TaxTMI 
TaxTMI 
2026 (9) TMI 753
X X X X Extracts X X X X
X X X X Extracts X X X X
....entive), Kolkata and reduced the penalty imposed on the two writ petitioners. 3. Out of the four appeals, APO 139 of 2018 has been filed by the writ petitioner in WP No. 279 of 2016 while the writ petitioner in WP No. 280 of 2016 has filed the appeal being APO 140 of 2018. Customs Department has filed APO 143 of 2018 in respect of WP No. 280 of 2016 while APO 144 of 2018 is in respect of WP No. 279 of 2016. 4. For the sake of convenience, and since, the writ petitioners have urged the same grounds in their two appeals and have opposed the two appeals of the Department, they are referred to herein as the writ petitioners while the Department is referred to as Customs. 5. Directorate of Revenue Intelligence had issued a show cause notice dated October 3, 2013 against the writ petitioners under Section 124 of the Customs Act, 1962. Commissioner of Customs (Preventive) had passed the adjudicating order in original dated November 24, 2015 confiscating 272 pieces of gold weighing 36.856 Kgs valued at Rs. 10.07 crores under Section 111 (b) of the Act of 1962. The adjudicating authority had also imposed penalty of Rs. 10.07 crores on both the writ petitioners under Section 112 of ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....2025 dated 17.09.2025] 9. Referring to the two appeals of the Department, learned Advocate appearing for the writ petitioners has submitted that, the seized gold were not prohibited goods as there was no specific prohibition on importation of gold issued under the Act of 1962. In support of the contention that, gold has to be classified as prohibited within the meaning of the Act of 1962, to be treated as such, learned Advocate appearing for the writ petitioners has relied upon Sections 2 (14), (25), (33) of the Act of 1962. He has also relied upon Sections 11, 11B and 125 of the Act of 1962. 10. Learned Advocate appearing for the writ petitioners has contended that, the statutory scheme under the Act of 1962, makes a clear distinction between dutiable and prohibited goods. The Act of 1962 has separate provisions for redemption of confiscated goods. He has contended that, the Central Government from time to time issued notifications under Section 11 of the Act of 1962. However, till date no notification issued by the Central Government under Section 11 of the Act of 1962 has included gold as a prohibited item prohibiting its importation into India. He has referred to the noti....
X X X X Extracts X X X X
X X X X Extracts X X X X
....eign exchange reserve of the country. 14. Learned Advocate appearing for the Customs has contended that Section 111 of the Act of 1962, provide for confiscation of improperly imported goods and that, importation of any goods contrary to the prohibition imposed by or under any other law for the time being in force can be confiscated. 15. Learned Advocate appearing for the Customs has relied upon Sections 114, 119, 120, 121, 123 and 126 of the Act of 1962 in support of the contention that, gold was a prohibited item. He has contended that, a smuggled good cannot be classified as a smuggled dutiable goods or a smuggled prohibited good. He has contended that, learned Judge erred in distinguishing between smuggled dutiable goods and smuggled prohibited goods. 16. Learned Advocate appearing for the Customs has contended that, since the goods confiscated were smuggled into India the same was correctly treated under Section 112(i) of the Act of 1962 by the Adjudicating Authority. 17. In support of his contentions learned Advocate for the Customs has relied upon the policy guidelines regarding import of gold by the Customs, Foreign Trade Policy existing at that point of time iss....
X X X X Extracts X X X X
X X X X Extracts X X X X
....Gopal Saha. Gopal Saha was the mastermind with Ajgar Sheikh acting as an accomplice. 20. A show cause notice dated October 3, 2013 had been issued to which, Gopal Saha had submitted a reply dated December 9, 2013 while Ajgar Sheikh had submitted a reply dated December 31, 2013. They had been given personal hearing by the Adjudicating Authority. 21. By the Adjudicating Order dated November 24, 2015, the Commissioner of Customs (Preventive) had directed confiscation of the seized gold valued at Rs. 10.07 crores under Section 111 (b) of the Act of 1962. He has imposed penalty of Rs. 10.07 crores on both the writ petitioners as the mastermind and kingpin as also the principal accomplice, under Section 112 of the Act of 1962. He has awarded penalties on the other nine persons. 22. The writ petitioners had a statutory alternative remedy in respect of the Adjudication Order dated November 24, 2015. Writ petitioners had the right to file an appeal under Section 129A of the Act of 1962. However, the writ petitioners had chosen to challenge the adjudication order by way of writ petitions under Article 226 of the Constitution of India. 23. It is trite law that, notwithstanding the....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ich the conditions subject to which the goods are permitted to be imported or exported have been complied with; (39) "smuggling", in relation to any goods, means any act or omission which will render such goods liable to confiscation under section 111 or section 113; 11. Power to prohibit importation or exportation of goods.- (1) If the Central Government is satisfied that it is necessary so to do for any of the purposes specified in sub-section (2), it may, by notification in the Official Gazette, prohibit either absolutely or subject to such conditions (to be fulfilled before or after clearance), as may be specified in the notification, the import or export of goods of any specified description. (2) The purposes referred to in sub-section (1) are the following:- (a) the maintenance of the security of India; (b) the maintenance of the public order and standards of decency or morality; (c) the prevention of smuggling; (d) the prevention of shortage of goods of any description; (e) the conservation of foreign exchange and safeguarding of balance of payments; (f) the prevention of injury to the ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....illegal import of goods of any class or description, the Central Government is satisfied that it is expedient in the public interest to take special measures for the purpose of checking the illegal import, circulation of disposal of such goods, or facilitating the detection of such goods, it may, by notification in the Official Gazette, specify goods of such class or description. "Section 111. Confiscation of improperly imported goods, etc.