2025 (11) TMI 1124 - HC - Customs

Unconditional release of 30g gold bracelet as personal effect under Customs/Baggage rules; petitioner pays 50% warehousing charges

Izhaar Ul Islam Versus Commissioner of Customs IGI Airport T3 New Delhi.

HC directed release of a detained 30-gram gold bracelet to the petitioner as a personal effect, finding it purchased in India and not imported. Relying on ... Seeking release of the detained gold bracelet weighing 30 grams - personal effect of the Petitioner - HELD THAT:- It is clear that the detained jewellery is a personal effect of the Petitioner which was purchased in India itself and it was not an imported product. Further, the issue whether gold jewellery worn by a passenger would fall within the ambit of personal effects under the Rules, has now been settled by various decisions of the Supreme Court as also this Court. The Supreme Court in the Directorate of Revenue Intelligence and Ors. v. Pushpa Lekhumal Tolani, [2017 (8) TMI 684 - SUPREME COURT], while considering the relevant provisions of the Customs Act, 1962 (hereinafter, the ‘Act’) read with the Baggage Rules, 1998, that were in force during the relevant period, held that it is not permissible to completely exclude jewellery from the ambit of ‘personal effects’. Thus, the detained jewellery is directed to be released to the Petitioner unconditionally without collecting any customs duty, penalty or redemption fine - the Petitioner shall pay 50% of the warehousing charges, as per the charges applicable on the date of detention. Petition disposed off. ISSUES PRESENTED AND CONSIDERED 1. Whether detention of gold jewellery worn by a passenger, purchased in India, can be sustained where no show-cause notice under the Customs Act has been issued within the statutory time prescribed by Section 110(2). 2. Whether interim release powers under Section 110A affect or extinguish the mandatory consequences flowing from non-issuance of notice within the period specified in Section 110(2), including the operation of the first proviso permitting extension of time. 3. Whether gold jewellery worn by a passenger constitutes 'personal effects' under the Baggage Rules/ Customs regime such that it is not liable to confiscation, duty, penalty or redemption fine when relevant conditions are satisfied. 4. What consequential relief follows (release, payment of duties/penalties, warehousing charges) where seizure continues despite non-compliance with statutory time-limits and the detained item is held to be a personal effect. ISSUE-WISE DETAILED ANALYSIS Issue 1 - Effect of non-issuance of show-cause notice within the period prescribed by Section 110(2) Legal framework: Section 110(2) prescribes a six-month period (extendable by first proviso) within which consequences of seizure must be addressed; clause (a) of Section 124 contemplates issuance of notice relating to seized goods. Failure to issue requisite notice within the statutory period triggers the statutory consequence of return/release. Precedent Treatment: The Court followed the binding statements in higher authority holding that where no notice under clause (a) of Section 124 is issued within the statutory period (including any lawful extension), the statutory consequence is release of the goods. Interpretation and reasoning: The judgment emphasizes the mandatory nature of the time period in Section 110(2). Where no notice is issued within the period prescribed by sub-section (2), and no valid extension communication is made as mandated by the first proviso, the statutory consequence is release of seized goods. The record in the instant matter shows absence of any show-cause notice; therefore, the statutory mandate for release applies. Ratio vs. Obiter: Ratio - Non-issuance of notice within the statutory period (and without valid extension) mandates release of seized goods. The application of this principle to the facts (absence of notice) is dispositive. Conclusion: The detained bracelet must be released because no show-cause notice was issued within the statutory timeframe and no compliant extension was effected. Issue 2 - Interaction between Section 110A interim release powers and Section 110(2) mandatory time-limits Legal framework: Section 110A confers an interim release power (for fast-moving/perishable goods etc.), while Section 110(2) prescribes the time-period for notice/continuance of seizure; the first proviso to sub-section (2) permits a written extension by the Principal Commissioner/Commissioner with intimation to the person concerned. Precedent Treatment: The Court adopted the higher authority's analysis that Section 110A is an enabling/interim provision and does not supplant or extinguish the mandatory provisions of Section 110(2). Thus, release under Section 110A does not negate the consequences of failure to comply with Section 110(2)'s time limits. Interpretation and reasoning: The Court reasons that permitting interim release under Section 110A cannot be