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TMI Blog2023 (8) TMI 1008X X X X Extracts X X X X X X X X Extracts X X X X ..... nce with the conditions prescribed are clearly excluded from the ambit of prohibited goods by virtue of the usage of the phrase but does not include . The expression prohibited goods as used in Section 2(33) and the concept of prohibition must therefore and necessarily draw colour and meaning from the specific exclusion of goods which have come to be imported or exported upon due compliance with the conditions prescribed. If compliance with conditions for import or export were irrelevant and the expression prohibition were to be understood in absolute terms, there clearly does not appear to be any justification for the definition clause to also deal with those goods which enter the territory of India after complying with the various conditions for import that may have been prescribed. In our considered opinion, this is the first aspect which appears to indicate that the word prohibition is intended to also extend to a restriction or regulation under the Act. It is significant to note that Section 111 of the Act which deals with the confiscation of improperly imported goods. While dealing with the circumstances in which the imported goods may become liable for confiscation, the prov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the discretionary power of the Adjudging Officer - the Court finds no illegality in the individual orders passed by the Adjudging Officer and which were impugned in these writ petitions. The Court finds no merit in the challenge raised to the impugned orders in the present batch of writ petitions - Petition dismissed. - HON'BLE MR. JUSTICE YASHWANT VARMA AND HON'BLE MR. JUSTICE DHARMESH SHARMA For the Petitioner Through: Mr. Nitin Ahlawat, Mr. Visesh Chaudhary, Mr. Sahil Dagar and Ms. Sonali Sardana, Advs. Mr. Chinmaya Seth, Mr. A.K. Seth, Advs. Through: Ms. Akanksha Mehra, Mr. Lakshay Saini and Mr. Himanshu Tyagi, Advs. For the Respondents Through: Mr. Tarun Gulati, Sr. Adv. Amicus Curie, Mr. Kishore Kunal, Mr. Kumar Sambhav, Advs. Mr. Satish Kumar, Sr. Standing Counsel and Ms. Sonu Bhatnagar, Sr. Standing Counsel on behalf of respondent no. 2 3 along with Mr. Dhruv, Mr. Mandal, Advs. Mr. Satish Kumar, Sr. Standing Counsel for respondent no. 2 3 with Mr. Dhruv, Mr. Atul Mandal, Advs. Mr. Sanjay Kumar, Ms. Easha Kadiyan, Ms. Hemlata Rawat, Advs. for R-4 Mr. Akshay Amritanshu, Sr. Standing Counsel, Mr. Ashutosh Jain, Mr. Samyak Jain, Advs. For the Union of India : Mr. Dev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inging in gold without a declaration on arrival at the Airport and making an attempt to pass through the Customs Green Channel thereby raising common questions of law and can thus be disposed of conveniently by this common Judgment. However, it would be expedient to refer to the factual narrative of each Writ Petition in order to understand the context that gives rise to the legal issues reflected hereinabove. FACTUAL BACKGROUND : W.P. (C) No. 8902/2021 (Nidhi Kapoor v. Principal Commissioner Additional Secretary to the Government of India Ors.) 3. The petitioner in this case arrived on 01 July 2015 from Dubai, UAE to India by Air Flight No. 9W 545, which landed at Indira Gandhi International Airport [IGI Airport], New Delhi, and while attempting to pass through the Customs Green Channel , she was found in possession of three gold metal bars and two gold cut pieces (hereinafter referred as the subject goods ), which as per the panchnama (P-1) was weighing 3100 grams with 995.0 purity valued at Rs. 76,44,011/-. She was detained and during investigation she in her statement recorded under Section 108 of the Act allegedly revealed that the subject goods were handed over to her by a fa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h receipt (P-4) also stating that the subject goods were gifted to her by a family friend. A Show Cause Notice dated 03 November 2015 (P-6) was issued to her which ultimately culminated in an order dated 15 November 2017 passed by the Joint Commissioner/Adjudicating Officer thereby confiscating the subject goods under Section 111 of the Act and imposing penalty of Rs. 15,00,000/- under Section 112 and 114AA of the Act (P-7). Aggrieved thereby, the petitioner filed an appeal and on which the Commissioner of Appeals (Customs) allowed the appeal vide order dated 17 July 2018 thereby releasing the subject goods in terms of Section 125 of the Act on payment of penalty of Rs. 19,00,000/- whereas the penalty under Section 112 read with Section 114AA of the Act was reduced to Rs. 8,00,000/- (P-8). The department/respondent No. 2 preferred an appeal and the Revisional Authority/ Additional Secretary, Government of India passed the impugned order dated 09 July 2021 thereby sustaining the original order dated 15 November 2017 (P-7) upholding confiscation of the subject goods and declining its redemption. W.P. (C) No. 13131/2022 (Sudha Murthy v. Jt. Commissioner of Customs, IGI Airport, T-3, D ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The same was dismissed by the Adjudicating Authority without considering her submissions and the subject goods were confiscated and redemption was rejected. W.P.