2025 (5) TMI 1537 - AT - Customs

Gold and silver coins collected by numismatist qualify as personal baggage not commercial goods under Customs Act

Jagruti G Shah Versus Commissioner of Customs (CSMI) Airport, Mumbai

CESTAT Mumbai held that gold and silver coins collected by a numismatist constituted personal baggage rather than commercial goods. The tribunal found no ... Smuggling- Confiscation of the impugned goods consisting of gold coins, silver coins, coins of other metals, and promissory notes - Nature of personal baggage Or nature of commercial goods - misdeclaration of the quantity, description or value of dutiable goods - determine its value from Archaeological Survey of India - imposition of penalty - correctly classifiable under Customs Tariff Item (CTH) 9803, as claimed by him as baggage; or, is it classifiable under Customs Tariff Heading (CTI) 9706 0000 as determined by the learned Commissioner of Customs - HELD THAT:- On plain reading of the Notification No. 97(RE- 2008)/2004-2009 dated 17.03.2009, it transpires that items of description which fulfils the condition that it is an ‘antique, of an age exceeding hundred years, antiquarian books’ and falling under ITC (HS)/ CTI 9706 0000, are allowed for import as “FREE” in terms of the extant Foreign Trade Policy. However, the policy condition attached to import of such items are that the importer must abide by the relevant rules/laws relating to export of such items of the country from where the imports are sought to be made. It also transpires that above policy condition is applicable at the time of export from the relevant country of export for import into India. From the details, it transpires that the impugned goods are collection of coins of gold/silver/other material which has been collected and systematically preserved in the form of albums, envelopes designed to display items of numismatic value, held by a collector of numismatic materials (numismatist). Therefore, we are of the considered view, that the impugned goods are in the nature of personal baggage, and not of the nature of commercial goods. Further, in the absence of any specific and independent evidence or proof, to state that the impugned goods are ‘antique’, we find that the action of the learned Commissioner of customs in treating the goods as ‘antique’ and applying the import policy condition, does not stand the scrutiny of law. Further, there is neither any material to state that the appellant passenger had violated the legal requirements at the airport of departure, nor proceedings were initiated or objection raised by HRMC/Customs authorities abroad, in respect of their bringing into India such coins of gold/silver/other material. Hence, we are of the considered view that the action taken by the learned Commissioner in confiscation of the goods, treating the same as ‘prohibited goods’ under Section 111(d) ibid does not stand the scrutiny of law. Further, it is a fact on record that the complete description of the goods have been inventoried by the customs officers at the time of preparing baggage receipt, detention receipt, upon reporting by the appellant passenger on arrival. Hence, there is no ground to state that there was misdeclaration in respect of quantity, description of the goods. Furthermore, the value of goods were not arrived at by the Department even at the time of issue of SCN on 14.01.2013, and the valuation was done later on 26/31.12.2013, by registered valuer of jewellery/antique shop. Therefore, the conclusion arrived at by the learned Commissioner in confiscation of goods under Section 111(l), 111(m) ibid, as involving misdeclaration, details not corresponding to the baggage declaration made under section 77 ibid, does not stand the scrutiny of law. In view of the foregoing discussions and analysis, we are of the considered view that the impugned order dated 28.01.2014 treating the impugned goods as ‘antiques’ and confiscating the same under Section 111(d), 111(l) and 111(m) of Customs Act, 1962 does not stand the scrutiny of law and therefore it is liable to be set aside. Accordingly, we set aside the impugned order dated 28.01.2014, to the extent it had absolutely confiscated the impugned goods, and imposed penalties on the appellant. Since, the impugned goods are ‘baggage’ and customs clearance of such baggage is subjected to Baggage Rules in force and specified conditions of applicable notifications in force, we are abundantly making it clear to the parties on both sides, that before the impugned goods are allowed for clearance upon release from customs control, appellant shall pay applicable duties of customs, if any, subject to restrictions on the total quantity of gold/silver which are allowed under Notifications issued by the Government from time to time. Further, we are also making it clear that if the impugned goods are opted by the appellant passenger for its export back to the country from where it was brought in, then the customs authorities at CSMI airport shall duly record the details of export of impugned goods, in the form of Export Certificate which is used for high value items or any other document, for the limited purpose of official record, that the appellant had duly complied with applicable