Imported Gold Ruling: Proper Notification Required for Trade Policy Changes

The High Court upheld the tribunal's decision that the imported gold medallions and granules were freely importable at the time and not subject to subsequent restrictions. The court emphasized that amendments to the Foreign Trade Policy must be made through proper notifications, not circulars, and that RBI's role is limited to regulating payment methods, not imposing import restrictions. The appeals were dismissed, and the goods were directed to be cleared free of duty.

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Issues Involved:

1. Legality of the import of gold medallions and gold granules by the respondent.
2. Applicability of Foreign Trade Policy and Reserve Bank of India regulations on the import.
3. Validity of the orders passed by the Additional Commissioner of Customs and the Commissioner (Appeals).
4. Interpretation of relevant notifications and circulars issued by DGFT and RBI.
5. Relevance of prior judicial decisions on similar issues.

Issue-wise Detailed Analysis:

1. Legality of the import of gold medallions and gold granules by the respondent:

The respondent imported gold medallions and gold granules from Korea. The Additional Commissioner issued show cause notices stating that the respondent was neither a nominated bank nor a nominated agency, nor a holder of star or premium trading house, thus not permitted to import gold as per DGFT regulations. The goods were considered imported in contravention of the import policy, leading to their confiscation under Section 111 of the Customs Act, 1962, and penalties under Section 112.

2. Applicability of Foreign Trade Policy and Reserve Bank of India regulations on the import:

The tribunal held that the goods were freely importable at the time of import and not subject to RBI regulations, which apply only to nominated banks and agencies. The tribunal quashed the orders of the Commissioner (Appeals), directing the customs authorities to clear the goods free of duty. The appellant argued that import regulations under Para 2.01 of the Foreign Trade Policy 2015-2020 and RBI's role in regulating gold imports were not appropriately considered by the tribunal.

3. Validity of the orders passed by the Additional Commissioner of Customs and the Commissioner (Appeals):

The Additional Commissioner and the Commissioner (Appeals) upheld that the respondent was not permitted to import gold, as it was not a nominated entity under the Foreign Trade Policy. The tribunal, however, found that the goods were freely importable at the time of their import and the restrictions were imposed subsequently by notifications dated 25.08.2017 and 18.12.2019.

4. Interpretation of relevant notifications and circulars issued by DGFT and RBI:

The tribunal noted that amendments to the Foreign Trade Policy can only be made by the Central Government under Section 5 of the Foreign Trade (Development and Regulation) Act, 1992, or by DGFT through a notification under para 2.07 of the Foreign Trade Policy. The tribunal found that the restrictions on the import of gold medallions and gold granules were imposed after the import dates, making the goods freely importable at the time of import.

5. Relevance of prior judicial decisions on similar issues:

The appellant cited the Bombay High Court decision in 'Riddhisiddhi Bullions Limited and Ors. vs. Union of India and Ors.' to support their case. However, the tribunal distinguished the present case, noting that the petitioner in the cited case was a recognized premier trading house challenging RBI circulars, which did not apply to the current factual matrix.

Conclusion:

The High Court dismissed the appeals, upholding the tribunal's decision that the gold medallions and gold granules were freely importable at the time of their import and that subsequent restrictions imposed by DGFT notifications did not apply retroactively. The court emphasized that amendments to the Foreign Trade Policy must be made through proper notifications and not by circulars, and the RBI's role is limited to regulating the mode of payment rather than imposing import restrictions.

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