(C) No. 531/2022 (Mr. Jasmeet Singh Chadha v. Commissioner of Customs, IGI Airport, New Delhi) 8. In the instant petition, it is the case of the petitioner that on 07 September 2014, he visited Dubai to meet his relatives and on account of an upcoming marriage in the family, on 08 September 2014, he bought approximately 2000 grams of gold ( the subject goods ) from his savings and also from the money borrowed from his relatives, the proof of which was provided vide Annexure P-2, but when he arrived at T-3 IGI Airport, New Delhi on 09 September 2014 by Flight No. 6E-024 from Dubai, he was detained despite the fact that he had duly declared the said gold at Dubai Airport before boarding the flight and while he was at the Aerobridge, Custom Officers approached him and made enquires, to which he truthfully replied acknowledging that he was carrying 2000 grams of gold and wanted to declare the same but was instead forced to sign multiple documents on the pretext that he would be released alongwith the subject goods , after such ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ommissioners of Customs, IG Airport T3, New Delhi (P-4) vide which the goods were not only confiscated but also no option of payment of Customs Duty or redemption fine was afforded to her. Furthermore, penalties were imposed on Mr. Vikram Devbrat, and two others from AI SATS namely Mr. Mithilesh Kumar Verma and Mr. Navin Kumar Abhimanyu, amounting to Rs. 10,00,000/-, Rs. 2,50,000/- and Rs. 1,50,000/- respectively, under Section 112 and 114AA of the Customs Act. A personal penalty of Rs. 75,000/- was also imposed on the petitioner. Aggrieved thereby, she filed an appeal before the Commissioner of Customs (Appeals) on 16 February 2017, which was rejected vide Order dated 24 August 2018 (P-5). Aggrieved thereof, the petitioner filed a Revision Application before the Central Government against the order dated 24 August 2018, which by the impugned order dated 14 July 2021 was dismissed (P-1), as per which the request for release of goods on payment of redemption fine under Section 125 of the Act was also rejected. The fines and penalties imposed were also found to be fair and just. COMMON CHALLENGE IN THE WRIT PETITIONS: 11. In a nutshell, the impugned orders passed by the respective Ad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... but obviously for commercial gain; and that the bringing of subject goods into India or smuggling the same without declaration and passing through the Green Channel was in violation of Section 7 of the Foreign Trade (Development and Regulation) Act [FTD R Act] as it amounted to import of gold without authorization; and lastly that there was no violation of principles of natural justice and the petitioners were guilty of their own follies since they failed to appear despite notice for hearing and not satisfying the authorities about their actions in bringing the subject goods into India. Sh. Satish Kumar, learned Standing Counsel for the respondent No. 2/Customs relied on decisions in Sheikh Mohd. Omar v. Customs 1970(2) SCC 728; Om Prakash Bhatia v. Commissioner of Customs (2003) 6 SCC 161; Garg Woolen Mills v. Customs (1999) 9 SC 175; and Union of India v. Raj Grow Impex 2021 SCC Online SC 429. ARGUMENTS ADVANCED ON BEHALF OF THE PETITIONERS: 13. Mr. Sholab Arora, learned counsel for the petitioners vehemently urged that the authorities concerned while passing the impugned orders had completely overlooked the fact that release/redemption of the subject goods had been allowed in s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (P-13). 15. Learned Counsel took us through the relevant chapters under the Customs Manual 2015, Foreign Trade Policy 2015-20 and ITC (HS), 2022-Import Policy. It was vehemently urged that the importation of the subject goods i.e., the gold, is not even prohibited under the FTDR Act. It was additionally canvassed that Section 125 of the Act deals with both prohibited and non prohibited items and that the importation of the gold is not prohibited as such and that being the case the Adjudicating Authority had no discretion but to allow or afford an option for the release/redemption of the subject goods under Section 125 of the Act to the importer/owners. In his submissions, reliance was placed on the decisions in the case of Sunshine International v. Collector of Customs 1993 (42) ECC 282; Mohini Bhatia v. Commissioner of Customs 1999 (106) ELT 485 Tri.-Mumbai; Suresh Kumar Raisoni v. Commissioner of Customs 2004 SCC OnLine CESTAT 1116; Union of India v. Dhanak M. Ramji 2009 SCC OnLine Bom 2270; Commissioner of Customs v. Ashwini Kumar 2020 SCC OnLine CESTAT 333; Rajaram Bohra v. Union of India 2015 SCC OnLine Cal 6049, Commissioner of Customs (Air) v. P.Sinnasamy 2016 SCC OnLine Ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssed by the Central Government prohibiting or restricting import or export of any goods, mere import or export of goods without any permit or license, would not result in shall not make such goods fall under the prohibited category. Reference was invited to the decisions in Becker Gray and Co. Ltd. v. Union of India 1970 (1) SCC 352; Sheikh Mohd. Omer v. CC, Calcutta 1983 (12) ELT 1439; Prayag Exporters Pvt. Ltd. v. Commissioner 2000 (121) ELT 819 (Tribunal); and Commissioner v. Prayag Exporters Pvt. Ltd. 2003 (155) E.L.T. 4 (S.C.). 