2014 (12) TMI 268 - HC - Customs

Foreign tourist wins case after customs wrongly confiscated gold chain worn openly upon India entry

VIGNESWARAN SETHURAMAN Versus UNION OF INDIA

Kerala HC ruled in favor of a foreign tourist whose gold chain was confiscated by customs authorities. The court held that neither the Customs Act, 1962 ... Undeclared gold ornaments worn by a foreign tourist entering India - Whether the Customs Act, 1962 and the Baggage Rules, 1998 prohibit foreign tourists entering India from wearing gold ornaments and whether they are bound to declare the gold ornaments worn by them on their person and are not carried in a baggage - Confiscation of goods - Held that:- The second respondent has in the impugned order held that a foreigner cannot import even a single gram of gold free of duty or on payment of duty. He does not however refer to the law which imposes the prohibition. The learned counsel appearing for the respondents was also not able to bring to my notice any provision in the Act or the Baggage Rules, 1998 to that effect. No provision in any other law to that effect was also brought to my notice, in the absence of any prohibition imposed by the Act or any other law to the effect that a foreign tourist arriving in India cannot wear gold ornaments on his person or wear gold ornaments of 24 carat purity, clause (d) of Section 111 could not have been invoked to confiscate the gold chain worn by the petitioner. The gold chain was not concealed in any package and therefore it could not have been confiscated invoking clause (i) of Section 111. Even if it was dutiable, as it was not concealed in any manner in any package either before or after it was unloaded, it could not have been confiscated invoking clause (i) of Section 111 of the Act. At best, only the duty payable could have been levied. The Customs Act, 1962 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 Customs Act, 1962 and the rules framed thereunder 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 reliance placed by the revenue on Notification No. 117/1992-Cus., is misconceived. Though the learned counsel appearing for the respondents submitted that the gold chain worn by the petitioner was of 24 carat purity, which is prohibited, no statutory stipulation to that effect was brought to my notice. In the absence of a statutory prescription in express terms to the effect that a foreign tourist entering India should not wear 24 carat gold jewellery much less gold jewellery, I am of the opinion that the impugned order cannot be sustained. As I have held that the order of confiscation was passed without any legal foundation, the finding in Ext. P3 that the petitioner attempted to smuggle the gold chain cannot be sustained, consequently, I hold that the order of confiscation and the levy of penalty are liable to be set aside. - Decided in favour of assesee. The core legal questions considered by the Court in this writ petition are:Whether the Customs Act, 1962 and the Baggage Rules, 1998 prohibit foreign tourists entering India from wearing gold ornaments on their person.Whether foreign tourists are bound to declare gold ornaments worn on their person, as opposed to those carried in baggage, under Section 77 of the Customs Act, 1962.Whether undeclared gold ornaments worn by a foreign tourist entering India are liable to confiscation under the Customs Act, 1962.Whether the confiscation order and penalty imposed on the petitioner were legal and sustainable.Whether the petitioner should be relegated to alternative statutory remedies instead of invoking writ jurisdiction under Article 226 of the Constitution.Issue-wise Detailed Analysis:1. Applicability of Customs Act and Baggage Rules to Gold Ornaments Worn by Foreign TouristsThe Court examined the definitions and provisions relating to baggage under the Customs Act, 1962, particularly Sections 2(3), 2(22), 77, 80, and 81. The term 'baggage' is defined to include unaccompanied baggage but clearly excludes the body of the passenger. Section 77 requires declaration of the contents of baggage, which ordinarily refers to suitcases, bags, or containers carried by a traveler. Section 80 permits detention of baggage containing dutiable or prohibited articles for return upon leaving India. Section 81 empowers the Central Board to frame regulations concerning baggage clearance.The petitioner's gold chain was worn on his person and was not contained in his hand baggage. The Court held that the provisions relating to baggage and declarations thereunder cannot apply to gold ornaments worn by a passenger. Consequently, the Baggage Rules, 1998, which regulate duty-free allowances and declarations for articles carried in baggage, have no application to gold ornaments worn by a foreign tourist.2. Whether the Customs Act or any other law prohibits foreign tourists from wearing gold ornaments or requires them to declare such ornaments worn on their personThe respondents relied on Notification No. 117/92 and subsequent notifications to assert that the petitioner violated customs laws by not declaring the gold chain and that foreigners cannot import gold free of duty or on payment of duty. However, the Court noted that these notifications apply only to Indian citizens or persons of Indian origin and relate to gold imported as baggage, not gold worn on the person.The Court found no provision in the Customs Act, Baggage