Telangana High Court

Smt.Elete Suseela, And Another vs Government Of India, And 4 Others on 19 March, 2024

Author: P.Sam Koshy

Bench: P.Sam Koshy, N.Tukaramji

        THE HONOURABLE SRI JUSTICE P.SAM KOSHY

                                AND

      THE HONOURABLE SRI JUSTICE N. TUKARAMJI

                Writ Petition No.13867 of 2019

ORDER:

(per Hon'ble Sri Justice P.SAM KOSHY)

The instant Writ Petition has been filed by the petitioners

under Article 226 of the Constitution of India praying the Court

to issue a Writ, Order or direction, more particularly one in the

nature of Writ of Mandamus to declare: (1) the Order-in-Original

No.108/2014-Adjn.Cus (ADC), dated 30.12.2014, passed by the

Adjudicating Authority and (2) the order of the Appellate

Authority dated 26.03.2018 in Appeal No.HYD-CUS-000-APP-

152 & 153-17-18 and order passed in Appeal No.6/2015-(D)Cus,

dated 22.05.2015, and the consequential order in Appeal

No.C/31096/2018, dated 01.04.2019 (Final Order

No.A/30446/2019) (for short, 'the impugned order'), as totally

arbitrary, irregular and without basing on the facts and

consequently to set aside the same.

2. Heard Mr.A. Ramakrishna, learned counsel for the

petitioner and Mr.Dominic Fernandes, learned Senior Standing

Counsel for Central Board of Indirect Taxes (C.B.I.C.), for the

respondents.

3. The impugned order is one which has been passed by the

Customs, Excise and Service Tax Appellate Tribunal, Regional

Bench at Hyderabad (C.E.S.T.A.T.), (for short, 'the Tribunal') on

01.04.2019 whereby the Tribunal had affirmed the Order-in-

Appeal, dated 26.03.2018, passed by the 2nd respondent in

Appeal Case No.HYD-CUS-000-APP-152&153-17-18.

4. The brief facts which led to the filing of the present Writ

Petition is that the petitioners herein are wife and husband who

had in the year 2014 gone to the United States of America where

they had stayed for a period little less than six months. After

staying there for some time, the petitioners came back to India

on 29.10.2014 via Doha and from Doha they took the flight to

Hyderabad. After collecting their baggage, the petitioners passed

through the green channel and just while they were about to

cross the exit gate, the officials of the respondents stopped the

petitioners for searching their baggage. When the petitioners

were passed through the metal detector, the 'beep' sound ran

and it was found that petitioner No.1 was wearing five (05) gold

bangles, the value of which at that point was ₹.8,50,185/-.

When the bangles were subjected to test, the same were found to

be of pure gold and the purity thereof being 99.9 and the total

weight of the five bangles was around (311.00) gms. During the

course of investigation, the petitioners took a stand that the gold

bangles were given to them by her daughter while she was in

Chicago.

5. After thorough investigation, it was found that petitioners

have not given proper declaration in respect of the gold they

were bringing in even if it was allegedly in the form of jewelry or

bangles. Secondly, it was found that the petitioners were

carrying gold much beyond the permissible limit for a passenger

to bring from overseas in accordance with the Foreign Trade

Policy applicable at the relevant point of time. For the aforesaid

non-disclosure of value of the gold being brought and the weight

of the gold and the price of the gold being much beyond the

permissible limits, the five (05) bangles were liable to be

confiscated under Section 111(i) of the Indian Customs Act,

1962 (for short, 'the Act').

6. On completion of the investigation, a show-cause notice

was issued to which the petitioners responded, and finally the

Order-in-Original was passed on 30.12.2014 ordering

confiscation of gold under Section 111(i) of the Act.

After the above order of confiscation was passed, the

authorities concerned gave them an option of redeeming the

goods on payment of fine and penalty under Section 112(a)(ii)

and also under Section 114(AA) of the Act. In addition, the

petitioners were also given the option to re-export the said gold

bangles.

