2023 (9) TMI 773 - HC - Customs

Direction to the respondent to release his gold chain in terms of Section 110(2) of the Customs Act, as amended upto date - restricted item - Baggage Rule - unlawful seizure or not - HELD THAT - There are no hesitation in holding that the respondent has dealt with the entire matter patently in an arbitrary, unjust and illegal manner. Although, this Court in NIDHI KAPOOR, SUPRIYA, SUDHA MURTHY, MR. JASMEET SINGH CHADHA AND MS. SHANAZ MALIK VERSUS PRINCIPAL COMMISSIONER AND ADDITIONAL SECRETARY TO THE GOVERNMENT OF INDIA ORS., JT COMMISSIONER OF CUSTOMS, IGI AIRPORT T-3 DELHI, COMMISSIONER OF CUSTOMS, IGI AIRPORT, NEW DELHI, UNION OF INDIA 2023 (8) TMI 1008 - DELHI HIGH COURT has already laid down the proposition of law that gold is a restricted item and if the importation of gold is in the nature of smuggling within the meaning of Section 2(39) of the Act, the adjudicating authority can exercise the discretion under Section 125 of the Act to absolutely confiscate the gold items and levy not only duty but also impose fine/penalty apart from declining to redeem/release the goods. However, decision in the aforesaid case decided by this Court does not come in the way of the petitioner for grant of appropriate relief in law since, firstly, it is evident that the respondent has not followed the procedure prescribed in the Act. Reference can also be invited to a decision of our own High Court in the case of JATINDER KUMAR SACHDEVA VERSUS THE UNION OF INDIA AND ORS. 2016 (12) TMI 523 - DELHI HIGH COURT wherein a gold kara (bracelet) seized from the petitioner on arrival in India and detained for more than a year without any notice was held to be unsustainable in law and the gold item was ordered to be released to the petitioner. It is relevant to indicate that the procedure for sale of goods and application of sale proceeds is governed by section 150(1) of the Act, which provides that where any goods not being confiscated goods are to be sold or disposed of under any provision of the Act in terms of section 110(1A), a notice must be issued to the owner. At the cost of repetition, the gold chain had since been deposited in the Government Mint, Mumbai on 26 June 2018 without any notice to the petitioner, which fact was brought on the record during the hearing on 27 May 2019. The Writ Petition allowed by thereby directing the respondent to do the necessary assessment/ evaluation as to the value of gold item as on 26 June 2018 based on the tariff value of gold applicable on that day, as per prescribed RBI parameters including the notification referred to hereinabove, and pay a sum equivalent thereto to the petitioner.

Summary

Issues Involved:
1. Legality of the seizure/detention of the petitioner's gold chain.
2. Compliance with the procedural requirements under the Customs Act.
3. Entitlement of the petitioner to the return of the seized gold chain.
4. Relief to be granted to the petitioner.

Summary:

1. Legality of the Seizure/Detention of the Petitioner's Gold Chain:
The petitioner, an Indian passport holder, arrived from Malaysia at IGI Airport on 18 October 2017 and was intercepted by Customs Officers. His gold chain, weighing about 100 grams, was seized/detained on the assumption that it was imported from Malaysia. The petitioner claimed it was his personal ornament worn before leaving for Malaysia. The respondent argued that the gold chain was concealed in the baggage and no declaration was made by the petitioner before leaving India.

2. Compliance with Procedural Requirements under the Customs Act:
The petitioner contended that no Show Cause Notice under Section 124(a) of the Customs Act was issued within six months of the seizure, as mandated by Section 110(2) of the Act. The respondent admitted that the gold chain was inventorized and deposited with the Government Mint at Mumbai on 26 June 2018 without issuing any notice to the petitioner. The Court noted that the respondent failed to follow the prescribed procedure under the Act, including the issuance of a notice under Section 124(a).

3. Entitlement of the Petitioner to the Return of the Seized Gold Chain:
The Court referred to the provisions of Section 110 and Section 124 of the Act, emphasizing that goods seized must be returned if no notice is issued within six months, extendable to a maximum of one year. The Court found that the respondent's plea that the gold chain was detained at the petitioner's request was unconvincing and noted that there is no provision for 'detention' of goods instead of 'seizure'. The Court cited precedents, including the Supreme Court's decision in Chaganlal Gainmull v. Collector of Central Excise, which held that failure to issue a Show Cause Notice within the stipulated period entitles the person to the return of the seized goods.

4. Relief to be Granted to the Petitioner:
The Court directed the respondent to assess/evaluate the value of the gold item as on 26 June 2018 based on the tariff value of gold applicable on that day, as per prescribed RBI parameters, and pay a sum equivalent thereto to the petitioner. The Court mandated that this exercise be conducted within three weeks, failing which the respondent would be liable to pay token costs of Rs. 25,000/-.

Conclusion:
The Writ Petition was allowed, and the respondent was directed to compensate the petitioner based on the valuation of the gold chain as per the specified guidelines. The Court emphasized adherence to procedural requirements under the Customs Act and upheld the petitioner's entitlement to relief due to the respondent's failure to issue the necessary Show Cause Notice.