18. It was additionally canvassed that the decision in Om Prakash Bhatia v. Commissioner of Customs (supra), was distinguishable since there was a specific Notification under Section 18 of the Foreign Exchange Regulations Act, 1972 [FERA] and such distinction was brought out in the decisions of Commissioner v. Suresh Jhunjhunwala 2006 (203) E.L.T. 353 (S.C.); CC, New Customs House Mumbai v. Vishal Exports Overseas Ltd. 2007 (209) ELT 331 (SC), Gurcharan Singh v. DRI 2008 (224) ELT 497 (SC). 19. Mr. Gulati, learned senior counsel then invited our attention to various notifications issued by the Central Government Notification No. 1/34 dated 18.01.1964 an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Section 125 of the Act states that an officer adjudging may impose redemption fine in case importation or exportation has been prohibited under the Act or under any other law for the time being in force. It is clear from the language that Section 125 applies to the goods, importation and exportation of which is prohibited under the Act or under any other law for the time being in force. It applies to prohibited goods. The contention of the Revenue that Section 125 does not apply to the prohibited goods is, therefore, misconceived and wrong. 17. The term prohibited goods under Section 2(33) of the Act, is much wider than Section 11(1) of the Act which gives power to the Central Government to issue notification prohibiting import or export of goods absolutely or subject to such conditions as may be specified Section 2(33) applies to the goods prohibited absolutely or subject to conditions stipulated under Section 11 of the Act and also to import or export of goods subject to any prohibition under the Act or any other law for the time being in force. The expression prohibited goods is much broader and wider and is not confined merely to goods import and export of which is prohibited ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re, the only question to be considered is whether the contravention of Baggage Rules, 2016 and breach of the prohibition imposed by the Foreign Trade (Development and Regulation) Act, 1992 amounts to a prohibition under any other law for the time being in force. It is true that various authorities had exercised the discretion to permit release of confiscated goods on payment of redemption fine. But such exercise of discretion is not mandatory if the import is prohibited under the Act or any other law in force. Even in such cases, discretion can be exercised which will depend upon the manner in which the authority approves the transaction. Section 7 of the Foreign Trade (Development and Regulation) Act clearly indicates that no person shall make any import or export except under an importer-exporter code number granted by the Director General or the officer authorised by the Director General in that behalf and in accordance with the procedure specified. The rules also clearly prescribe the procedure under how the import or export is to be carried out by preparation of a Bill of Entry. 22. In the end, learned Senior Advocate referred to certain observations in the cited cases viz., i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Act. It was very strongly canvassed that for the purpose of invoking the discretionary part of Section 125 of the Act, absolute or per se prohibition is not the sole criteria and prohibition arising from illegal importation contrary to or in breach of conditions or restrictions, of any law for the time being in force shall be sufficient. Reference has been invited to Commissioner of Customs (Prev) v. M. Ambalal Co. (2011) 2 SCC 74, apart from referring to decisions in the cases of Sheikh Mohd. Omar v. Collector of Customs (supra); Om Prakash Bhatia v. Commissioner of Customs (supra);, Garg Woolen Mills v. Customs (supra) and Union of India v. Raj Grow Impex (supra) and lastly to the decision in Abdul Rajak v. UOI 2012 (275)ELT 300 (Ker.). 24. Mr. Satish Kumar, learned Senior Standing Counsel for the respondent/Customs by all means echoed the line of submissions advanced by Ms. Bhatnagar and additionally referred to the decision in the case of Commissioner of Customs (AIR) v. Samynathan Murugesan CESTAT 2009 (4) TMI 77 Madras High Court reciting the relevant paragraphs about legislative intent behind the promulgation of Section 125 of the Act. In this regard, it was vehementl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... goods , importer and smuggling in the following manner: 2.