2018 (12) TMI 1371 - HC - Customs

Temporary detention of baggage - Smuggling - gold of third country origin - prohibited goods - N/N. 9 of 1996 Customs dated 22.1.1996 - Whether in the absence of any declaration under Section 77 of the Customs Act any benefit could be extended under Section 80 of the Act? Held that - Admittedly, the gold seized from the respondent was of the third country origin and had not been exported to Nepal from India. It was purchased by the respondent in London and was then brought by him to Nepal. The bringing of the said gold from London to Nepal amounts to export of gold of the third country to Nepal. Thus, its subsequent import to India is prohibited by the notification - Accordingly, the import of the aforesaid gold into India was in complete violation of the aforesaid notification read with Section 11 of the Act and as such is nothing but smuggling of gold. The notification No. 11/2012-Customs dated 17th March 2012 relied upon by the counsel for the respondent is one which has been issued under Sub-section (1) of Section 25 of the Act exempting certain goods of the specified nature from duty. The said notification exempts the gold of the specified nature upto the limit of 10 Kg. from duty. The aforesaid notification is simply a notification exempting gold from the payment of duty. It does not over ride the prohibition which has been imposed by the notification dated 22nd January 1996 - the notification relied upon on behalf of the respondents dated 17th March 2012 is of no help to him. In fact, it is not applicable to the facts and circumstances of the case. The argument advanced on its basis is therefore not tenable in law. The question raised in this appeal is answered in favour the Custom Department and it is held that the benefit of Section 80 could not have been extended to the respondent by the tribunal when there was no declaration by him under Section 77 of the Act - impugned order set aside - appeal allowed - decided in favor of appellant.

Summary

Issues:
- Appeal under Section 130 A of the Customs Act, 1962 against CESTAT's order
- Confiscation of gold and penalty imposition
- Application of Section 80 of the Act
- Necessity of declaration under Section 77 of the Customs Act
- Prohibition on import of goods from Nepal under specific notifications
- Interpretation of relevant provisions and notifications

Analysis:
The case involves an appeal by the Commissioner Customs (Preventive) against an order passed by CESTAT, concerning the confiscation of gold and imposition of a penalty on a respondent who attempted to smuggle gold into India. The respondent, a British passport holder, was found with a significant amount of gold of foreign origin upon entering India from Nepal. The Customs authorities seized the gold and issued a show cause notice, leading to the confiscation of the gold and imposition of a penalty. The respondent's appeals were dismissed until the tribunal allowed the appeal, invoking Section 80 of the Act and directing the return of the gold and passport to the respondent.

The main issue revolves around the application of Section 80 of the Act, which allows for the temporary detention of dutiable or prohibited articles upon a true declaration under Section 77. The appellant argues that the respondent did not make such a declaration, rendering the tribunal's decision erroneous. Conversely, the respondent claims he was not given the opportunity to declare and asserts the gold was not prohibited, citing specific notifications.

The court delves into the provisions of Section 80, emphasizing the mandatory requirement of a declaration under Section 77 for the return of detained articles. It clarifies that the owner of the baggage must make this declaration before the Custom Officer, which was not done in this case. Despite the respondent's statements and circumstances, the absence of a formal declaration under Section 77 precludes the application of Section 80.

Furthermore, the court examines the notifications prohibiting the import of goods from Nepal, particularly gold of foreign origin not exported from India to Nepal. The court highlights the violation of these notifications by the respondent's actions, emphasizing the prohibition on such imports.

In conclusion, the court rules in favor of the Customs Department, setting aside the tribunal's decision as the respondent did not fulfill the mandatory declaration requirement under Section 77, thus rendering the application of Section 80 invalid. The court dismisses the appeal, upholding the legality of the Customs authorities' actions in confiscating the gold and imposing penalties.