2025 (3) TMI 19 - HC - Customs

Seeking release of the gold chain of foreign origin which was detained by the Customs Department - undertaking in a standard format for wavier of show cause notice and personal hearing signed by the concerned tourist. Detention of jewellery or personal effects of a tourist especially those of foreign origin under the Baggage Rules 2016 - HELD THAT - The Indian Customs Declaration Form (hereinafter Declaration Form ) issued by the CBIC as part of the Guide for Travellers has also been perused by the Court which would show that gold and gold jewellery is being treated as prohibited articles where the same is beyond the prescribed limits under Rule 5 of Baggage Rules including gold bullion. The Supreme Court in Pushpa Lekhumal Tolani 2017 (8) TMI 684 - SUPREME COURT has considered whether jewellery being carried by a tourist as part of her baggage would qualify as smuggling under the Act read with the Baggage Rules 1998 that was in force during the relevant period. The Supreme Court clearly holds that it is not permissible to completely exclude jewellery from the ambit of personal effects . Accordingly the Court declared that the seized jewellery items therein were the bona fide jewellery of the tourist for her personal use and was intended to be taken out of India. In Saba Simran v. Union of India Ors. 2024 (12) TMI 19 - DELHI HIGH COURT this Court was seized with the issue of deciding the validity of the seizure of gold jewellery by the Customs Department from an Indian tourist. The Court considered the ambit of personal effects vis- -vis jewellery under the Baggage Rules in effect from time to time. A conspectus of the above decisions and provisions would lead to the conclusion that jewellery that is bona fide in personal use by the tourist would not be excluded from the ambit of personal effects as defined under the Baggage Rules. Further the Department is required to make a distinction between jewellery and personal jewellery while considering seizure of items for being in violation of the Baggage Rules. Thus it is now settled law that the Customs Officials are required to consider the facts of each case and apply their mind before detaining the goods of a tourist either of Indian or foreign origin. The Customs Officials have to be conscious of the fact that personal effects including jewellery of tourists are protected by the law from detention and same cannot be detained in a mechanical manner. Applicability of the Baggage Rules qua tourists of foreign origin - HELD THAT - It is noted that the Petitioner is a Russian passport holder and thus the extent of applicability of the Baggage Rules to a tourist of foreign origin has to be kept in mind. This issue has also been discussed by various decisions of the of this Court including in Nathan Narayansamy vs. Commissioner of Customs 2023 (9) TMI 1549 - DELHI HIGH COURT wherein the Co-ordinate Bench of this Court was dealing with a similar situation wherein certain jewellery was recovered and seized from the baggage items of a tourist holding Malaysian passport. Further the predecessor Bench of this Court in Farida Aliyeva v. Commissioner of Customs 2024 (12) TMI 755 - DELHI HIGH COURT while relying upon the decision in Nathan Narayansamy directed release of jewellery seized from a tourist who was travelling from Azerbaijan to India. It is an undisputed fact that the Petitioner is a Russian passport holder. In view of the law discussed above on the ground of limited applicability of the Baggage Rules to the tourist of foreign origin and as jewellery is part of personal effects the detention of Petitioner s gold chain would have to be set aside. However there is another aspect of this case which has bearing on the validity of the detention of the Petitioner s gold chain. Undertaking in a standard format for wavier of show cause notice and personal hearing signed by the concerned tourist - HELD THAT - The undertaking signed by the Petitioner in the present case cannot be sustained in law. Accordingly the Customs Department has failed to satisfy the requirements of Section 124 of the Act in the present case. Therefore the detention of the Petitioner s gold chain has to be set aside. Conclusion - i) Jewellery bona fide in personal use by a tourist is not excluded from personal effects under the Baggage Rules and the Customs Department must distinguish between jewellery and personal jewellery. ii) The Baggage Rules have limited applicability to foreign nationals and the detention of the Petitioner s gold chain was unjustified. iii) The standard form used by the Customs Department for waiving show cause notice and personal hearing does not satisfy the requirements of Section 124 of the Customs Act violating principles of natural justice. The detention of the Petitioner s gold chain would be contrary to law and accordingly the same is set aside - The gold chain of the Petitioner shall be released to the Petitioner subject to payment of any charges within four weeks - Petition disposed off.

