The Delhi High Court quashes customs duty demand ornaments and jewellery being carried as part of baggage does not qualify as “smuggling”.
The bench of Justice Yashwant Varma and Justice Ravinder Dudeja has observed that petitioner is a foreign national, who brought a chain and a kara by wearing them on his body while arriving from Bangkok. The same was not brought in a concealed manner.
The petitioner/assessee is a Foreign National of Indian origin and a resident of Thailand. He arrived in India from Bangkok on 25.04.2014. Near the exit gate after he had crossed the green channel, the Officers of Customs enquired from the petitioner whether he was carrying any goods which he needed to declare to the Customs, to which, he replied in negative.
As per Indian Customs Declaration Form of the petitioner, there were no dutiable goods carried by him. Petitioner had not declared any gold/bullion in the declaration form.
On his personal search, a gold chain and a gold kara were recovered. After examining the same, the Jewellery Appraiser reported that the total weight of the gold was 501.00 grams, valued at Rs. 13,12,861/-.
Since the petitioner did not provide any documents regarding the possession of the gold chain and kara, the same were seized under Section 110 of the Customs Act, 1962 on the reasonable belief that the same were imported to India illegally and were attempted to be cleared without payment of customs duty.
A Show Cause Notice dated 14.10.2024 was issued to the petitioner. Petitioner filed his response stating that gold jewellery was purchased by his wife for his daughter’s wedding.
Order was passed, by, confiscating the gold chain and kara. However, the petitioner was given an option to redeem the confiscated goods on payment of redemption fine of Rs. 2,00,000/- and payment of applicable customs duty at the rate of 36.05%. A penalty of Rs. 1,25,000/- was also imposed upon the petitioner.
The petitioner/assessee preferred an appeal before the Commissioner of Customs. Order-in-Appeal passed by the Commissioner of Customs (Appeals) went in favour of the petitioner and directed the Department to return the gold jewellery to the petitioner.
The Order-in-Appeal was challenged in revision before the Additional Secretary to the Government of India. The Revisional Authority allowed the revision application and set aside the Order-in-Appeal and restored the Order- in-Original. Said order is the subject matter of challenge in the present writ petition.
The petitioner argued that petitioner is the owner of the gold jewellery. It is submitted that gold weighing 1742 grams was purchased by the wife of the petitioner from M/s. Shagun Jewellers Pvt. Ltd, Paschim Vihar vide Invoice no. 4329 dated 21.04.2021 against payment made through NRI account jointly held by the petitioner and his wife, maintained with Canara Bank.
The petitioner submitted that the gold kara and chain in question were made out of part of the said gold from M/s. Roop Jewellers, Arya Samaj Mandir, Rani Bagh for a consideration of Rs. 5570/-. It is submitted that the ornaments were seized ignoring the invoices produced.
The Department argued that petitioner had not made any declaration of gold kara and chain in the Declaration Form. As per the report of the Appraiser, the gold chain and gold kara were made up of 24 carat gold and that petitioner tried to clear the same clandestinely and thus violated the provisions of Section 77 of the Customs Act.
The department submitted that gold is not allowed to be imported freely in the baggage. With regard to the claim of the petitioner that the impugned gold was purchased from India and taken to Bangkok, it is submitted that the petitioner had not obtained export certificate in respect of the said gold while leaving India for Bangkok and there is nothing on record to suggest that the gold was the same gold which was purchased from India.
Import of gold in India is highly regulated and bulk importation of gold can only be effected by the nominated banks, agencies or business houses in the manner laid down by various DGFT Regulations as well as by RBI Circulars or by the “eligible passengers” in the manner provided by the relevant regulations. As per Section 7 of Foreign Trade (Development and Regulation) Act, 1992, no person is allowed to import gold into the country except under an Import-Export Code Number.
However, Rule 3(1)(h) of the Foreign Trade (exemption from application of rules in certain cases) Rules, 1993 provides exemption to the import of any goods by the person as passenger baggage to the extent permissible under the Baggage Rules.
The court stated that the Original Authority and Revisional Authority has clearly misconstrued the scheme as well as objectives of the Baggage Rules. The order passed in revision, is quashed.
The court held that the order of confiscation, customs duty and the penalty imposed is without any legal foundation.
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Case Details
Case Title: Luvleen Maingi Versus Union Of India
Case No.: W.P.(C) 11877/2018
Date: 02/12/2024
Counsel For Petitioner: D.S. Chadha and Riya Sharma
Counsel For Respondent: Anil Soni, Devrat Yadav
