2025 (8) TMI 1307 - HC - Customs

Petition dismissed; no stay on appellate orders - appellant not habitual offender, must pay warehousing charges; goods released after verification

Ashiya Versus Commissioner Of Customs

HC dismissed the petition and refused to stay implementation of earlier appellate orders, noting the possibility of a review is not a ground to withhold ... Smuggling of gold bangles - denial of free allowance for not declaring the detained goods to the Proper Officer at Red Channel - ineligible Passenger for the purpose of the N/N. 50/2017- Customs dated 30.06.2017 (as amended) read with Baggage Rules, 2016 (as amended) - Confiscation - redemption fine - penalty - HELD THAT:- Considering that no review has been filed till date and the Order-in-Appeal has been issued way back on 26th May, 2025, the mere prospect of filing a review cannot be a ground to hold back implementation of these orders. Moreover, a perusal of paragraph 5.10 of the Appellate Authority’s order would show that the Authority has considered the entire aspect and has held that the Petitioner is not a habitual offender. The Appellate authority has also held that it cannot be presumed that the Petitioner is part of a smuggling syndicate. The Petitioner shall be liable to pay the warehousing charges as applicable on the date when the detention was made - The concerned authority shall release the detained items after due verification of the credentials of the Petitioner. Petition disposed off. ISSUES PRESENTED AND CONSIDERED 1. Whether the Order-in-Original (which denied free allowance, declared the passenger an 'ineligible Passenger', ordered confiscation of four gold bangles under sections 111(d), 111(j) and 111(m) of the Customs Act, 1962 and allowed option of redemption with fine and duty) as confirmed by the Appellate Authority, should be given effect to by the Court. 2. Whether the detained personal jewellery must be released without imposition of any warehouse/warehousing charges. 3. Whether the purity of the seized jewellery (24 carat/998 purity) renders it 'primary gold' or otherwise justifies absolute confiscation as being in commercial quantity or part of smuggling activity. 4. Whether the mere prospect or filing of a review application by the Department bars immediate implementation of an affirmed adjudicatory order. ISSUE-WISE DETAILED ANALYSIS Issue 1 - Enforcement of the affirmed Order-in-Original Legal framework: Sections 111, 112, and 125(3) of the Customs Act, 1962 (confiscation, penalty, and release on payment of fine/duty); Notification No. 50/2017 - Customs dated 30.06.2017 and Baggage Rules, 2016 (free allowance and eligibility provisions); appellate review under Customs procedure. Precedent Treatment: The Appellate Authority reviewed prior judicial pronouncements and applied those ratios to the facts; the Court accepted the Appellate Authority's consideration of those precedents. Interpretation and reasoning: The Appellate Authority examined factual findings (ownership, quantity, absence of habitual offending or syndicate involvement) and legal standards for confiscation versus redemption. The Authority concluded that absolute confiscation would be harsh and unjustified given the absence of commercial quantity, habitual offending, or evidence of organized smuggling, and therefore upheld the adjudicator's grant of redemption on payment of fine and duty. The Court found that the Appellate Authority had considered relevant legal principles and facts comprehensively. Ratio vs. Obiter: Ratio - affirmed conclusion that, on the facts, redemption (payment of fine and duty) rather than absolute confiscation was appropriate; that adjudicatory findings on non-habitual status and absence of smuggling nexus are sufficient to deny absolute confiscation. Obiter - ancillary comments on valuation methodology or general remarks about purity not treated as binding law beyond the facts. Conclusion: The Court directed implementation of the confirmed Order-in-Original and permitted release subject to the conditions in the order (payment of redemption fine and applicable customs duty and completion of legal/regulatory formalities), thereby enforcing the adjudicatory and appellate conclusions. Issue 2 - Liability to pay warehousing/warehouse charges on release Legal framework: Section 125(3) of the Customs Act (release upon payment) and general Customs practice allowing recovery of charges and dues incurred during detention/ warehousing. Precedent Treatment: The Appellate Order upheld the redemption option but did not direct waiver of warehousing charges; the Court noted that the possibility of review does not suspend implementation and addressed warehousing charges in exercise of supervisory jurisdiction. Interpretation and reasoning: The Court held that while the substantive order allowing redemption must be implemented, costs incidental to detention such as warehouse charges are recoverable unless expressly waived by the authority. No authority or finding in the affirmed orders absolved the passenger of warehousing charges; accordingly, the Court declined to direct release without such charges. Ratio vs. Obiter: Ratio - release under the affirmed order is subject to payment of warehousing charges applicable on date of detention; Obiter - none regarding automatic waiver of incidental charges. Conclusion: Petitioner is liable to pay warehousing charges applicable as on the date when detention occurred; release to follow after verification and compliance with payment and other conditions as per the nodal authority's directions. Issue 3 - Characterization of jewellery purity as 'primary gold' and its effect on confiscation Legal framework: Distinction in Customs law between personal jewellery and primary/commercial gold; criteria for confiscation include commercial quantity, evidence of smuggling syndicate involvement, and breach of declaration obligations. Precedent Treatment: The Appellate Authority considered judicial pronouncements distinguishing high-purity articles used as jewellery from 'primary gold' for commercial smuggling; it applied those ratios to reject a presumption that high purity alone equates to primary gold warranting absolute confiscation. Interpretation and reasoning: The Appellate Authority found that the impugned jewellery, though of high purity (998), was owned by the passenger and not in commercial quantity, and there was no material to show habitual offending or syndicate involvement. The Authority held that deeming such high-purity jewellery automatically as primary gold is not a reasonable conclusion absent other indicia. The Court accepted this reasoning and observed that purity alone, without corroborating evidence of commercial intent or organized smuggling, cannot justify absolute confiscation. Ratio vs. Obiter: Ratio - purity alone does not convert personal jewellery into primary gold for purposes of automatic confiscation; ownership, quantity, and absence of syndicate/habitual offending are material. Obiter - technical observations about malleability of 24-carat gold and normal jewellery composition were noted by the Department but were not adopted as grounds to overturn the adjudicatory findings. Conclusion: The finding that the jewellery was not in commercial quantity and that the passenger was not a habitual offender or part of a smuggling syndicate supports allowing redemption rather than absolute confiscation; the Court upheld the Appellate Authority's rejection of the Department's contention that high purity alone warrants confiscation. Issue 4 - Effect of potential departmental review on implementation of affirmed order Legal framework: Powers to review or file further departmental appeals do not ordinarily operate as automatic stay of execution unless stayed by appropriate forum or continuing injunction/ stay order is obtained. Precedent Treatment: The Court applied established administrative law principle that speculative or potential review does not restrain immediate implementation of a final adjudicatory order affirmed in appeal when no stay or review has been filed or granted. Interpretation and reasoning: The Department indicated an intention to file review but had not done so. The Court held that the mere prospect of filing a review cannot be a ground to withhold enforcement of the affirmed orders, particularly where the appellate decision is dated and there is no stay. The Appellate Authority had already addressed the core issues; withholding implementation on speculative review would frustrate finality. Ratio vs. Obiter: Ratio - an unfiled or speculative review application does not stay enforcement of an affirmed adjudicatory order; absent a stay, the order must be given effect. Obiter - procedural encouragement to pursue review expeditiously if intended. Conclusion: The Court directed implementation of the affirmed Order-in-Original notwithstanding the Department's stated intention to seek review, subject only to compliance with the order's conditions and payment of warehousing charges. Operational Directions (stemming from conclusions) For release: The detained items shall be released after due verification of credentials and completion of legal formalities; the Petitioner must approach the designated nodal officer who will guide compliance. The Petitioner remains liable for warehousing charges applicable on the date of detention.