7. Aggrieved by the Order-in-Original No.108/2014-Adjn.Cus

(ADC), dated 30.12.2014, whereby the petitioner was permitted

to redeem the gold upon payment of fine, the order of re-export

along with penalties were subjected to challenge in an Appeal

under Section 138(i) of the Act. The Appellate Authority, upon

due consideration of the contentions put forth by the petitioners

herein, had preferred an appeal before the CESTAT challenging

the Order-in-Original. Both these appeals came up for hearing

together and the appellate authority vide its order dated

30.12.2014 dismissed the appeal filed by the petitioners,

whereas the appeal filed by the respondent-Department was

partly allowed by modifying the Order-in-Original to the extent

that the petitioners would be liable to pay customs duty @ 35%

plus cess, as is applicable on the gold. It is this order which was

subsequently subjected to challenge before the CESTAT.

8. The CESTAT also after hearing the petitioners has decided

the appeal elaborately dealing with all the issues that the

petitioners have raised as grounds in the appeal that they had

preferred and finally vide the impugned order rejected the appeal

confirming the order passed by the Commissioner Appeals. It is

these orders which are under challenge by the petitioners in the

instant appeal.

9. Learned counsel for the petitioners highlighted the fact

that the authorities concerned and also the Appellate Tribunal

failed to appreciate the fact that there was no mens rea on the

part of the petitioners to smuggle gold into India. According to

the petitioners, the fact that the bangles were worn by petitioner

No.1 on her hand which was glaringly visible to one and all itself

establishes that the petitioners did not have an intention of

suppression or there was an intention of bringing the said

product by hiding the same either physically or by hiding within

the baggage.

10. According to the learned counsel for the petitioners, the

fact that the adjudicating authority himself had permitted the

petitioners to re-export gold without any duty clearly indicates

that it was not an act of smuggling on the part of the petitioners.

The fault on the part of the authorities concerned in not

appreciating the gold bangles worn by petitioner No.1 was not a

prohibited good but was personal jewelry which was permissible

for any citizen of India to wear and come.

11. It was also the contention of the learned counsel for the

petitioners that once when the petitioners were given the option

to re-export the gold ornaments without payment of duty,

thereafter passing an order for payment of duty, fine and penalty

under Section 112a and 114AA of the Act is highly unjustified,

unfair and arbitrary on the part of the respondents. According to

the learned counsel for the petitioners, both of them are senior

citizens and had gone to visit their daughter in United States of

America and it was a gift on the part of their daughter and

therefore, they had brought it.

12. It was the contention that the petitioners did carry a

declaration form and it was in the pocket of petitioner No.2 and

for this reason, the authorities concerned ought to have taken a

sympathetic view and imposition of penalty, fine and duty had

been waived.

13. Per contra, learned counsel for the respondent-Department

opposing the petition submits that it is a clear case where the

petitioners had illegally tried to smuggle gold worth more than

Rs.8.5 lakhs without even declaring the same in the course of

bringing it into the country. It is a case where in fact the

authorities concerned have already taken a very liberal approach

while dealing with the case of the petitioners and therefore there

is hardly any scope left for this Court now to invoke its

extraordinary jurisdiction under Article 226 of the Constitution

of India.

14. It was also the contention of the learned counsel for the

respondent-Department that the facts which are narrated in the

preceding paragraphs of this order by itself would clearly

establish the fact that there being a dispute that the petitioners

admittedly brought 311.00 gms. of five gold bangles, the market

value of which at that point of time was more than Rs.8.5 lakhs.

The gold bangles which is said to have been brought by the

petitioners was not in fact a jewelry as it would be evident from

the fact that it was pure gold with its purity at 99.9 which is not

normally used for manufacture of jewelry and therefore a strong

inference has to be drawn. That it was with an intention of

suppressing it from the Government and for evading tax and

other liabilities that would had occurred in favour of the

petitioners.