(14) dutiable goods means any goods which are chargeable to duty and on which duty has not been paid; (15) duty means a duty of customs and leviable under this Act; *** (23) import , with its grammatical variations and cognate expressions, means bringing into India from a place outside India; *** (25) imported goods means any goods brought into India from a place outside India but does not include goods which have been cleared for home consumption; (26) importer , in relation to any goods at any time between their importation and the time when they are cleared for home consumption, includes any owner or any person holding himself out to be the importer; *** 29. Chapter V of the Act provides provisions for levy of, and exemption, from customs duty besides refund of duty paid including the interest thereupon as also period of limitation for processing the claims. Chapter VA of the Act incorporating Section 28 (c) (d) provides for amount of duty in the price of goods, etc., for purpose of refund; while Chapter VAA provides for administration of rules of origin under trade agreement. Section 28E in Chapter VB of the Act provide ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r export out of India. Under this section, all goods imported into or exported from India are liable to customs duty unless the Customs Act itself or any other law for the time being in force provides otherwise. The rate of duty is fixed by the Customs Tariff Act, 1975. 31. The valuation of the imported goods is done as provided under Section 14 of the Act. Section 25 of the Act empowers the Central Government to issue notifications exempting either absolutely or subject to such conditions as specified in a notification, goods of any specified description from the whole or any part of the duty under the Customs Act leviable thereon import and imported goods mean that if goods are brought into India, meaning thereby into the territory of India from outside, there is import of goods and the goods become imported goods and become chargeable to duty, up to the moment they are cleared for home consumption. The word importer has been defined in the Act as importer in relation to any goods at any time between their importation and the time when they are cleared for home consumption and includes any owner or any person who holds himself out to be an importer. Section 2(33) of the Customs A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al or plant life or health; (l) the protection of national treasures of artistic, historic or archaeological value; (m) the conservation of exhaustible natural resources; (n) the protection of patents, trade marks and copyrights; (o) the prevention of deceptive practices; (p) the carrying on of foreign trade in any goods by the State, or by a Corporation owned or controlled by the State to the exclusion, complete or partial, or citizens of India; (q) the fulfilment of obligations under the Charter of the United Nations for the maintenance of international peace and security; (r) the implementation of any treaty, agreements or convention with any country; (s) the compliance of imported goods with any laws which are applicable to similar goods produced or manufactured in India; (t) the prevention of dissemination of documents containing any matter which is likely to prejudicially affect friendly relations with any foreign State or is derogatory to national prestige; (u) the prevention of the contravention of any law for the time being in force; and (v) any other purpose conducive to the interests of the general public. (3) Any prohibition or restriction or obligation relating to impo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... scation of improperly imported goods, etc. The following goods brought from a place outside India shall be liable to confiscation: (a) any goods imported by sea or air which are unloaded or attempted to be unloaded at any place other than a customs port or customs airport appointed under clause (a) of section 7 for the unloading of such goods; (b) any goods imported by land or inland water through any route other than a route specified in a notification issued under clause (c) of section 7 for the import of such goods; (c) any dutiable or prohibited goods brought into any bay, gulf, creek or tidal river for the purpose of being landed at a place other than a customs port; (d) any goods which are imported or attempted to be imported or are brought within the Indian customs waters for the purpose of being imported, contrary to any prohibition imposed by or under this Act or any other law for the time being in force; (e) any dutiable or prohibited goods found concealed in any manner in any conveyance; (f) any dutiable or prohibited goods required to be mentioned under the regulations in an import manifest or import report which are not so mentioned; (g) any dutiable or prohibited good ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng out that import of any dutiable ; or prohibited goods which are not declared at the customs when imported, would be an act or omission amounting to smuggling, and would therefore subject the goods to confiscation. As much is canvassed as to whether smuggling of goods can be read or not into the definition of prohibited goods, and further that its confiscation and release/redemption are severable course of actions, we reach to the crucial issue of interpreting Section 125 of the Act, which provides as under:- 125. Option to pay fine in lieu of confiscation. (1) Whenever confiscation of any goods is authorised by this Act, the officer adjudging it may, in the case of any goods, the importation or exportation whereof is prohibited under