Rules, or any other law that prohibits foreign tourists from wearing gold ornaments or requires them to declare gold ornaments worn on their person. The confiscation order was therefore held to lack any legal foundation. The Court emphasized that the respondents failed to identify any statutory prohibition or duty liability applicable to gold ornaments worn by foreign tourists.3. Legality of confiscation and penalty under Sections 111 and 112 of the Customs Act, 1962Sections 111(d), (i), (l), and (m) of the Customs Act were invoked for confiscation. Clause (d) relates to goods imported contrary to prohibition under the Act or other law. Clause (i) relates to dutiable or prohibited goods concealed in any package. Clauses (l) and (m) relate to goods not declared or incorrectly declared in baggage.The Court held that since the gold chain was worn on the person and not concealed in any package or baggage, clauses (i), (l), and (m) do not apply. Clause (d) requires a prohibition under the Act or other law, which was absent. Thus, confiscation under Section 111 was unsustainable. Penalty under Section 112 can only be levied if goods are liable to confiscation under Section 111, which was not the case here.4. Requirement of fair warning and certainty in lawThe Court referred to the principle of legality and fair warning as enshrined in the decisions of the Apex Court and the US Supreme Court. It emphasized that laws must give persons of ordinary intelligence reasonable opportunity to know what is prohibited to avoid arbitrary and discriminatory application. The Customs Act and Baggage Rules do not clearly prohibit foreign tourists from wearing gold ornaments, nor do they provide notice to that effect. The confiscation order thus offended principles of fairness and legal certainty.5. Alternative statutory remediesThe respondents argued that the petitioner should have availed alternative statutory remedies instead of filing a writ petition. The Court, relying on precedent, held that where an order is passed without jurisdiction or legal foundation, the High Court's writ jurisdiction under Article 226 is not barred. Since the confiscation order lacked any legal basis, the petitioner was entitled to challenge it by way of writ petition.6. Treatment of competing arguments and findingsThe petitioner contended that the notifications cited by the respondents do not apply to gold ornaments worn on the person and that the Baggage Rules do not regulate such ornaments. The respondents contended that the petitioner was attempting to smuggle 24-carat gold and violated customs laws by not declaring it. The Court found no statutory provision prohibiting wearing 24-carat gold ornaments and noted the absence of any concealment or declaration requirement for gold worn on the person. The respondents' reliance on notifications applicable only to Indian-origin passengers carrying gold in baggage was rejected. The Court also observed that the petitioner was not given the option to detain the gold for re-export, as required under Section 80 of the Act.7. Application of law to facts and key evidenceThe petitioner's statement (Ext. P2) confirmed that the gold chain was worn on his person and not concealed in baggage. No contraband was found in his baggage. The confiscation order (Ext. P3) lacked any clear legal basis and did not specify any statutory prohibition justifying confiscation. The Court found the seizure and penalty arbitrary and unsustainable.Significant Holdings:'The body of a passenger cannot be said to be baggage.''The provisions of Sections 77, 80 and 81 of the Customs Act, 1962 and the Baggage Rules, 1998 can have no application to gold ornaments worn by a foreign tourist on his person.''In the absence of any prohibition imposed by the Customs Act or any other law to the effect that a foreign tourist entering India cannot wear gold ornaments on his person or wear gold ornaments of 24 carat purity, clause (d) of Section 111 could not have been invoked to confiscate the gold chain worn by the petitioner.''The Customs Act, 1962 and the Baggage Rules, 1998 do not stipulate that a foreign tourist entering India cannot wear gold ornaments on his person.''Vague laws offend several important values. It is insisted or emphasised that laws should give the person of ordinary intelligence a reasonable opportunity to know what is prohibited, so that he may act accordingly.''Where the authority against whom the writ is filed is shown to have had no jurisdiction or had purported to usurp jurisdiction without any legal foundation, the jurisdiction of the High Court to entertain a writ petition under Article 226 of the Constitution of India is not affected in spite of alternative statutory remedies.'Final determinations:The confiscation of the gold chain worn by the petitioner and the levy of penalty under Sections 111 and 112 of the Customs Act, 1962 were arbitrary, illegal, and unsustainable.The Baggage Rules, 1998 and the Customs Act, 1962 do not prohibit foreign tourists from wearing gold ornaments on their person, nor require declaration of such ornaments.The petitioner was not required to declare the gold chain worn on his person under Section 77 of the Customs Act.The order of confiscation was passed without any legal foundation and is quashed.The respondents are directed to return the gold chain in specie and refund the penalty amount paid by the petitioner.