17 Jun 2022 5:25 AM GMT
The Madras High Court recently upheld the order of the Principal Commissioner (Revision Application) and held that gold/silver ornaments that are worn in person and exceed Rs. 50,000 in value have to be declared before the Customs Authority. Justice C Saravanan opined that the law was unambiguous in this regard. Though exemptions were provided under the Baggage Rules, 2016 it was...
The Madras High Court recently upheld the order of the Principal Commissioner (Revision Application) and held that gold/silver ornaments that are worn in person and exceed Rs. 50,000 in value have to be declared before the Customs Authority.
Justice C Saravanan opined that the law was unambiguous in this regard. Though exemptions were provided under the Baggage Rules, 2016 it was limited to the extent permitted under the Rules. The court also opined that import of jewelry worth more than Rs. 50,000 could not be considered as bonafide baggage and could not be exempted from paying customs duty.
The petitioners are members of the same family and are Sri Lankan nationals based in Colombo. They arrived at the Chennai Airport on 06.05.2017 along with two minor children. All the petitioners were wearing 1,594 kgs of gold jewelry valued at Rs.43,95,854/-. They attempted to walk through the green channel along with two minor children wearing 1594 kgs of gold jewelry without making a declaration before the Customs Officers. Apart from the jewelry, the first petitioner had also purchased about 112 bottles of liquor valued at Rs.1,50,000/-.
The officers of the Air Customs Department intercepted them and found that there was an attempt to smuggle liquor beyond the permissible limit. Subsequently, a show-cause notice under Section 124 of the Customs Act, 1962 was issued to them which was duly replied.
The Joint Commissioner of Customs, 3rd respondent imposed a redemption fine under Section 125 of the Customs Act and a penalty under Sections 112 (a) & 114 AA of the Customs Act, 1962. Aggrieved, the petitioners herein filed an appeal before the Appellate Commissioner. By a common Order, the appeals were allowed.
The petitioners had thus filed writ petitions for a refund of the amount paid by them towards redemption and penalty which was disposed of by the High Court directing the first respondent to pass appropriate orders on merits in the revision application filed before the first respondent within a period of 12 weeks.
The first respondent reversed the Order in Appeals passed by the Commissioner of Customs (Appeals) and thus affirmed the order of the third respondent ordering the confiscation of the gold & liquor and imposition of redemption fine and penalty under Section 125 and Section 112 (a) of the Customs Act, 1962. The first respondent further held that there was no necessity to impose a separate penalty under Section 114 AA of the Customs Act, 1962.
The petitioners relied heavily on the decision of the Kerala High Court in Vigneswaran Sethuraman, vs. Union of India (2014) 308 E.L.T 394 (Ker). They contended that the decision would apply to the present case also in as much as a foreign tourist coming to India was not required to make a declaration of jewelry worn or carried in person.
They further contended that the respondents had wrongly relied on the Notification` issued under Section 25 of the Customs Act, 1962 which was applicable only in the case of an "eligible passenger" and applied only to citizens returning from abroad after a long stay.
They submitted that the confiscation of jewelry was outside the purview of the Customs Act 1962 and Baggage Rules 2016 and the impugned notification. Therefore, the impugned order upholding the confiscation and redemption fine and penalty is liable to be set aside.
The respondent contended that the decision of the Kerala High Court had rendered its decision in the context of Baggage Rules 1998. The reasoning therein could not be imported into the provision of the Baggage Rules, 2016.
As per Rule 3 of the 2016 Rules, only certain categories of goods were allowed to be cleared duty-free. A foreign tourist was allowed a duty-free clearance of only bonafide baggage. The petitioners were not bonafide tourists and therefore the impugned order need not be interfered with.
The court observed that Jewelry items are not articles of personal effect. Therefore, the petitioners being tourists within the meaning of Rule 2(1)(v) of the Rules were governed by Sub Clause (b) of Rule 3 of Baggage Rules, 2016. The said Rule read with Annexure I makes it clear that gold or silver ornaments up to a value of Rs.50,000/- (Rupees Fifty Thousand only) worn in person or carried on the person are only freely importable.
Since the value of the gold ornaments worn in the person of the respective petitioners exceeded Rs.50,000/- (Rupees Fifty Thousand only), it was incumbent on the part of the petitioners to have made a proper declaration under Customs Baggage Declaration Regulations, 2013 read with Baggage Rules 2016. These Rules apply to all passengers including tourists coming to India.
Therefore, there was no scope for any ambiguity and confusion. If the value of gold and silver ornaments exceeded the value under the Rules, the petitioners were required to make the appropriate declaration.
Import of gold or silver ornaments exceeding Rs.50,000/- (Rupees Fifty Thousand only) cannot be considered as part of the bonafide baggage of tourists traveling to India. The court also raised suspicion about the conduct of the petitioners.
"Further, one fails to understand, petitioners who claim to be pilgrims visiting an alien country would wear costly jewellery even if it be their customs. The fact that the petitioners also purchased 112 bottles liquor beyond the permissible limits and attempted to walk through the green channel without making declaration also shows that the visit to India by the petitioners were not purely as pilgrimage alone."
The court was therefore of the opinion that the proceedings against the petitioners were in accordance with the provisions of the Customs Act 1962 and that there was no infirmity in the order.
Case Title: Chandrasegaram Vijayasundaram and others v. Principal Commissioner (Revision Application) and others
Case No: W.P No. 20249 of 2021
Citation: 2022 LiveLaw (Mad) 253
Counsel for the Petitioner: Mr.B.Satish Sundar
Counsel for the Respondents: Mr.M.Santhanaraman
Click here to read/download the judgment