CARRYING OF ORNAMENTS AND JEWELLERY AS PART OF BAGGAGE DOES NOT AMOUNT TO SMUGGLING

In LUVLEEN MAINGI VERSUS UNION OF INDIA & ORS. - 2024 (12) TMI 179 - DELHI HIGH COURT, the petitioner is a national of Thailand and Indian origin.  While he came from Bangkok to India, he did not file any declaration form as required under the provisions of Section 77 of the Customs Act, 1962 (‘Act’ for short).  The said section provides that the owner of any baggage shall, for the purpose of clearing it, make a declaration of its contents to the proper officer.  He was intercepted by the Customs Officers.  They enquired him about the goods which have to be declared to the Department.  He answered in negative.  On his personal search a gold chain and a gold kara were recovered.  The value of the said articles is Rs.13,12,861/-.  Since the petitioner did not explain on the source of the said articles the same were confiscated under Section 110 of the Act on the belief that the said articles were imported illegally without payment of customs duty.

A show cause notice was issued to the petitioner on 14.10.2014.  The petitioner made a reply to the show cause notice in which he informed that the said articles were purchased by his wife for the marriage of their daughter.  The said articles were confiscated on 31.03.2015 vide a confiscation order.  The petitioner was given an option to redeem the confiscated goods on payment of Rs.2 lakhs as redemption fine + customs duty @ 36.05%.  penalty Rs.1,25,000/-

The petitioner filed an appeal before Commissioner of Customs (Appeals) against the said order.  The appellate authority allowed the appeal and directed the department to return the jewels to the petitioner.  Against this order the Department filed a revision petition before the Additional Secretary to the Government of India, the Revisional Authority who allowed the petition and set aside the order of the First Appellate Authority.  Therefore, the petitioner filed the present writ petition challenging the revisionary order.

The petitioner submitted the following before the High Court-

• The petitioner is the owner of the jewellery.
• The gold weighing 1742 grams was purchased by the wife of the petitioner from Shagun Jewellers Private Limited, 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 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/-.
• The ornaments were seized ignoring the invoices produced.

The Department submitted the following before the High Court-

• The petitioner had not made any declaration of gold kara and chain in the Declaration Form.
• 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 Act.
• The gold is not allowed to be imported freely in the baggage.
• The impugned gold was purchased from India and taken to Bangkok.
• 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 impugned gold was the same gold which was purchased from India.
• 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 High Court considered the above submissions.  The High Court observed that the Department was confined to personal effects exclusive of jewellery whether it be personal or otherwise.  The monetary limit provided in the Baggage Rules would be determinative of the value of the jewellery that may be carried by an incoming passenger and allowed duty free. 

The High Court analysed the circular issued by the Department in F.No. 520/136/92-CUS-VI, dated 24.09.1998.  The said circular clarified that the phrase “personal effects” would include “personal jewellery”.    The High Court relied on the judgment in ‘PUSHPA LAKHUMAL TULANI VERSUS ADD. COMMISSIONER CUSTOMS - 2006 (9) TMI 161 - DELHI HIGH COURT, the High Court considered the issue of ornaments and jewellery being carried as part of baggage and whether the same would qualify as ‘smuggling’ as defined under the Act, albeit in the context of the rules which applied then.  The High Court held that one has to look at the matter in a pragmatic way and one should appreciate that jewellery cannot be treated as other personal effects such as clothing, etc. The High Court also considered another possible situation. What if the Petitioner had worn the jewellery that she was carrying with her in her hand baggage. Could the Department still have confiscated it? Could they have claimed that it was not her ‘personal effects’ and that she had imported it to sell it in India? According to the High Court the answer has to be in the negative. This is because it could not be said that the jewellery was new goods packed ‘in their original packaging’, much less to say that it could ‘be disposed of off-hand’. The expression ‘new’ connotes that which is not at all used. It does not include ‘like new’.

The High Court also referred to Supreme Court judgment in DIRECTORATE OF REVENUE INTELLIGENCE VERSUS PUSHPA LEKHUMAL TOLANI - 2017 (8) TMI 684 - SUPREME COURT, the Supreme Court held that in the absence of any facts on record about the nature and mode of concealment and also any finding of the lower authority that jewellery was kept in a way to evade detection on examination of the baggage, it has to be held that there was no concealment as such. It is seen that the respondent chose the green channel for clearance of her baggage. She committed no violation of law or infraction of any instruction for clearance of the baggage through the green channel as she being a tourist had no dutiable goods to declare under the Baggage Rules. The presumption that the jewellery found in her baggage cannot be considered as personal effects owing to its high monetary value is rebutted herewith and the Supreme Court  held that the respondent was entitled to import personal jewellery duty free.

In VIGNESWARAN SETHURAMAN VERSUS UNION OF INDIA - 2014 (12) TMI 268 - KERALA HIGH COURT, the High Court held that the Act, or the Baggage Rules, 1998 do not stipulate that a foreign tourist entering India cannot wear gold ornaments on his person. The Customs Act, 1962 and the Baggage Rules, 1998 do not provide sufficient warning to foreign tourists entering India that wearing a gold chain is prohibited. The Act and the Rules do not even remotely indicate that a foreign tourist entering India cannot wear a gold chain on his person, in other words, foreign tourists entering India are in a boundless sea of uncertainty as to whether it is prohibited or not. As the Act and the rules framed there under contemplate confiscation and levy of penalty as also prosecution, the State has a duty to specify with a degree of certainty as to what is prohibited and what is not, without leaving it to the foreign tourist to guess what is prohibited and what is not.

The High Court observed that the 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.  It becomes apparent that the Original Authority and Revisional Authority has clearly misconstrued the scheme as well as objectives of the Baggage Rules.

The High Court quashed impugned revision order.  The High Court further held that the order of confiscation, customs duty and the penalty imposed is without any legal foundation.