Anushka Sharma - Wedding Ring – Customs Law on Import of Jewellery - Duty & Penalty

[Rakesh Chitkara]

Author: M P Vasudevan, IRS (Retd)

with Rakesh Chitkara, Advocate

Whether Anushka Sharma’s wedding ring will be detained by Customs and whether Duty, Redemption Fine & Personal Penalty be imposed on her when Virat and she return from passionate honeymoon. If that happens it would be the second time her brush with spoilsport Indian Customs.

Virat and Anushka’s wedding in Italy was a fairytale romance and the guests couldn't take their eyes off her huge wedding ring rumoured to have cost more than the wedding event. Love smitten Virat took three months to zero in on the perfect ring for the love of his life with a rare diamond ring specially crafted by an ace designer from Austria. On her return, the men would not be able to take their eyes off her and the envious women on the sparkling glittering ring. (Also see http://indiatoday.intoday.in/story/virat-kohli-anushka-sharma-wedding-ring-cost-italy-borgo-finocchieto/1/1108345.html).

The green eyed damsels who failed to catch Virat are surely going to send anonymous tips to Customs & DRI. They too must be wondering whether the ring and other jewellery be allowed free of duty under the Baggage Rules, 2016 as ‘personal effects’ by the customs when they arrive in India or whether the couple had carried the jewellery from India on proper ‘export certificates’.

SEIZURE : Lets flashback to 2011.  The 23-year old actress Anushka Sharma was intercepted, on suspicion, while passing through the green channel by the customs officers at the Chatrapati Shivaji International Airport, Mumbai at 2.30 pm on the 27^th June, 2011 on her return by Air India flight No. AI-188 from Toronto via Singapore. Examination of her accompanied baggage revealed two wrist watches and assortedgold and diamond-studded jewellery collectively worth about ₹ 35 lakhs, nearly 90 times above her duty free allowance.

DEFENSE :During investigations, she claimed that she was returning from IIFA award ceremony in Toronto and the detained / seized goods had earlier been carried with her while going abroadand hence not dutiable. It was also asserted that these accessories given to her by various brands for showcasing at the IIFA ceremony and such brands concerned would produce the documents confirming the ownership of the jewellery. (http://archive.indianexpress.com/news/anushka-sharma-stopped-at-airport-by-customs/809416/).

ADJUDICATION : A Show Cause Notice was subsequently issued which was adjudicated by the Joint Commissioner of Customs (Airport) who ordered confiscation of the goods collectively valued at ₹ 34,71,700/- (CIF) under section 111(l) and (m) of the Customs Act, 1962 but allowed release provided she paid redemption fine (RF) of ₹ 3,50,000/-. A personal penalty (PP) of ₹ 1,00,000/- was also imposed on the actress under section 112(a) of the Act.

APPEAL : She appealed  before the Commissioner (Appeals)on the grounds:-

(i) that the jewellery and wrist watches were taken by her from India on her departure to Toronto for wearing them during the IIFA award ceremony and belonged to some jewellers in India and that since it was a case of re-import, the goods were not liable to duty or declaration and hence they cannot be confiscated under section 111(l) and (m) of the Customs Act;

(ii) that no duty was payable on the goods under Rule 3 of the Baggage Rules, 1998 as these were used personal effects required for satisfying the daily necessities of life;

(iii) that no duty was payable on the jewellery as they were of Indian origin and also in view of the notification No. 94/96-Cus., no duty was payable;

(iv) that since the goods were not declared, the confiscation under section 111(m) on account of non-tallying with the declaration was not proper and section 111(l) would not attract as the goods were given by the dealers and jewellers for wearing during IIFA award ceremony at Toronto;

(v) that the evidences on record were not considered by the Adjudicating Authority while deciding the case and the findings that the wrist watches imported were different from those supplied to her,  was contrary to the records;

(vi) that no penalty was imposable since there was no column on the baggage declaration form to declare the re-imported goods and that the order be set aside.