Summary

ISSUES PRESENTED and CONSIDERED

The Court considered two primary issues in this case:

(i) The legality of the detention of jewellery or personal effects of a tourist, specifically under the Baggage Rules, 2016.

(ii) The validity of an undertaking in a standard format for the waiver of show cause notice and personal hearing signed by the concerned tourist.

ISSUE-WISE DETAILED ANALYSIS

Jewellery vis-`a-vis personal effects under the Baggage Rules, 2016

The Baggage Rules, 2016, enacted under Section 79 of the Customs Act, 1962, define "personal effects" as items required for daily necessities but explicitly exclude jewellery. Under these rules, a tourist of foreign origin is allowed duty-free clearance of personal effects and travel souvenirs up to a value of fifteen thousand rupees, excluding items listed in Annexure-I, which includes gold or silver in forms other than ornaments.

The Court referenced the Supreme Court's decision in Pushpa Lekhumal Tolani, which clarified that jewellery carried by a tourist as part of personal effects does not qualify as smuggling if declared appropriately. This precedent establishes that personal jewellery intended for personal use and to be taken out of India is permissible and not subject to import duty.

The Court also considered the Madras High Court's ruling in Thanushika vs. The Principal Commissioner of Customs, which held that the Baggage Rules apply only to articles in baggage, not those carried on the person. This case emphasized that the phrase "carried on the person" exceeds the scope of the Customs Act, rendering such provisions ultra vires.

In light of these interpretations, the Court concluded that jewellery bona fide in personal use by a tourist should not be excluded from personal effects under the Baggage Rules. Customs officials must distinguish between "jewellery" and "personal jewellery" when considering seizures under these rules.

Applicability of the Baggage Rules to tourists of foreign origin

The Court noted that the Petitioner, a Russian passport holder, is subject to the limited applicability of the Baggage Rules. The Court referenced Nathan Narayansamy vs. Commissioner of Customs, which determined that the Baggage Rules have limited application to foreign nationals, and jewellery as personal effects should not be detained under these rules.

Given the Petitioner's status as a foreign tourist and the established legal precedents, the Court found that the detention of the Petitioner's gold chain was unjustified under the Baggage Rules.

Waiver of show cause notice and personal hearing

The Customs Department relied on an undertaking signed by the Petitioner, waiving the issuance of a show cause notice and personal hearing. However, the Court emphasized the requirements of Section 124 of the Customs Act, which mandates a written notice, opportunity for representation, and a personal hearing before confiscation of goods.

The Court analyzed the validity of such waivers, referencing Amit Kumar v. The Commissioner of Customs, which held that a waiver must be conscious and informed, not merely a standard form signed by the affected individual. The Court deemed that the standard form used by the Customs Department did not satisfy the requirements of natural justice under Section 124.

Consequently, the Court found that the Customs Department failed to comply with the procedural requirements of Section 124, rendering the detention of the Petitioner's gold chain unlawful.

SIGNIFICANT HOLDINGS

The Court held that:

- Jewellery bona fide in personal use by a tourist is not excluded from personal effects under the Baggage Rules, and the Customs Department must distinguish between "jewellery" and "personal jewellery."

- The Baggage Rules have limited applicability to foreign nationals, and the detention of the Petitioner's gold chain was unjustified.

- The standard form used by the Customs Department for waiving show cause notice and personal hearing does not satisfy the requirements of Section 124 of the Customs Act, violating principles of natural justice.

The Court directed the release of the Petitioner's gold chain and instructed the Customs Department to discontinue the practice of obtaining standard form waivers, ensuring compliance with natural justice principles in future cases.