2022 (8) TMI 1010 - HC - Customs

Smuggling - Gold Ornaments - prohibited item or restricted item - pendency of adjudication will stand in the way to release the gold articles to the petitioner - Section 110-A of the Customs Act, 1962 - HELD THAT - Section 125 of the Customs Act, 1962, gives rights to the owner or from whom the goods have been seized to redeem such goods on payment of fine. Further, this Court consistently held that goods can be handed over on executing 50% of the Bank guarantee on the duty amount. Hence, this Court permits the petitioner to make an application for provisional release under Section 110-A, on such application, when received, shall be disposed of by the Adjudicating Authority, after hearing the petitioner within a period of two (2) weeks from the date of receipt of the application. This Court directs the petitioner to execute 50% of the Bank guarantee in lieu of customs duty and on execution of the Bank guarantee, the respondents are directed to hand over the gold articles seized from the petitioner, recorded in Mahazar, dated 07.11.2019 within two weeks from thereon. It is for the respondents to proceed with the adjudication proceedings to save the revenue to the Nation. The adjudication proceedings shall be completed within a period of three months from the date of receipt of a copy of this order. Petition allowed.

Issues Involved:
1. Legality of the seizure of gold jewelry by Customs officials.
2. Petitioner's claim of coercion and illegal detention.
3. Petitioner's right to provisional release of seized goods under Section 110-A of the Customs Act.
4. Applicability of Section 125 of the Customs Act regarding the option to pay a fine in lieu of confiscation.
5. Distinction between prohibited and restricted items under the Customs Act.

Issue-wise Detailed Analysis:

1. Legality of the seizure of gold jewelry by Customs officials:
The petitioner, a Malaysian citizen, was detained at Trichy Airport and his gold jewelry was seized by Customs officials. He argued that the jewelry was his personal property, worn on his body, and not concealed. The respondent officials conducted a surprise check and seized gold articles from multiple passengers, including the petitioner, who was found wearing gold chains, bracelets, and a ring. The petitioner contended that the seizure was illegal as the jewelry was not concealed and he was not smuggling.

2. Petitioner's claim of coercion and illegal detention:
The petitioner alleged that he was coerced into signing a typed statement under threat and was detained illegally from 05.11.2019 to 07.11.2019. He retracted this statement later, claiming it was signed under duress. The petitioner held an Overseas Citizen of India Card and had come to India for a family wedding. He argued that there was no need for him to sign a statement prepared by the officials if he was not coerced.

3. Petitioner's right to provisional release of seized goods under Section 110-A of the Customs Act:
The petitioner cited Section 110-A of the Customs Act, which allows for provisional release of seized goods pending adjudication. He argued that the respondents should have exercised this power and released the gold jewelry to him. He was willing to pay the necessary duty for the release of his goods. The court noted that as per Section 110-A, goods seized can be released to the owner on taking a bond with security and conditions as required by the adjudicating authority.

4. Applicability of Section 125 of the Customs Act regarding the option to pay a fine in lieu of confiscation:
The petitioner argued that under Section 125 of the Customs Act, he should be given the option to pay a fine in lieu of confiscation of the seized gold. He relied on various judgments, including those from the Apex Court and Delhi High Court, which held that gold is a restricted item, not a prohibited one, and can be redeemed on payment of duty and fine. The court acknowledged that Section 125 allows for redemption of confiscated goods on payment of a fine and directed the petitioner to provide a bank guarantee for 50% of the duty involved.

5. Distinction between prohibited and restricted items under the Customs Act:
The court referred to the judgment in Commissioner of Customs vs. Atul Automations Pvt. Ltd., which distinguished between prohibited and restricted items. The judgment clarified that restricted goods can be redeemed on payment of the market value and fine under Section 112(a) of the Customs Act. The court also cited the Delhi High Court ruling in Vaibhav Sampat More vs. National Investigation Agency, which held that the import of gold is restricted, not prohibited, and subject to prescribed quantity on payment of duty.

Conclusion:
The court concluded that the petitioner is entitled to the provisional release of the seized gold jewelry under Section 110-A of the Customs Act. The petitioner was directed to execute a bank guarantee for 50% of the customs duty, and upon doing so, the respondents were ordered to hand over the seized gold articles to the petitioner. The adjudication proceedings were to be completed within three months to ensure the revenue of the nation is protected. The writ petition was allowed, and no costs were imposed.

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