Following case laws were relied upon in her defence : COMMISSIONER OF CUSTOMS, MUMBAI Versus TOYO ENGINEERING INDIA LIMITED . - 2006 (8) TMI 184 - SUPREME COURT OF INDIA ; Commissioner of Central Excise, Nagpur Versus M/s Ballarpur Industries Ltd .  - 2007 (8) TMI 10 - SUPREME COURT OF INDIA ; Associated Cement Companies Ltd. v. CC - 2001 2001 (1) TMI 248 - Supreme court of India ; Naresh Lokumal Serai v. CC - 2006 (7) TMI 52 - CESTAT, MUMBAI ; Dynacast Industries v. CC - 1999 (1) TMI 192 - CEGAT, MUMBAI ;  Hindustan Steel Ltd. v. the State of Orissa - 1969 (8) TMI 31 - SUPREME Court ;  HGI Industries Ltd. v. Commissioner of C. Ex. & Cus., Vadodara - 2006 (11) TMI 44 - CESTAT, AHMEDABAD; Shri Ram Hari Ram & Sons Pvt. Ltd. v. Commr. Of Cus., New Delhi - 2008 (9) TMI 756 - CESTAT, NEW DELHI ; K.A. Devarajan v. Commissioner of Customs, Cochin - 2000 (5) TMI 506 - CEGAT, CHENNAI ; Lakshmi Machine Works Ltd. v. Commr. of C. Ex., Coimbatore - 2010 (10) TMI 171 - CESTAT, CHENNAI ; Commissioner of Customs, Hyderabad v. Mussaddilal Exports - 2001 (10) TMI 795 - CEGAT, CHENNAI , etc.

RELIF : The kind hearted Commissioner (Appeals) Mumbai, taking note of the fact that it had subsequently been demonstrated that the jewellery was indeed carried out of India and hence non-dutiable on re-import, imposed only a token fine/penalty for technical breach of non-declaration in respect of the jewellery. The jewellery valued at ₹ 25,91,000/- was allowed to be released on a redemption fine of ₹ 10,000/- without payment of duty and the watches valued at ₹ 8,80,000/- were allowed to be released on a redemption fine of ₹ 88,000/- on payment of applicable duty under section 125 of the Customs Act, 1962. Penalty imposed under section 112(a) of the ibid Act was also reduced from ₹ 1,00,000/- to ₹ 50,000/-.

RULES ON IMPORT OF JEWELLERY :

The present Rules, i.e. the Baggage Rules, 2016, allows a passenger residing abroad for more than one year, on return to India, clearance free of duty in his bona fide baggage, jewellery upto a weight of 20 grams with a value cap of fifty thousand rupees if brought by a gentleman passenger, or 40 grams with a value cap of one lakh rupees if brought by a lady passenger. A passenger on a short trip or vacation abroad is not allowed to import any gold jewellery. Pertinent to note that a specific provision to bring back the jewellery taken outearlier by a passenger or a member of his family from India, subject to the satisfaction of the Assistant Commissioner of Customs were available in the Baggage Rules, 1998. However, this is done away in the new Baggage Rules, 2016. The clause 2(vi) defining the “personal effects” is to mean things required for satisfying daily necessities of life excluding jewellery,  has also been added.

RE-IMPORT LIABLE TO DUTY : Section 20 of the Customs Act, 1962 provides that  if goods are imported into India after exportation therefrom, such goods shall be liable to duty and be subject to all the conditions and restrictions, if any, to which goods of the like kind and value are liable or subject, on the importation thereof. As such in the case of re-import also duty, as in the case of first import is leviable. However, notification No. 94/96-Customs dated the 16.12.1996 provided conditional exemption to certain classes of goods from payment of duty on re-import. This notification has recently been superseded by the notifications No. 45/2017–Customs, No. 46/2017–Customs and No. 47/2017–Customs, all dated 30.06.2017.

OBTAIN ADVANCE EXPORT CERTIFICATE PREFERABLY BEFORE REACHING AIRPORT : A circular No. 02/2002 dated 08.01.2002 also provided the facility to obtain an ‘export certificate’ for jewellery or other valuable items carried by passengers while travelling to a foreign destination to enable its duty free re-import on return to India. Such services are available at the Customs Office, Jhandewalan Jewellery Complex, Jhandewalan, Karol Bagh, New Delhi and at  Courier Terminal, IGI Airport, Terminal-3, New Delhi. In Mumbai such amenities exist at the Precious Cargo Customs Clearance Centre (PCCCC) at Bandra-Kurla Complex, Bandra (East), Mumbai – 400051.

ONCE BITTEN TWICE SHY – The Authors were not invited to the wedding and do not know whether this ring was taken by the couple from India on proper documentation, i.e. an export certificate. But the Authors are sure that we will not find Ms. AnushkaVirat Kohli on the wrong side of the law as speculated by jealous damsels on the social media.

Taxmanagementindia.com and the Authors wish the couple a Happy Married Life and caution those planning destination weddings abroad to be careful in observing the law.

[To continue in Part-II on how other celebrities like Bipasha Basu and others have faced similar ordeal in the past.]

 

M P Vasudevan, IRS (Retd) with Rakesh Chitkara, Advocate