15. According to the learned counsel for the respondent-

Department the case of the petitioners squarely falls within the

definition of smuggling and also falls in violation of the foreign

trade policy in so far as smuggling of gold is concerned. That

since the petitioners have not been saddled with the tax liability

of payment of excess duty, but has only been ordered to pay fine

and penalty which too has been subsequently reduced

substantially by the Appellate Authority, there is hardly any

scope left for interfering with the same now.

16. It was also the contention of the learned counsel for the

respondent-Department that the fact that the authorities

concerned have already taken a liberal view at the first instance

and which further stood modified in favour of the petitioners

when the penalty amount was further substantially reduced by

1/4th, it cannot be said that the authorities have at any point of

time shown any arbitrariness or malafides against the

petitioners. For this reason also, the Writ Petition deserves to be

dismissed.

17. Having heard the contentions put forth on either side and

on perusal of records, it is necessary to be appreciated at this

juncture that the imported items from a foreign country into

India is classifiable under three (03) categories which for ready

reference is reproduced herein under:

"i. Free importable - Goods which are importable without any condition;

ii. Restricted goods - Goods which can be imported subject to fulfillment of certain conditions; and

iii. Prohibited goods - Goods which cannot be permitted to be imported into India."

18. In this regard, it is to further mention that gold bangles

(kada) brought by the petitioners can be safely held to be one

which falls under the restricted category of items. That any

restricted item which has been brought into India from foreign

country without fulfilling the conditions of import becomes a

prohibited item. The Hon'ble Supreme Court in the case of

M/s.Omprakash Bhatia vs. Commissioner of Customs, Delhi 1

in paragraph No.9 held as under:

"9. From the aforesaid definition, it can be stated that (a) if there is any prohibition of import or export of goods under the Act or any other law for the time being in force, it would be considered to be prohibited goods; and (b) this would not include any such goods in respect of which the conditions, subject to which the goods are imported or exported, have been complied with. This would mean that if the conditions prescribed for import or export of goods are not complied with, it would be considered to be prohibited goods. This would also be clear from Section 11 which empowers the Central Government to prohibit either 'absolutely' or 'subject to such conditions' to be fulfilled before or after clearance, as may be specified in the

(2003) 155 ELT 423

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."

19. The said judgment has further been reiterated on various

occasions. Thus, the said stand gets confirmed. According to

the baggage rules, 1998, a person is entitled to import articles in

a bona fide baggage including gold ornaments of only up to

Rs.15,000/- or of the value of Rs.45,000/- free of duty if the

passenger is returning from stay in the foreign country for a

period of less than three (03) days respectively. As per the

baggage rules, 1998, if a lady passenger is residing abroad for

over a period of one (01) year, she is eligible to bring jewelry up

to an average value of Rs.1,00,000/- free of duty. In

contravention to the same, the petitioners herein have brought

bangles weighing around 311.00 gms., the market value of

which was more than Rs.8.5 lakhs as assessed by the

Government approved valuer.

20. The import and export of goods into and out of India are

subject to the provisions of the Foreign Trade (Development and

Regulation) Act, 1992. In exercise of the powers conferred by

Section 3 read with Section 4 of the Foreign Trade (Development

and Regulation) Act, 1992 (22 of 1992), the Central Government

has framed the Foreign Trade (Exemption from Application of

Rules in Certain Cases) Order, 1993. As per Rule 3(h) of this

Order, a passenger of Indian Origin or having a valid Indian

passport and who has a stay of more than six months abroad is

allowed to import gold subject to certain conditions. Further, as

per Notification No.12/2012-Customs dated 17.03.2012, as

amended, eligible passengers of Indian Origin or having a valid

Indian passport and who have a stay of more than six months

abroad are permitted to bring gold up to 1 Kg. under concession

rate of duty of 10% ad volarem.

