2014 (12) TMI 268 - HC - Customs

Undeclared gold ornaments worn by a foreign tourist entering India - Whether the Customs Act, 1962 and the Baggage Rules, 1998 prohibit foreign tourists entering India from wearing gold ornaments and whether they are bound to declare the gold ornaments worn by them on their person and are not carried in a baggage - Confiscation of goods - Held that - The second respondent has in the impugned order held that a foreigner cannot import even a single gram of gold free of duty or on payment of duty. He does not however refer to the law which imposes the prohibition. The learned counsel appearing for the respondents was also not able to bring to my notice any provision in the Act or the Baggage Rules, 1998 to that effect. No provision in any other law to that effect was also brought to my notice, in the absence of any prohibition imposed by the Act or any other law to the effect that a foreign tourist arriving in India cannot wear gold ornaments on his person or wear gold ornaments of 24 carat purity, clause (d) of Section 111 could not have been invoked to confiscate the gold chain worn by the petitioner. The gold chain was not concealed in any package and therefore it could not have been confiscated invoking clause (i) of Section 111. Even if it was dutiable, as it was not concealed in any manner in any package either before or after it was unloaded, it could not have been confiscated invoking clause (i) of Section 111 of the Act. At best, only the duty payable could have been levied. The Customs Act, 1962 or the Baggage Rules, 1998 do not stipulate that a foreign tourist entering India cannot wear gold ornaments on his person. The Customs Act, 1962 and the Baggage Rules, 1998 do not provide sufficient warning to foreign tourists entering India that wearing a gold chain is prohibited. The Act and the Rules do not even remotely indicate that a foreign tourist entering India cannot wear a gold chain on his person, in other words, foreign tourists entering India are in a boundless sea of uncertainty as to whether it is prohibited or not. As the Customs Act, 1962 and the rules framed thereunder contemplate confiscation and levy of penalty as also prosecution, the State has a duty to specify with a degree of certainty as to what is prohibited and what is not, without leaving it to the foreign tourist to guess what is prohibited and what is not. The reliance placed by the revenue on Notification No. 117/1992-Cus., is misconceived. Though the learned counsel appearing for the respondents submitted that the gold chain worn by the petitioner was of 24 carat purity, which is prohibited, no statutory stipulation to that effect was brought to my notice. In the absence of a statutory prescription in express terms to the effect that a foreign tourist entering India should not wear 24 carat gold jewellery much less gold jewellery, I am of the opinion that the impugned order cannot be sustained. As I have held that the order of confiscation was passed without any legal foundation, the finding in Ext. P3 that the petitioner attempted to smuggle the gold chain cannot be sustained, consequently, I hold that the order of confiscation and the levy of penalty are liable to be set aside. - Decided in favour of assesee.

Issues Involved:
1. Whether the Customs Act, 1962 and the Baggage Rules, 1998 prohibit foreign tourists entering India from wearing gold ornaments.
2. Whether foreign tourists are bound to declare gold ornaments worn on their person.
3. Whether undeclared gold ornaments worn by a foreign tourist entering India are liable to confiscation.
4. Whether the confiscation of the gold chain and the imposition of a penalty under the Customs Act, 1962 were arbitrary, illegal, and unsustainable.
5. Whether the petitioner was discriminated against compared to other passengers wearing gold ornaments.

Issue-wise Detailed Analysis:

1. Prohibition on Wearing Gold Ornaments:
The judgment examined whether the Customs Act, 1962 and the Baggage Rules, 1998 prohibit foreign tourists from wearing gold ornaments. The court found no provision in the Act or the Rules that prohibits a foreign tourist from wearing gold ornaments on their person. The Customs Act and the Baggage Rules do not provide sufficient warning to foreign tourists that wearing a gold chain is prohibited. The court emphasized the need for laws to give a person of ordinary intelligence a reasonable opportunity to know what is prohibited.

2. Declaration Requirement for Worn Gold Ornaments:
The court analyzed whether the petitioner was required to declare the gold chain worn by him under Section 77 of the Customs Act. The term "baggage" defined in Section 2(3) of the Act does not include items worn on the body. The court held that the gold chain worn by the petitioner was not part of his baggage and thus did not require declaration.

3. Liability of Undeclared Gold Ornaments to Confiscation:
The judgment reviewed the applicability of Section 111(d), (i), (l), and (m) of the Customs Act, which were invoked to confiscate the gold chain. The court found that these provisions did not apply as the gold chain was worn by the petitioner and not concealed in any package or baggage. The court concluded that the confiscation of the gold chain was without legal foundation.

4. Arbitrary and Illegal Confiscation and Penalty:
The petitioner contended that the confiscation of the gold chain and the imposition of a penalty were arbitrary, illegal, and unsustainable. The court agreed, stating that the Customs Act and the Baggage Rules do not prohibit a foreign tourist from wearing gold ornaments. The court also noted that the notifications cited by the respondents were not applicable to the petitioner's case.

5. Discrimination Against the Petitioner:
The petitioner argued that he was discriminated against as other passengers wearing gold ornaments were not subjected to punitive action. The court did not explicitly address this issue but implicitly supported the petitioner's claim by ruling the actions of the customs officials as arbitrary and without legal foundation.

Conclusion:
The court quashed the order of confiscation and the penalty imposed on the petitioner. It directed the respondents to return the confiscated gold chain and refund the penalty amount. The judgment underscored the importance of clear legal provisions and fair warning to individuals regarding prohibited conduct.

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