- - The following goods brought from a place outside India shall be liable to confiscation: - (a) any goods imported by sea or air which are unloaded or attempted to be unloaded at any place other than a customs port or customs airport appointed under clause (a) of section 7 for the unloading of such goods; (b) any goods imported by land or inland water through any route other than a route specified in a notification issued under clause (c) of section 7 for the import of such goods; (c) any dutiable or prohibited goods brought into any bay, gulf, creek or tidal river for the purpose of being landed at a place other than a customs port; (d) any goods which are imported or attempted to be import....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ng in force, in respect of which the condition is not observed unless the non-observance of the condition was sanctioned by the proper officer; (p) any notified goods in relation to which any provisions of Chapter IVA or of any rule made under this Act for carrying out the purposes of that Chapter have been contravened. (q) any goods imported on a claim of preferential rate of duty which contravenes any provision of Chapter VAA or any rule made thereunder. SECTION 112. Penalty for improper importation of goods, etc.- Any person, - (a) who, in relation to any goods, does or omits to do any act which act or omission would render such goods liable to confiscation under section 111, or abets the doing or omission of such an act, or (b) who acquires possession of or is in any way concerned in carrying, removing, depositing, harbouring, keeping, concealing, selling or purchasing, or in any other manner dealing with any goods which he knows or has reason to believe are liable to confiscation under section 111, shall be liable, - (i) in the case of goods in respect of which any prohibition is in force under this Act or any othe....
X X X X Extracts X X X X
X X X X Extracts X X X X
....sengers in the manner provided by the relevant regulations. It has held that, importation of gold is a prohibited item within the meaning of Section 2(33) of the Act of 1962 and that, redemption in case of importation of gold which brought into India illegally in the form of smuggling does not entitle the owner or importer for automatic release/redemption of such item and therefore as a necessary corollary a decision to allow release/redemption of the goods confiscated with or without imposition of fine in addition to payment of requisite duty is vested in the discretion of the Adjudicating Officer. Rahul Goyal (supra) has applied the principles laid down in the Nidhi Kapoor (supra). 30. The Delhi High Court in Rameshwar Tiwari (supra) has held that, gold imported contrary to the prohibition imposed for its import is liable to be confiscated under Section 111 of the Act of 1962. 31. The Rajasthan High Court in Om Prakash Soni (supra) has dealt with a challenge to the Constitutional validity of Sections 114, 115 and 108 of the Customs Act, 1962. It has held, after considering various authorities on the subject that, gold comes within the meaning of prohibited goods under the A....
X X X X Extracts X X X X
X X X X Extracts X X X X
....eferring to Supreme Court Judgment of Raj Grow Impex LLP (supra) has held that, Foreign Trade (Development and Regulation) Act, 1992 allowed the Central Government to regulate importation of betel nuts. 39. AGRICAS LLP and Others (supra) has held that, the Foreign Trade (Development and Regulation) Act, 1992 is in addition to and not in derogation of the provisions of any other law for the time being in force. It has noted that, Central Government continues to and have as the authority to impose quantitative restrictions of import of goods under the Act of 1992. 40. One of the objectives if not the predominant objective of the Act of 1962 is to ringfence domestic trade and commerce against unauthorized intrusion and extrusion of goods. In order to facilitate achievement of such objective, the Act of 1962 makes various provisions. In the context of the four appeals before us, we are concerned with smuggling of gold into India. 41. Section 2(25) of the Act of 1962 has defined imported goods to mean any goods brought into India. It does not include goods which have been cleared for home consumption. Section 2(39) of the Act of 1962 has defined smuggling in relation to any goo....
X X X X Extracts X X X X
X X X X Extracts X X X X
....he question therefore, is whether the seized gold had been imported by an agency authorized by the Reserve Bank of India in its notifications and circulars or the persons from whom the golds were seized were passengers carrying such gold at a port of entry and were therefore governed by the Baggage Rules. 48. In order to assess whether, the seized goods were prohibited goods within the meaning of the Act of 1962 or not, not only prohibition issued under the Act of 1962 is required to be considered but also any prohibition that have been issued under any other law for the time being in force. If there is a prohibition on importation of the goods seized issued under the Act of 1962 or any other law for the time being in force, then, such seized goods would fall within the definition of prohibited goods as appearing under Section 2(33) of the Act of 1962 and have to be proceeded against under the Act of 1962. The persons involved would also have to suffer the consequences under the Act of 1962. 49. Under the Act of 1962 the test is whether the intercepted or seized goods are prohibited by dint of exercise of powers under Section 11 of the Act of 1962 or by virtue of any prohibit....