TaxTMI 
TaxTMI 
2026 (9) TMI 570
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....gold ornaments seized on their arrival from Dubai. Petitioners seek release of gold on payment of redemption fine under Section 125 of the Customs Act, 1962, while claiming that seized gold is not a prohibited item. 2. Brief facts: Petitioners viz., Geetha, Madhan Kumar and Kannathasan are members of the same family, arrived on 20.02.2018 at Chennai from Dubai after a stay of four days. Petitioners proceeded through Green Channel, they were intercepted by customs authorities and on being questioned as to whether they were carrying any dutiable gold or goods, answered in the negative. A personal search was conducted. On such search, 332 grams, 282 grams and 382 grams, were recovered from petitioners viz., Madhan Kumar, Kannathasan and Geetha, in all 996 grams of 24-carat gold ornaments, valued at Rs.30,60,708/-, allegedly concealed beneath their clothing, were recovered. Customs authorities seized the gold under a mahazar and initiated proceedings, culminating in orders of absolute confiscation. Aggrieved, petitioners preferred an appeal before the 2nd respondent, the same was disposed vide order dated 11.10.2018, whereby penalty under Section 114 A of the Act was set aside wh....
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....oncealment on person with an intention to avoid detection by customs and thus had a culpable mind to take away the gold clandestinely. Considering the above facts and the conduct of the passenger does not warrant and justify redemption in lieu of confiscation. I also observe that the gold concealed by the passenger does not constitute to be the bonafide baggage which includes household goods and personal effects only. I also find that the passenger in her statement had accepted the fact of smuggling the gold. By indulging in these illegal activities, the passenger has violated the various provisions of the Customs Act, 1962 read with Section 3 (3) of the Foreign Trade (Development & Regulations), Act, 1992 mentioned at Para (7) above rendering herself liable for penal action." 3.2. Order of 1 s t Appellate Authority/ 2 nd respondent: "12. I find that in view of overall circumstances of the case and considering the nature of concealment, purity of gold, mode of carriage, ownership (the appellants have stated that they purchased the impugned gold, however, no purchase receipts were produced by them), etc, their culpable statements admitting the guilt. Further, th....
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....d the following contentions: a) Gold in question comprised personal jewellery worn by the Petitioners during travel. b) Gold is not a prohibited good under the Customs Act and that authorities erroneously treated the ornaments as smuggled goods and ordered absolute confiscation. c) Distinction between prohibited goods and restricted goods assumes significance, in the context of Section 125 of the Customs Act, and that petitioners ought to have been afforded the option of redemption on payment of fine. d) Baggage Rules have no application to personal jewellery worn by a passenger. e) That impugned proceedings are vitiated by violation of principles of natural justice. 4.2. In support of the above contention, following judgments were relied: i) Commr. of Customs v. Rajesh Jhamatmal Bhat, (2025) 150 GSTR 357 : 2022 SCC OnLine All 2625 : (2022) 5 All LJ 193 : (2022) 382 ELT 345; ii) Horizon Ferro Alloys P. Ltd. v. UOI, (2017) 42 GSTR 227 : 2016 SCC OnLine P&H 4706 : (2016) 340 ELT 27. 5. Case of Respondents: 5.1. Learned Additional Solicitor General of India, appearing for the Respondents submitted as follows: ....
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....e thereon. [(2) Where any fine in lieu of confiscation of goods is imposed under sub-section (1), the owner of such goods or the person referred to in sub-section (1), shall, in addition, be liable to any duty and charges payable in respect of such goods.] [(3) Where the fine imposed under sub-section (1) is not paid within a period of one hundred and twenty days from the date of option given thereunder, such option shall become void, unless an appeal against such order is pending. Explanation.-For removal of doubts, it is hereby declared that in cases where an order under sub-section (1) has been passed before the date on which the Finance Bill, 2018 receives the assent of the President and no appeal is pending against such order as on that date, the option under said sub-section may be exercised within a period of one hundred and twenty days from the date on which such assent is received.] " 9. The primary question raised by petitioners is as to whether restricted goods in the present case "gold", by virtue of non-compliance with the conditions attached to import would result in metamorphosis of such restricted goods into "prohibited goods". The answ....
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....ed before or after clearance, as may be specified in the notification, the import or export of the goods of any specified description. The notification can be issued for the purposes specified in sub-section (2). Hence, prohibition of importation or exportation could be subject to certain prescribed conditions to be fulfilled before or after clearance of goods. If conditions are not fulfilled, it may amount to prohibited goods.". (emphasis supplied) 11. Before proceeding further, it may be relevant to note that import of "gold bars", during the relevant period i.e. on 20.02.2018 was governed by Notification No. 12/2012-Cus dated 17.3.2012, amended vide Notification No. 26/2012-Cus dated 18.4.2012, while "jewellery" was governed by the Baggage Rules, 2016. If the import of the 24-carat gold in the form of jewellery is to be treated as import of "gold bars", then the same would be governed by the above notification, the relevant portion of which reads as under: S. No. Chapter or Heading or subheading or tariff item Description of goods Standard rate Additional duty rate Condition No. (1) (2) (3) (4) (5) (6) 321 71 or 98 Gold bars, other....
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....rrival. Further, the Petitioners do not qualify as eligible passengers, having stayed abroad for only 4 days as against the requisite period of 6 months prescribed under the above notification. 14. Assuming that these are jewellery, though admittedly these are of 24- carat purity, nevertheless, it would be governed by the Baggage Rules, 2016. Rule 5 of Baggage Rules, 2016 may be relevant and reads as under, "A passenger residing abroad for more than one year, on return to India, shall be allowed clearance free of duty in his bona fide baggage of jewellery upto a weight, of twenty grams with a value cap of fifty thousand rupees if brought by a gentleman passenger, or forty grams with a value cap of one lakh rupees if brought by a lady passenger." 15. Rule 5 of Baggage Rules permits import of only 40 grams of gold jewellery in case of women and 20 grams of gold jewellery in case of men. Clearly, what is imported is in excess of whatever is permitted to be imported as jewellery in terms of Baggage Rules, 2016. Further, admittedly, the petitioners had stayed abroad only for 4 days, thus falling short of 1 year as required in terms of the above Rule. Thus, Rule 5 may not ....
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....the individual orders passed by the adjudging officer and which were impugned in these writ petitions." b) Commr. of Cus. v. P. Sinnasamy, (2017) 42 GSTR 322 : 2016 SCC OnLine Mad 22055 at page 376 "41. In the case on hand, when discretion is conferred on the adjudicating authority, under section 125 of the Customs Act, 1962, as to whether, gold and other goods seized, should be confiscated absolutely or be permitted to be redeemed on payment of fine, on the facts and circumstances of the case, and considering the statutory provisions and notification, he has ordered absolute confiscation of gold and other goods, used for import and released certain goods on payment of fine and duty. Exercise of discretion has been interfered with by the Tribunal, with a specific direction to give option for redemption, in which event, there is no choice left to the adjudicating authority to act. He has no freedom or liberty to act, according to his own will and that he has been compelled to exercise discretion and his power, without control, other than his own judgment and in this context, let us consider, what the hon'ble apex court has said on exercise of discretion. ....