legal requirements, as per law. In the result, by setting aside the impugned order dated 28.01.2014, we allow the appeal filed by the appellant-importer in their favour with consequential relief, as per law. The core legal questions considered by the Tribunal include:1. Whether the confiscation of the impugned goods consisting of gold coins, silver coins, coins of other metals, and promissory notes under Sections 111(d), 111(l), and 111(m) of the Customs Act, 1962, and the imposition of penalties under Sections 112(a) and 114AA are sustainable.2. Whether the impugned goods are correctly classifiable under Customs Tariff Heading (CTH) 9706 0000 as antiques, or under CTH 9803 as passenger baggage.3. Whether the appellant complied with the import policy conditions, particularly regarding the requirement of an export license from the country of export (UK) as per Notification No. 97(RE-2008)/2004-2009 dated 17.03.2009.4. Whether the appellant misdeclared the goods or carried them for commercial purposes, thus justifying confiscation and penalties.5. Whether the procedural safeguards under Section 138B of the Customs Act, 1962, including the right to cross-examination of witnesses, were duly followed by the adjudicating authority.Issue-wise Detailed Analysis:Issue 1: Sustainability of Confiscation and Penalties under Customs ActRelevant Legal Framework and Precedents: Sections 111(d), 111(l), and 111(m) of the Customs Act, 1962 pertain to confiscation for prohibited goods, misdeclaration, and goods not corresponding to declarations. Sections 112(a) and 114AA provide for penalties. The Baggage Rules, 1998, and relevant notifications govern passenger baggage clearance. The Tribunal referred to precedents including the Apex Court judgment in Hindustan Steel and Tribunal decisions emphasizing procedural fairness under Section 138B.Court's Interpretation and Reasoning: The Tribunal found no credible evidence that the appellant misdeclared the goods or that the goods were commercial in nature. The appellant declared the goods at the Red Channel, paid applicable duties on other items, and the customs officers prepared detailed inventory and receipts. There was no independent evidence of misdeclaration or commercial intent.Key Evidence and Findings: The detention receipt, baggage receipts, and customs challans showed proper declaration and payment of duty on other items. The appellant's conduct in declaring goods was not disputed. No evidence indicated the goods were for trade or commercial quantity.Application of Law to Facts: Since the goods were bona fide baggage and properly declared, confiscation under Sections 111(d), 111(l), and 111(m) was not justified. Consequently, penalties under Sections 112(a) and 114AA could not be sustained.Treatment of Competing Arguments: The Revenue argued violation of import policy and absence of export license from UK, justifying confiscation. The Tribunal rejected this on the basis that no evidence showed violation of UK export laws, and the appellant had no objection from UK customs. Also, the goods were not proven to be antiques requiring special licenses.Conclusion: Confiscation and penalties imposed by the Commissioner of Customs were unsustainable.Issue 2: Classification of Goods under Customs TariffRelevant Legal Framework: Customs Tariff Act, 1975, Chapter 97 (CTH 9706 0000) covers antiques of age exceeding 100 years. Chapter 98 (CTH 9803) covers passenger baggage and personal importations. Note 1 to Chapter 98 states it applies even if goods are covered elsewhere.Court's Interpretation and Reasoning: The Tribunal emphasized that classification as antiques requires proof that goods are indeed antiques over 100 years old. The opinion from Archaeological Survey of India (ASI) Mumbai did not certify the goods as antiques but stated the Customs Department should decide. The detailed description of coins showed a collection of various coins, some historical but not necessarily antiques.Key Evidence and Findings: Valuation reports from registered valuers and antique dealers described the coins as numismatic collections, including coins from various eras and types, but did not establish them as antiques. ASI's opinion explicitly noted the department should take action as per legislation.Application of Law to Facts: Since the goods were personal baggage and not certified antiques, classification under CTH 9803 for passenger baggage was appropriate rather than under CTH 9706 for antiques.Treatment of Competing Arguments: The Revenue insisted on classification as antiques to invoke import policy restrictions. The Tribunal rejected this due to lack of evidence and ASI's non-certification.Conclusion: The goods should be classified as passenger baggage under CTH 9803, not as antiques under CTH 9706.Issue 3: Compliance with Import Policy Conditions and Export LicensingRelevant Legal Framework: Notification No. 97(RE-2008)/2004-2009 mandates that importers of antiques abide by export rules of the country of origin. UK regulations require export licenses for archaeological objects above certain thresholds. The appellant's goods were alleged to require such licenses.Court's Interpretation and Reasoning: The Tribunal noted correspondence from UK HM Revenue