2024 (7) TMI 332 - HC - Customs

Seeking provisional release of seized Gold - burden of proof - petitioner contended that though the petitioners intended to declare the same whereas even before they could reach to the counter where submission of declaration forms are accepted, the petitioners were intercepted by the Officers of the Customs Department - Section 110 of the Customs Act - HELD THAT - In terms of the provisions of Sub-Section (1A) of Section 110, the Central Government has issued a notification, viz., Notification No.31/1986, dated 05th February, 1986, drawing up a list of Schedule of goods of perishable or hazardous nature, depreciation in the value with the passage of time, constraints of storage space and valuable nature of the goods. In the said appendix of Schedule at Serial No.4A, it is mentioned that gold in all forms including bullion, ingot, coin, ornament, crude jewelry , can be disposed of immediately on its seizure. There does not seem to be any strong case made out by the learned counsel for the petitioners to doubt the action on the part of the respondents so far as arresting the petitioners on the ground that they were trying to smuggle the gold into India from Bangkok. The petitioners in the two writ petitions have, in very categorical terms, stated that they have purchased the gold en route to India - Both the petitioners were carrying gold worth more than Rs.1 crore each as its cost price. The mode of payment made at the time of purchase was not disclosed. The petitioners did not carry / produce any authentic document in respect of the price of the gold. The petitioners did not even produce any declaration form in respect of they carrying any dutiable goods. In the instant case, the declaration of the subject gold being brought into India was not available with the petitioners. The fact that the gold was being brought into the territory of India without proper documents and also in violation of the provisions of the Customs Act, there can be no doubt that the goods are liable for confiscation and it was for this reason the subject gold bars were seized. This Bench also does not have any doubt in holding that the contention of the learned counsel for the petitioners that the item gold is not a prohibited good , cannot be accepted, for the simple reason that there are certain conditions which have to be mandatorily and statutorily followed in the event of import being made. Further, if such statutory and mandatory requirements are not complied with, the said goods when tried to be smuggled into the country would squarely falls within the definition of prohibited goods under Section 2(33) of the Customs Act - taking into consideration the stand that the two petitioners took in the course of the interrogation wherein they have specifically stated that the gold was not purchased by them and it was given to them by some unknown persons at Bangkok and to be handed over to some unknown person at Hyderabad after coming out of the airport, gives a clear picture of the intention of the petitioners to smuggle the gold into India from Bangkok. There are no hesitation in reaching to the conclusion that the action initiated by the respondent- Department cannot be found fault with, nor can the same to be held as arbitrary or in contravention of the provisions of the Customs Act - petition dismissed.

Issues Involved:
1. Legality of the seizure of gold by the Customs Department.
2. Compliance with procedural requirements under the Customs Act.
3. Validity of the notices for disposal of the seized gold.
4. Rights of the petitioners to declare and pay customs duty.
5. Classification of gold as "prohibited goods" under the Customs Act.
6. Applicability of re-export provisions under Section 80 of the Customs Act.

Issue-wise Detailed Analysis:

1. Legality of the Seizure of Gold:
The petitioners were intercepted at the Hyderabad airport carrying 2,000 gms. and 1793.500 gms. of gold respectively. They did not declare the gold nor had the necessary documentation. The Customs Department seized the gold based on the suspicion of smuggling. The court found that the seizure was justified under Section 110 of the Customs Act, as the petitioners did not provide any convincing reply or documentation regarding the gold, nor did they declare the goods as required.

2. Compliance with Procedural Requirements:
The Customs Department followed the procedure under Section 110 of the Customs Act, which allows for the seizure of goods suspected to be smuggled. The petitioners argued that they were intercepted before reaching the declaration counter, thereby depriving them of the opportunity to declare the gold. However, the court found that the interception was lawful as the petitioners attempted to pass through the 'Green Channel' without declaring the gold.

3. Validity of Notices for Disposal of Seized Gold:
The petitioners received notices for the disposal of the seized gold while they were in judicial custody. The court held that under Section 110(1A) of the Customs Act, the Central Government has the authority to dispose of certain goods, including gold, immediately after seizure. The court found that the issuance of notices was in compliance with the law and did not violate principles of natural justice.

4. Rights to Declare and Pay Customs Duty:
The petitioners contended that they intended to declare the gold and pay the required customs duty but were intercepted prematurely. The court found that the petitioners did not follow the proper procedure for declaration and did not carry sufficient money to pay the customs duty. The interception and subsequent seizure were deemed lawful as the petitioners failed to declare the gold at the designated counter.

5. Classification of Gold as "Prohibited Goods":
The court referred to various judicial precedents to conclude that gold, when imported without proper documentation and declaration, falls within the definition of "prohibited goods" under Section 2(33) of the Customs Act. The court held that the petitioners' actions constituted an attempt to smuggle gold, making it liable for confiscation.

6. Applicability of Re-export Provisions:
The petitioners argued for the right to re-export the gold under Section 80 of the Customs Act. The court clarified that re-export is only permissible if a declaration under Section 77 is made. Since the petitioners did not make such a declaration, they were not entitled to re-export the gold. The court cited precedents from the Allahabad and Delhi High Courts, which supported this interpretation.

Conclusion:
The court dismissed the writ petitions, holding that the Customs Department's actions were lawful and in compliance with the Customs Act. The seizure of the gold was justified, and the petitioners' failure to declare the gold and provide necessary documentation led to the lawful confiscation of the gold. The court also upheld the validity of the notices for disposal of the seized gold and denied the petitioners' right to re-export the gold due to non-compliance with declaration requirements.

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