2017 (8) TMI 684 - SC - Customs

Import of gold and diamond jewellery items - Baggage Rules - passing through the Green Channel - Smuggling - Whether the items are personal effects and no duty is leviable on the same - whether in the present facts and circumstances of the case, the show-cause notice dated 12.12.2002 and order dated 14.08.2003 are liable to be quashed or not? - Held that - the respondent herein did not violate the provisions of Section 77 of the Act since the necessary declaration was made by the respondent while passing through the Green Channel. Such declarations are deemed to be implicit and devised with a view to facilitate expeditious and smooth clearance of the passenger. Further, as per the International Convention on the Simplification and Harmonization of Customs Procedures (Kyoto 18.05.1973), a passenger going through the green channel is itself a declaration that he has no dutiable or prohibited articles. A harmonious reading of Rule 7 of the Baggage Rules, 1998 read with Appendix E (2), the respondent was not carrying any dutiable goods because the goods were the bona fide jewellery of the respondent for her personal use and was intended to be taken out of India. Also, with regard to the proximity of purchase of jewellery, all the jewellery was not purchased a few days before the departure of the respondent from UK, a large number of items had been in use for a long period. It did not make any difference whether the jewellery is new or used. There is also no relevance of the argument that since all the jewellery is to be taken out of India, it was, therefore, deliberately brought to India for taking it to Singapore. Foreign tourists are allowed to bring into India jewellery even of substantial value provided it is meant to be taken out of India with them and it is a pre-requisite at the time of making endorsements on the passport. Therefore, bringing jewellery into India for taking it out with the passenger is permissible and is not liable to any import duty. Also, from the present facts and circumstances of the case, it cannot be inferred that the jewellery was meant for import into India on the basis of return ticket which was found to be in the possession of the respondent. Moreover, we cannot ignore the contention of the respondent that her parents at the relevant time were in Indonesia and she had plans of proceeding to Indonesia. Some of the jewellery items purchased by the respondent were for her personal use and some were intended to be left with her parents in Indonesia. In the absence of any facts on record about the nature and mode of concealment and also any finding of the lower authority that jewellery was kept in a way to evade detection on examination of the baggage, it has to be held that there was no concealment as such. It is seen that the respondent chose the Green Channel for clearance of her baggage. She committed no violation of law or infraction of any instruction for clearance of the baggage through the green channel as she being a tourist had no dutiable goods to declare under the Baggage Rules - appeal dismissed - decided against appellant-Revenue.

Summary

Issues Involved:
1. Validity of the show-cause notice dated 12.12.2002 and the order dated 14.08.2003.
2. Classification of the seized goods as personal effects under the Baggage Rules, 1998.
3. Compliance with customs declaration requirements.
4. Intention of the respondent regarding the import and re-export of the jewellery.
5. Relevance of the monetary value of the jewellery in determining its classification as personal effects.

Detailed Analysis:

Validity of the Show-Cause Notice and Order:
The Supreme Court examined whether the show-cause notice dated 12.12.2002 and the order dated 14.08.2003 were liable to be quashed. The High Court had previously quashed these documents, and the review petition against this decision was dismissed. The Supreme Court upheld the High Court's decision, confirming that the show-cause notice and the order were invalid.

Classification of the Seized Goods:
The respondent was intercepted at IGI Airport carrying gold and diamond jewellery worth ?1.27 crores. The Directorate of Revenue Intelligence (DRI) seized the items under the belief that they were smuggled. The respondent claimed these were personal effects, exempt from duty under the Baggage Rules, 1998. The Supreme Court noted that the Baggage Rules allow tourists to bring used personal effects duty-free. The jewellery was deemed personal effects for the respondent's use, intended to be taken out of India, and thus not liable for duty.

Compliance with Customs Declaration Requirements:
The respondent passed through the Green Channel, implicitly declaring she had no dutiable items. The Supreme Court referenced the International Convention on the Simplification and Harmonization of Customs Procedures, which supports that passing through the Green Channel constitutes a declaration. The Court found no violation of Section 77 of the Customs Act, 1962, as the respondent had no dutiable goods to declare.

Intention Regarding Import and Re-Export of Jewellery:
The DRI argued that the respondent intended to smuggle the jewellery into India. However, the Supreme Court found no evidence supporting this claim. The respondent's travel records showed she returned to London shortly after arriving in India, and there was no restriction under UK law on reclaiming VAT and re-importing items. The Court concluded that the respondent's intention was to take the jewellery out of India, not to import it permanently.

Monetary Value of Jewellery:
The DRI contended that the high value of the jewellery indicated it could not be personal effects. The Supreme Court disagreed, stating that personal effects can include valuable items like jewellery. The High Court had noted that the jewellery's value, as assessed by DRI, was incorrect and significantly lower than claimed. The Supreme Court emphasized that the newness or value of personal effects should not be scrutinized excessively, as long as they are for personal use.

Conclusion:
The Supreme Court concluded that the respondent did not conceal the jewellery or violate any customs laws. The jewellery was classified as personal effects, exempt from duty under the Baggage Rules, 1998. The Court expunged any adverse remarks against the appellant from the High Court's judgment and dismissed the appeal, affirming the High Court's decision to set aside the show-cause notice and order. The decision was confined to the specific facts of this case and did not set a broader precedent.