and Customs indicating no restrictions on export of gold and silver coins to India. The appellant's goods fell below threshold limits requiring licenses. No objection was raised by UK authorities at the time of export.Key Evidence and Findings: Email from UK Customs (HMRC) stated no export restrictions. The appellant's collection was accumulated over 30 years through dealers and open market, making invoices unavailable but lawful. The appellant produced photographs and evidence of declaration.Application of Law to Facts: Since no export license was required or denied by UK authorities, and the goods were not antiques necessitating such licenses, the import policy condition was not violated.Treatment of Competing Arguments: The Revenue argued that the goods were antiques requiring export licenses and thus import was prohibited without them. The Tribunal rejected this due to lack of proof that goods were antiques or that export licenses were required.Conclusion: The appellant complied with export requirements of the UK, and import policy conditions were not breached.Issue 4: Misdeclaration and Commercial Nature of GoodsRelevant Legal Framework: Sections 111(l) and 111(m) of the Customs Act deal with misdeclaration and goods not corresponding to declarations. Baggage Rules, 1998, and Customs Manual prescribe procedures for declaration and clearance.Court's Interpretation and Reasoning: The appellant declared goods at the Red Channel, and the customs officers prepared detailed inventories and receipts. There was no evidence of misdeclaration, concealment, or commercial intent. The goods were personal collections, not commercial consignments.Key Evidence and Findings: Baggage declaration forms, detention receipts, and customs challans supported bona fide declaration. No panchanama or independent evidence of misdeclaration was produced.Application of Law to Facts: The absence of evidence on misdeclaration or commercial use negated confiscation under the relevant sections.Treatment of Competing Arguments: Revenue contended goods were commercial or misdeclared; the Tribunal found no material to support this.Conclusion: No misdeclaration or commercial import was established.Issue 5: Procedural Fairness and Opportunity for Cross-examinationRelevant Legal Framework: Section 138B of the Customs Act mandates adherence to principles of natural justice, including opportunity to cross-examine witnesses and present evidence.Court's Interpretation and Reasoning: The appellant requested to produce a witness and cross-examine the assessing officer, which was denied by the adjudicating authority without recording reasons. The Tribunal relied on High Court and Supreme Court precedents emphasizing that denial of such opportunity without reasons amounts to violation of natural justice.Key Evidence and Findings: Requests for witness examination and cross-examination were documented; no reasons for denial were recorded.Application of Law to Facts: Failure to follow prescribed procedures under Section 138B vitiated the adjudication.Treatment of Competing Arguments: The Revenue did not justify denial of procedural rights. The Tribunal held procedural lapses as a ground to set aside the order.Conclusion: The impugned order was liable to be set aside on procedural grounds.Significant Holdings:'The action taken by the learned Commissioner in confiscation of the goods, treating the same as 'antique' and applying the import policy condition, does not stand the scrutiny of law.''In the absence of any specific and independent evidence or proof, to state that the impugned goods are 'antique', we find that the impugned goods are in the nature of personal baggage, and not of the nature of commercial goods.''The appellant had no intention to mis-declare his baggage before the customs authorities.''The adjudicating authority has not followed the procedures prescribed under section 138B of the Act of 1962...otherwise it would amount to denial of principles of natural justice.''The impugned order dated 28.01.2014...does not stand the scrutiny of law and therefore it is liable to be set aside.'Core principles established include:Classification of goods as antiques under CTH 9706 requires credible proof of age and nature; mere collection of old coins does not suffice.Baggage brought by passengers is governed by Chapter XI of the Customs Act and Chapter 98 of the Customs Tariff, subject to Baggage Rules and notifications.Import policy conditions relating to antiques apply only if goods are certified antiques and require compliance with export laws of the country of origin.Proper declaration and payment of duty on baggage negate confiscation unless commercial intent or misdeclaration is established.Procedural fairness under Section 138B is mandatory; denial of cross-examination without reasons vitiates orders.Final determination was to set aside the impugned order of confiscation and penalty. The appellant's goods were held to be bona fide baggage, not antiques requiring special import conditions, and no violation of customs laws was established. The appellant was directed to pay applicable customs duties if any, and customs authorities were directed to facilitate lawful clearance or export with proper documentation.