this Act or under any other law for the time being in force, and shall, in the case of any other goods, give to the owner of the goods 1[or, where such owner is not known, the person from whose possession or custody such goods have been seized,] an option to pay in lieu of confiscation such fine as the said officer thinks fit: Provided that, without prejudice to the provisions of the proviso to sub-section (2) of section 115, such fine shall not exc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se of a gentleman and Rs. 20,000/- in case of a lady passenger. However, in a later Notification: 12/2012-Cus. dated 17 March 2012 the Government relaxed the conditions as to enable eligible passengers to carry gold not exceeding 10 kgs provided declaration is filed in the prescribed form before the proper officer at Customs at the time of arrival in India but directing the customs officials to rigorously follow the following guidelines: (i) The engraved serial number of gold bars must be invariably mentioned in the baggage receipt issued by Customs. (ii) In case of gold in any other form, including ornaments, the eligible passenger must be asked to declare item wise inventory of the ornaments being imported. This inventory, duly signed and duly certified by the eligible passenger and assessing officer, should be attached with the baggage receipt. (iii) Wherever possible, the field officer, may, inter alia, ascertain the antecedents of such passengers, source for funding for gold as well as duty being paid in the foreign currency, person responsible for booking of tickets etc. so as to prevent the possibility of the misuse of the facility by unscrupulous elements who may hire such ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and exports. ( 1) The Central Government may, by Order published in the Official Gazette, make provision for the development and regulation of foreign trade by facilitating imports and increasing exports. (2) The Central Government may also, by Order published in the Official Gazette, make provision for prohibiting, restricting or otherwise regulating, in all cases or in specified classes of cases and subject to such exceptions, if any, as may be made by or under the Order, the [import or export of goods or services or technology]: [Provided that the provisions of this sub-section shall be applicable, in case of import or export of services or technology, only when the service or technology provider is availing benefits under the foreign trade policy or is dealing with specified services or specified technologies.] (3) All goods to which any Order under sub-section (2) applies shall be deemed to be goods the import or export of which has been prohibited under section 11 of the Customs Act, 1962 (52 of 1962) and all the provisions of that Act shall have effect accordingly. [(4) Without prejudice to anything contained in any other law, rule, regulation, notification or order, no perm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ver, it again begs the question as to whether such relaxation would apply to importation of gold in the nature of smuggling? NOTIFICATIONS AND CIRCULARS BY THE GOVERNMENT DEPARTMENTS 48. In order to answer the above question, let us now scan through the various notifications/circulars issued by the Government regulating importation of gold into India. Firstly, it would be expedient to extract the relevant notifications and circulars issued by the DGFT issued from time to time, that go as under: (i) DGFT Notification No. 29/(RE-2004)/2002-2007 dated 28.01.2004 issued under Section 5 of the FTDR, Act read with para 2.1 of Export Import Policy, 2002-2007, amended the ITC (HS) classification of certain goods, including gold. As per this Notification, and gold in all its forms, falling under the Tariff Item Head 7108 and 7118 was Free but subject to RBI regulations . (ii) DGFT Policy Circular No. 32/(RE-2004)/2002/2007 dated 16.04.2004 notified that that import of gold was made free subject to RBI regulations vide Notification No. 29 dated 28.01.2004. It also stated that the policy of duty-free imports through Nominated Agencies and 15 Nominated Banks details in Chapter-4 of the EXIM Po ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 71069100 Unwrought Free Restricted Subject to RBI Regulations Import is allowed only through nominated agencies as notified by RBI (in case of banks) and DGFT (for other agencies) Silver dore can be imported by refineries against a licence with AU condition 71081100 Powder Free Restricted Subject to RBI Regulations Import is allowed only through nominated agencies as notified by RBI (in case of banks) and DGFT (for other agencies) (vi) DGFT Notification No. 49/2015-2020 Dated: 5th January, 2022, brought out amendment in import policy conditions of gold under Chapter 71 of Schedule - I (Import Policy) of ITC (HS), 2017 in exercise of powers conferred by Section 3 read with Section 5 of FT (D R) Act, 1992, read with paragraph 1.02 and 2.01 of the Foreign Trade Policy, 2015-2020, as amended from time to time. In addition to nominated agencies as notified by RBI (in case of banks) and by DGFT, qualified jewellers as notified by International Financial