Anticipatory bail denied in Rs 50 lakh gold smuggling case under Section 111(o) Customs Act

The Bombay HC dismissed anticipatory bail applications in a customs duty evasion case involving 37 kg of imported gold worth over Rs. 50 lakhs. Applicants imported gold under a processing scheme requiring export within 120 days but failed to process or export the gold. A witness confirmed no gold was received for processing and applicants instructed him not to visit office premises during search operations. The court found the gold was either sold locally or misappropriated, making applicants liable for duty payment and confiscation under Section 111(o) of Customs Act. Given the serious nature of the offense and missing gold, custodial interrogation was deemed necessary, warranting rejection of anticipatory bail.

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Issues Involved:
1. Jurisdiction and admissibility of anticipatory bail application.
2. Allegations of duty evasion and non-compliance with import-export obligations.
3. Validity of the extension of export obligation period.
4. Necessity of custodial interrogation and rejection of anticipatory bail.

Summary:

1. Jurisdiction and Admissibility of Anticipatory Bail Application:
The Applicants sought pre-arrest bail u/s 438 of Cr.P.C. in connection with an inquiry conducted by the Directorate of Revenue Intelligence (DRI) u/s 193 and 228 of IPC. The jurisdiction of the Sessions Court in Mumbai and the High Court of Bombay to entertain the anticipatory bail applications was not contested.

2. Allegations of Duty Evasion and Non-Compliance with Import-Export Obligations:
The Applicants, partners of M/s. Diavon Fine Jewels L.L.P., were authorized to import 150 kg of gold under Notification No. 18/2015-Customs. They imported 37 kg of gold but failed to process and export it within the stipulated 120 days, leading to duty evasion. The investigation revealed that the gold was sold in the Indian market, and the Applicants' registered office was a dummy office. The supporting manufacturer, M/s. D.B. Gold, did not receive any gold from the Applicants. The Applicants admitted selling the imported gold to local entities, evading customs duty of over Rs. 3.38 Crores, thus committing offenses u/s 135 (1) (i) (A) and 135 (1) (i) (B) of the Customs Act, 1962.

3. Validity of the Extension of Export Obligation Period:
The Applicants argued that the export obligation period was extended from 4.5.2024 to 4.11.2024, making the inquiry premature. However, the investigating agency contended that the 120-day export period from the date of import could not be extended. The court found that the extension did not negate the requirement to export within 120 days from the date of import, which the Applicants failed to do.

4. Necessity of Custodial Interrogation and Rejection of Anticipatory Bail:
The court noted that the Applicants failed to provide satisfactory answers regarding the gold and its whereabouts. Witnesses confirmed that the gold was not processed or exported but sold locally. The court concluded that the Applicants misappropriated the gold, evaded duty, and their custodial interrogation was necessary. Consequently, the application for anticipatory bail was rejected. The court also denied the extension of interim relief, considering the gravity of the offense involving the misappropriation of 37 kg of gold and significant duty evasion.

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