read to nullify the separate statutory scheme that fixes time limits for notice and adjudicatory steps. The first proviso to Section 110(2) is the only provision allowing extension of the six-month period and it imposes conditions (reasons recorded in writing and information to the person before expiry). Absent compliance with these conditions, Section 110(2)'s consequence follows. Ratio vs. Obiter: Ratio - Section 110A's interim-release power does not affect operation of Section 110(2); extensions must comply with the first proviso to be valid. Conclusion: Interim-release powers cannot be invoked to justify continued detention or to override mandatory notice/time-limit requirements; absence of a validly recorded and notified extension renders detention unlawful where no notice was issued within the prescribed period. Issue 3 - Whether gold jewellery worn by a passenger is a 'personal effect' exempting it from confiscation/duty/penalty when conditions met Legal framework: Customs Act provisions governing baggage and seized goods read with the Baggage Rules. Rule 7 and Appendix provisions delineate treatment of baggage/personal effects and the importation of jewellery brought into India by passengers. Precedent Treatment: The Court relied on settled jurisprudence that jewellery cannot be categorically excluded from the ambit of 'personal effects.' The higher authority's reasoning was followed that bona fide jewellery for personal use, even if new or recently acquired, can qualify as personal effects and is not automatically dutiable if intended to be taken out or declared as per rules. Interpretation and reasoning: The Court accepted the factual averments (bracelet purchased in India, worn as personal jewellery) and applied precedent holding that newness or proximity of purchase is not determinative. Declarations (e.g., via green channel) and bona fides are relevant; intention to smuggle or sell must be inferred from facts, not merely from value or recent purchase. The detained bracelet, being a personal effect purchased in India and worn by the passenger, falls within the ambit of personal effects as construed in precedent. Ratio vs. Obiter: Ratio - Jewellery worn by a passenger may constitute personal effects; newness or recent purchase alone does not defeat that status. Obiter - Observations about international conventions and pragmatic readings of 'new goods' provide context but the core holding is the statutory/interpretative rule stated above. Conclusion: The bracelet worn by the passenger is a personal effect and, under the applicable legal framework and precedents, is not liable to confiscation, duty, penalty or redemption fine in the circumstances shown. Issue 4 - Relief and incidental financial consequences where seizure is invalid by reason of statutory non-compliance and item is personal effect Legal framework: Remedies flow from the combined effect of Sections 110/110A and Section 124, read with baggage rules and relevant precedent that prescribes release and bars levy of customs duty/penalty when statutory preconditions for seizure/continuance are not met and item qualifies as personal effect. Precedent Treatment: The Court applied precedent ordering unconditional release without collection of customs duty, penalty or redemption fine where statutory time-limits were not complied with and items were personal effects. Interpretation and reasoning: Given the two independent bases for relief (absence of notice within time; item being a personal effect), the Court directed unconditional release without demand of duty/penalty/redemption fine. The Court, however, recognized legitimate administrative costs and apportioned warehousing charges; it required the petitioner to pay 50% of warehousing charges applicable on the date of detention. Ratio vs. Obiter: Ratio - Where statutory time-limits are not complied with and/or the item is a personal effect, the detained goods must be released without levy of customs duty, penalty or redemption fine. Obiter - The apportionment of warehousing charges is a discretionary incidental measure to balance administrative costs; the Court's order on warehousing charges is specific to the facts. Conclusion: The detained bracelet is to be released unconditionally without collecting customs duty, penalty or redemption fine; the detained party must bear 50% of warehousing charges as assessed on the date of detention. Cross-references and interconnected reasoning The conclusions on release rest on two interlinked grounds: (i) absence of issuance of a show-cause notice within the statutory time prescribed by Section 110(2) (and no valid extension under the first proviso), and (ii) the classification of the jewellery as a personal effect under the baggage/customs regime. The Court treated Section 110A as not displacing Section 110(2) and applied authoritative precedent on jewellery-as-personal-effect to direct unconditional release, subject only to partial warehousing cost recovery.