Baggage import of gold by an NRI passenger: declaration breach justified confiscation, but not absolute confiscation or harsh penalty.

Import of gold as baggage by an NRI passenger was considered against customs, import control, foreign exchange and RBI requirements. The baggage scheme was not limited to Indian nationals returning from abroad, and the six-month condition was not to be applied mechanically to a person resident outside India. However, the passenger failed to make the mandatory declaration under Section 77 of the Customs Act, 1962; payment of duty through a co-passenger did not cure that breach. The gold was therefore liable to confiscation for statutory violation, but absolute confiscation was held excessive because duty had been paid, there was no intent to evade duty, and the breach was substantially technical. Redemption on fine and reduction of penalty were considered appropriate.

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Issues: (i) Whether the import of gold as baggage by an NRI passenger was in violation of the applicable customs, import control and foreign exchange restrictions so as to justify confiscation and penalty; (ii) whether absolute confiscation and the original penalty were warranted in the facts of the case.

Issue (i): Whether the import of gold as baggage by an NRI passenger was in violation of the applicable customs, import control and foreign exchange restrictions so as to justify confiscation and penalty.

Analysis: The baggage import was to be read with the customs notification, the import control order, the FERA notification and the RBI circular. The conditions for baggage import of gold were not confined only to Indian nationals visiting abroad, and the RBI circular also indicated that the six-month condition was not to be applied mechanically against a person resident outside India. However, the passenger was obliged to make a declaration under Section 77 of the Customs Act, 1962, and that declaration was not made by him. The payment of duty through a co-passenger did not cure that breach, though it showed absence of intent to evade duty and supported the view that the duty condition had substantially been met.

Conclusion: The import was not wholly free from illegality, and the gold remained liable to confiscation for violation of the customs and import control requirements.

Issue (ii): Whether absolute confiscation and the original penalty were warranted in the facts of the case.

Analysis: Although the declaration requirement was violated, the facts showed that duty had in fact been paid, there was no intention to evade duty, and the breach was substantially technical. In these circumstances, absolute confiscation was considered excessive. The case called for a more lenient view by allowing redemption on fine and reducing the penalty to a proportionate amount.

Conclusion: Absolute confiscation was not justified; the gold was ordered to be redeemed on payment of fine and the penalty was reduced.

Final Conclusion: The appeal succeeded only to the extent of relief against the severity of confiscation and penalty, while the liability of the gold to confiscation on account of statutory breach was maintained.

Ratio Decidendi: Where statutory conditions for baggage import are substantially met and there is no intent to evade duty, violation of the declaration requirement may justify confiscation, but not absolute confiscation or an unduly harsh penalty.

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