21. An international passenger is required to file International

Customs Declaration Form (I.C.D.) with the Customs

Department under Section 77 of the Customs Act, 1962. Merely

wearing the bangles on body by the petitioners does not obviate

the statutory requirement of filing an ICD form with the

Customs Department. Further, the fact of non-filing this ICD

Form and not submitting the same to the Customs Department

has not been disputed by the petitioners.

22. The word "smuggling" has been defined under Section

2(39) of the Act as under :

" "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".

23. Lastly, as regards the contention of learned counsel for the

petitioners that imposition of custom duties by the adjudicating

authority while extending the option to re-export the gold

bangles to be bad, it is necessary to appreciate that the

petitioner in the instant case was not eligible for duty-free

clearance of gold bangles brought from a foreign country leading

to its confiscation. The petitioners were permitted to redeem

only on payment of redemption fine and appropriate customs

duty so that the gold bangles would be cleared for domestic

consumption. However, the option of re-export of gold bangles

does not provide any right on the petitioner to get the gold

bangles cleared for home consumption and it is under these

circumstances that no duty is demanded on the option of

re-export of gold bangles. Thus, for all the aforesaid reasons we

do not find any illegality or perversity on the part of the

adjudicating authority at the first instance and then by the

Commissioner of Appeals subsequently, while modifying the

order, both of which subsequently stood affirmed by the CESTAT

vide the impugned order under challenge in the present case.

24. The decision relied on by the learned counsel for the

petitioners in Directorate of Revenue Intelligence vs. Pushpa

Lekhumal Tolani 2 is a decision which is distinguishable on its

facts itself and would not come to the rescue of the petitioners

for the simple reason that the facts of the case are entirely

different to the facts in the instant case.

25. In the case of Pushpa Lekhumal Tolani (2 supra), the

respondent therein had come to India from London as a tourist

and under the Baggage Rules, tourists were permitted to bring

in personal old jewelry. In was in this context that the said

decision was rendered, and unlike the facts of the instant writ

petition where the factual matrix which has been narrated in the

initial part of this judgment would itself clearly indicate the

distinction of the facts in the present writ petition with the facts

of the case in Pushpa Lekhumal Tolani (2 supra).

26. Further, the Delhi High Court in the case of Ms. Jasvir

Kaur vs. Union of India 3, the learned Division Bench, while

dealing with the responsibility of the person who brings high

2 AIR 2018 S.C. 438 3 AIR 1992 DELHI 332

value articles with them, held at paragraph Nos.6 and 7 as

under, viz.,

"6. It is the tourist who knows as to whether he has brought with him any article of high value. As we read Rule 7 it appears to us that it is incumbent on the tourist who comes into this country bringing with him articles of high value which are intended to be re-exported by him when he goes out of the country, to make a declaration and give the undertaking as contemplated by Rule 7. For the sake of convenience the Customs authorities may distribute a list to the passenger who lands at the airport but even if, without demand, no such list is given to a passenger but the passenger has brought an article of high value, then it is for him to give an undertaking as contemplated by sub-rule (1) of Rule 7. It is for him to ask for the form in which an undertaking is to be given. Sub- rule (2) has to be read along with sub-rule (1) and the said sub-rule requires a list of articles of high value to be given by the tourist. If, for any reason, the Customs authorities on their own do not give a list to be filled by a tourist that does not absolve the tourist of his obligation to obtain a list and list the articles of high value which have been brought by him.

7. In the present case, admittedly this was not done. It is only if such a list which is filed is signed can the articles be cleared for export when the tourist leaves India."

27. In the instant case, the petitioner No.1 was in possession

of the gold bangles while passing through the Green Channel of

the Customs at the Rajiv Gandhi International Airport,

Shamshabad. Despite possessing the gold bangles which are

dutiable goods, the petitioners neither adopted the Red Channel

nor submitted the ICD Form to the Customs Department and

thus tried to take the undue advantage of the Green Channel

facility at the Customs violating the provisions of Section 77 of

the Act.

28. It is an admitted fact that in the case on hand petitioners

do not satisfy the condition of having stayed abroad for more

than six months and the same has not been disputed by the