2023 (8) TMI 863 - HC - Customs

Court orders return of seized gold chains under Customs Act, clarifies treatment of restricted items

Musthafa Versus The Commissioner of Customs, The Joint Commissioner of Customs, (Adjudication-AIR)

The Court granted the writ petition for the return of seized gold chains under the Customs Act. The petitioner was directed to pay 50% customs duty and ... Direction to respondents to return the seized 03 numbers of crude gold chain 24 Karat purity totally weighing 348 grams to the petitioner - prohibited item or restricted item - Section 110-A of the Customs Act, 1962 - HELD THAT:- Once the gold is seized by the proper officers under Section 110 of the Customs Act, 1962, the petitioner is entitled to release of the gold, which are detained pending adjudication proceedings, in terms of Section 110-A of the Customs Act, 1962. As per Section 110-A of the Customs Act, 1962, any goods, documents or things seized or bank account provisionally attached, pending the order of the adjudicating authority, may be released to the owner or the bank account holder on taking a bond from him in the proper form with such security and conditions as the adjudicating authority may require. Thereafter, even in the case of option to pay fine in lieu of confiscation, Section 125 of the Customs Act, 1962 will come into play. In the present case, the gold chains, which have been seized from the petitioner, is not a prohibited item. Hence, the Adjudication Officer ultimately, shall give an option to redeem the confiscated gold jewels. In the present case, the petitioner is ready and willing to give a bank guarantee for 50% of the duty involved. It is seen that the respondents have treated the gold as prohibited items. But the Hon'ble Apex Court in the case of COMMISSIONER OF CUSTOMS VERSUS M/S. ATUL AUTOMATIONS PVT. LTD., AND PARAG DOMESTIC APPLIANCES [2019 (1) TMI 1324 - SUPREME COURT] distinguished the prohibited item from restricted item. It was held that Section 125 of the Customs Act vests discretion in the authority to levy fine in lieu of confiscation. The MFDs were not prohibited but restricted items for import. A harmonious reading of the statutory provisions of the Foreign Trade Act and Section 125 of the Customs Act will therefore not detract from the redemption of such restricted goods imported without authorization upon payment of the market value. There will exist a fundamental distinction between what is prohibited and what is restricted. Further, the Delhi High Court in VAIBHAV SAMPAT MORE, RAVIKIRAN BALASO GAIKWAD, SADDAM RAMJAN PATEL, DILEEP LAXMAN PATIL, PAWAN KUMAR MOHAN GAIKWAD, AVADHUT ARUN VIBHUTE, SACHIN APPASO HASBE, ABHIJEET NAND KUMAR BABAR, YOGESH HANMANT RUPNAR, VERSUS NATIONAL INVESTIGATION AGENCY THROUGH ITS CHIEF INVESTIGATION OFFICER [2022 (6) TMI 220 - DELHI HIGH COURT] held that import of gold is not prohibited, but restricted subject to prescribed quantity on payment of duty. Thus, import of gold is not prohibited, but restricted subject to prescribed quantity on payment of duty. Section 125 of the Customs Act, 1962, gives rights to the owner or from whom the goods have been seized to redeem such goods on payment of fine. Further, the Courts consistently held that goods can be handed over on executing 50% of the Bank guarantee on the duty amount. In view of the same, the impugned order is quashed and the petitioner is directed to pay 50% customs duty and also execute 50% of the Bank guarantee in lieu of customs duty. And on such payment / execution of the Bank guarantee, the respondents are directed to hand over the gold chains to the petitioner within two weeks from thereon. This Writ Petition is disposed of. Issues:The issues involved in the judgment are the seizure of gold chains by Customs Officers, exercise of power under Section 110 of the Customs Act, and the petitioner's request for the return of the seized gold.Seizure of Gold Chains:The petitioner arrived in Chennai Airport possessing gold chains, which were seized by Customs Officers under threat and coercion. The petitioner claimed to have purchased the jewelry from his own income. The respondents justified the seizure under Section 110 of the Customs Act. The petitioner argued that since gold is a restricted item, it should be returned to the owner or passenger from whom it was seized, citing various judgments in support.Legal Precedents:The judgment referenced previous cases where similar issues were addressed. In one case, a direction was given to release gold jewels on payment of customs duty and redemption fine, subject to adjudication proceedings. Another case highlighted the consistent view of returning seized gold to the owner on payment of 50% duty, with the option for authorities to proceed further if guilt is established.Customs Act Provisions:Under Section 110-A of the Customs Act, goods seized pending adjudication may be released to the owner on bond with security. Section 125 provides the option to pay a fine in lieu of confiscation for prohibited items, which does not apply in the case of non-prohibited items like gold chains. The petitioner offered to provide a bank guarantee for 50% of the duty involved.Court's Decision:The Court considered the distinction between prohibited and restricted items, emphasizing that gold is a restricted item subject to payment of duty. Referring to Section 125, the Court directed the petitioner to pay 50% customs duty and execute a bank guarantee for the remaining amount. Upon compliance, the respondents were ordered to return the gold chains within two weeks.Conclusion:The writ petition seeking the return of seized gold chains was granted based on the interpretation of relevant provisions of the Customs Act and legal precedents. The petitioner was instructed to fulfill payment and guarantee requirements for the release of the gold chains. The judgment provided clarity on the treatment of restricted items like gold under customs laws.