taken by the petitioner was that the
compounding amount as fixed is beyond the permissible limit. This plea was
rejected by the High Court.
In support of the petition, it has been stated that the extent of
compounding amount as fixed by the Compounding Authority was beyond the
permissible limit. It is submitted that market value of the goods which had not
been declared was Rs. 8,45,176/- and therefore it should have been 20% of the
said market value.
It is stated that since the purpose of compounding is to prevent unnecessary
litigation, if the interpretation given by the High Court that the quantum has
to be upto 20% of the market value of the goods or upto Rs.10,00,000/-
whichever is higher is accepted same would be counter productive.
The guidelines for compounding are contained in the Circular No.54/2005-Cus dated
30th December, 2005. Central Government had brought into force the Customs
(Compounding of Offences) Rules 2005 (in short the 'Customs Rules') and Central
Excise (Compounding of Offences) Rules, 2005) (in short the 'Central Excise
Rules') with effect from 30th December, 2005. The purpose of compounding of
offence against payment of compounding amount is to prevent litigation and
encourage early settlement of disputes. The cases where compounding would be
rejected are also spelt out in the said circular. The relevant Rule is Rule 5
of the Customs Rules which so far as relevant reads as follow:
Fixation of the Compounding Amount- For the purpose of compounding of
offences under the various provisions of the Act, the compounding amount shall
be as provided hereinbelow:- (1) (3) xxx xxx xxx (4) Offence specified under Upto
twenty per- Section 135(1) (a) of the cent of market Act. value of the goods or
Rupees ten lakhs whichever is higher.
(5) (7) xxx xxx xxx (Underlined for emphasis) The crucial words in the Rule
are "whichever is higher".
According to learned counsel for the petitioner, the word "up to"
applies to both 20% of the market value of the goods or Rupees Ten Lakhs. This
interpretation as suggested is clearly unacceptable. If the interpretation
suggested is accepted, it would render expression "whichever is
The inevitable conclusion is that the petition lacks merit, deserves
dismissal, which we direct.