The main legal point established in the judgment is the importance of the compounding authority discharging the statutory duty of making proper enquiry and the rule of disclosure in compounding of offences under Section 137 of the Customs Act.

S. Ravindra Bhat, J.

1. Issue notice. Mr. G.S. Arora, Advocate accepts notice.

2. The petitioner in these proceedings claims an order giving directions to quash the order of the Chief Commissioner (Customs) dated 10.03.2014, whereby his application for compounding made under Section 137 of the Customs Act was rejected.

3. The facts are that the petitioner landed in India from Hong Kong inter alia with ten thousand pieces of micro chips (micro SD cards) valued at Rs.15,80,000/-. These articles were sought to be taken into the country without declaring them; he could not, upon being stopped by the customs authorities, give a satisfactory explanation or produce any evidence with regard to the legality of the goods. He admitted the recovery of goods from his package. In his first statement on 31.05.2011 recorded under Section 108, the petitioner stated that goods were given by one Shri Rakesh Jain of Hong Kong for delivering the same to someone else in Jaipur. In the later statement recorded in July and August, 2011, the petitioner admitted that the articles were procured by him only and that he bought them from the market to sell them in India. He admitted that due to fear, he did not disclose the truth on 31.05.2011. Apparently, he also made certain contradictory statements in the bail application presented on his behalf before the Metropolitan Magistrate.

4. After show cause notice was issued, an adjudication order was made which was appealed; this ultimately culminated in the duty in respect of the goods valued at Rs.15,80,000/-being deposited by the petitioner. He also concededly paid the redemption fine to avoid confiscation, as well as the penalty imposed upon him. In these circumstances, in order to avoid prosecution he applied for compounding. By the impugned order, the compounding application was rejected.

5. The Chief Commissioner relied upon the decision reported as Union of India v. Anil Chanana 2008 (222) ELT 481 SC to say that the disclosure here was not clear and, on the contrary, was contradicted. The operative portion of the Chief Commissioner’s order impugned herein reads as follows:-

“21. From the above I find that applicant had initially in his statement admitted recovery of 10000 Pcs of Memory Cards from his baggage but denied the ownership and stated that the goods were given to him by one Shri Rakesh Jain to be delivered to another person Shri Ritesh at Jaipur. But later on he admitted that the goods belonged to him and that he had used the name of a fictitious person Sh. Rakesh Jain to divert the attention. In between his two statements the applicant took a different stand in his bail application and stated that he had reported to the Customs Officer at the Red Channel Counter to declare 10000 Pcs of Memory Cards and pay duty but the Customs Officer instead of preparing necessary papers for payment of duty took him to the office room and made him sit there and dictated the statement dated 31/05/2011. Thus, it is evident that the applicant has not made a true and complete declaration of facts in as much as he did not reveal in his application for compounding anything about the contradictory stand taken by him in his bail application and statements recorded under Section 108 of the Customs Act, 1962. A comparison of the statements made under Section 108 and in bail application disclose major demonstrable contradictions or inconsistencies or incompleteness in the case of the applicant in as much as in his initial statement he admitted recovery of 10,000 Pcs of Memory cards and non-declaration of the same to the Customs Officer but in his bail application denied having committed any offence and put the blame on the Customs Officer in framing him in the whole matter. This was followed by him by admission of offence in his later statements 20/07/2011 & 09/08/2011. This admission was again followed by a denial in written submissions before the adjudicating authority wherein he stated that he had reported at Red