2024 (12) TMI 19 - HC - Customs

Import of Baggage - Personal Effects - Detention and confiscation of gold ornaments by Customs authorities - petitioner had travelled from Bengaluru to Dubai and and opted for the green channel. She was intercepted by a Customs Officer after she had crossed the green channel. On her search, one plastic box containing 3 gold bangles, weighing 130 grams, 15 gold beads (parts of bracelets) weighing 89 grams were recovered - According to the respondents, all jewellery and ornaments, personal or otherwise, is liable to be viewed as prohibited goods in addition to being subject to the restrictions contained in the 2016 Rules - as argued phrase bringing into cannot possibly be construed as being applicable to personal effects . HELD THAT - As per Circular No. 72/98-Customs dated 24 September 1998 the competent authority clarified that the phrase personal effects would include personal jewellery . The respondents thus consciously sought to introduce a distinction between personal jewellery and the word jewellery per se as it appears in the Appendices. The clear intent of that Circular appears to have been to include personal items of jewellery or ornaments within the meaning of the expression personal effects . When the aforesaid 1998 Rules came to be amended in 2006, by virtue of the Baggage (Amendment) Rules, 2006 2006 Amendment , the stipulation with respect to articles allowed entry free of duty remained the same except for the increased monetary limits of INR 35,000/-, 15,000/- and 3,000/- which came to be incorporated. Rule 2(vi) of the 2016 Rules essentially adopts the same concept of used personal effects as was intended under the 1998 Rules, and by way of abundant caution, a definition now stands placed in the 2016 Rules and which purports to define the expression personal effects with sufficient clarity. However, the same would not detract from the distinction which the respondents themselves acknowledged in the Circular and intended customs officers to bear in mind the distinction which must be recognised to exist when construing and identifying personal jewellery as opposed to jewellery per se. The expression jewellery as it appears in Rule 2(vi) would thus have to be construed as inclusive of articles newly acquired as opposed to used personal articles of jewellery which may have been borne on the person while exiting the country or carried in its baggage. Thus, personal jewellery which is not found to have been acquired on an overseas trip and was always a used personal effect of the passenger would not be subject to the monetary prescriptions incorporated in Rules 3 and 4 of the 2016 Rules. This clearly appeals to reason bearing in mind the understanding of the respondents themselves and which was explained and highlighted in the clarificatory Circular referred to above. That Circular had come to be issued at a time when the Appendices to the 1998 Rules had employed the phrase used personal effects, excluding jewellery . The clarification is thus liable to be appreciated in the aforesaid light and the statutory position as enunciated by the respondents themselves requiring the customs officers to bear a distinction between personal jewellery and the word jewellery when used on its own and as it appears in the Appendices. This position, in our considered opinion, would continue to endure and remain unimpacted by the provisions contained in the 2016 Rules. Thus Joint Commissioner of Customs has clearly misconstrued the scheme as well as the objectives of the 2016 Rules. In the absence of the case of the petitioner having been tried or evaluated on the basis of the postulates that we have enunciated hereinabove, we find ourselves unable to sustain the order impugned.

Issues Involved:

1. Legality of the detention and confiscation of gold ornaments by Customs authorities.
2. Interpretation of "personal effects" under the Baggage Rules, 2016.
3. Applicability of customs duty and monetary limits on personal jewellery.
4. Jurisdiction and authority of Customs officials in issuing a show-cause notice.
5. Relevance of previous judgments and legislative history in determining the status of personal jewellery.

Detailed Analysis:

1. Legality of the Detention and Confiscation of Gold Ornaments:

The petitioner challenged the detention and confiscation of her gold ornaments by Customs authorities upon her return from Dubai. The Customs Officer intercepted the petitioner after she crossed the green channel and recovered gold jewellery, which was detained under a Detention Receipt dated 25 May 2023. The Order-in-Original dated 21 September 2023 ordered absolute confiscation of the jewellery under Sections 111(d), 111(i), 111(j), and 111(m) of the Customs Act, 1962, and imposed a penalty under Sections 112a and 112b of the same Act. The Court examined whether the jewellery constituted "prohibited goods" or was subject to restrictions under the Baggage Rules, 2016.

2. Interpretation of "Personal Effects" Under the Baggage Rules, 2016:

The Court delved into the interpretation of "personal effects" as defined in Rule 2(vi) of the Baggage Rules, 2016, which explicitly excludes items of jewellery. The Court considered the legislative history, including the Baggage Rules, 1998 and the clarificatory Circular No. 72/98-Customs, which included "personal jewellery" within "personal effects." The Court concluded that "personal jewellery" should not be treated as "imported" goods and should not be subject to the monetary limits prescribed under the 2016 Rules if they were personal items worn by the passenger.

3. Applicability of Customs Duty and Monetary Limits on Personal Jewellery:

The Court noted that the respondents argued for the applicability of monetary limits on jewellery under Rules 3 and 4 of the 2016 Rules. However, the Court emphasized that personal jewellery, which is not newly acquired and is worn by the passenger, should not be subjected to these limits. The Court highlighted that the legislative intent and previous Circulars support the view that personal jewellery is part of "personal effects" and not subject to import duty.

4. Jurisdiction and Authority of Customs Officials in Issuing a Show-Cause Notice:

The Court addressed the jurisdictional issue of whether the Customs authorities had the legal authority to issue a show-cause notice. The petitioner contended that her jewellery was personal and did not require declaration, thus questioning the jurisdiction of the Customs authorities. The Court referenced previous judgments, including Pushpa Lakhumal Tulani vs. Add. Commissioner, Customs, where it was held that personal jewellery does not constitute "smuggling" and does not require declaration if it is part of personal effects.

5. Relevance of Previous Judgments and Legislative History:

The Court extensively referred to prior judgments and legislative history to interpret the current legal framework. It cited the Supreme Court's affirmation of the High Court's decision in Pushpa Lekhumal Tulani, which held that personal jewellery intended to be taken out of India is not subject to import duty. The Court also referred to the Kerala High Court's judgment in Vigneswaran Sethuraman vs. Union of India, which clarified that personal jewellery worn by a passenger is not subject to confiscation under the Customs Act.

Conclusion:

The Court quashed the Order-in-Original dated 21 September 2023, finding that the Customs authorities had misconstrued the Baggage Rules, 2016, and the legislative intent regarding personal jewellery. The matter was remitted to the Joint Commissioner for re-evaluation in light of the Court's observations, emphasizing the distinction between personal jewellery and imported goods.

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