Services Centres Authority (IFSCA) were permitted to import gold under specific ITC(HS) Codes through India International Bullion Exchange IFSC Ltd. (IIBX). The relevant conditions are extracted as follows: ITC (HS) Code Item Description ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ia, relied upon by the ld counsels for the respondents, the extracts of which read as under: (i). Circular No. 107 dated 04.06.2013 issued by the Government of India, Ministry of Finance (Department of Revenue), CBEC permitting import of gold on consignment basis by banks for genuine needs of the exporters of gold jewellery simultaneously extended the benefit to all nominated agencies / premier / star trading houses who have been permitted by the Government of India to import gold. The said Circular was issued under Section 10 (4) read with Section 11 (i) of the FEMA. (ii). RBI Circular No. 103/2012-13/499 dated May 13, 2013 by the Foreign Exchange Department reiterated that nominated banks / agencies were permitted to import gold on loan basis. (iii). Circular No. 7 by the Exchange Control Department, RBI dated March 6, 1998 whereby certain nominated agencies had been permitted to import gold viz. MMTC, HHEC, STC, SBI and other agencies authorized by the Reserve Bank for sale of jewellery manufacturers, exporters, NRIs, holders of Special Import Licences and domestic users. There were detailed guidelines for import of gold on loan / credit basis providing for period of loan, rate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mechanism by the resident qualified jeweller to import gold through IIBX i.e., India International Bullion Exchange IFSC Ltd. or in terms of any other regulations issued by IFSCA and DGFT. 50. The aforesaid circulars leave no iota of doubt that the RBI has also been stepping in from time to time regulating the importation of gold. While winding up this part of the narrative, there is no gainsaying that the rate of customs duty on import of gold has been modified from time to time under Customs Tariff Act, 1975, and it is but obvious that smuggling of gold is undertaken not only to profit from the price difference in gold items as also to avoid payment of customs duty. 51. Without further ado, we have no hesitation in holding that smuggling of gold is per se restricted by virtue of Section 111 as also in terms of various notifications issued under the FTDR Act and under the RBI Act discussed herein above. The aforesaid discussion raises a strong disposition to the effect that the importation of gold into India is highly regulated and bulk importation of gold item could only be affected by the nominated banks, agencies or business houses in the manner laid down by various DGFT regula ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cross borders in a relatively convenient way with a product that can be transformed to be concealed easily. This quality of gold to move value quickly and easily, renders it also susceptible to be used in funding terrorism. 53. It would further be relevant to refer to the report by the Indian Gold Policy Centre (IGPL) 7 that reads as under: It is estimated that up to one-fourth of the total volume of gold entering India arrives here through illicit trade. India imports around 800-900 tonnes of gold every year while the annual consumption is around 1,000 tonnes. This suggests that up to 200 tonnes of gold is being smuggled into the country. This illicit trade represented over $1 billion in value and at least $20 million in lost tax revenue to governments. The World Gold Council (WGC) estimates 65-75% of smuggled gold comes by air, 20-25% by sea, and 5-10% by land. One important factor that encourages the smuggler is the customs duty levied on the gold import. History shows that there is a considerable percent increase in the customs duty. PR Somasundaram, Managing Director for the region at the WGC said that the propensity to smuggle now is very high because every time you increase ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... R) Act, 1992. The crux of the matter is that the exporter failed to fully disclose the true sale consideration. Examining the scope and ambit of section 2(33) read with section 11 113 of the Act, it was observed as under: 10. From the aforesaid definition, it can be stated that: (a) if there is any prohibition of import or export of goods under the Act or any other law for the time being in force, it would be considered to be prohibited goods; and (b) this would not include any such goods in respect of which the conditions, subject to which the goods are imported or exported, have been complied with. This would mean that if the conditions prescribed for import or export of goods are not complied with, it would be considered to be prohibited goods. This would also be clear from Section 11 which empowers the Central Government to prohibit either absolutely or subject to such conditions to be fulfilled before or after clearance, as may he specified in the notification, the import or export of the goods of any specified description. The notification can be issued for the purposes specified in sub-section (2). Hence, prohibition of importation or exportation could be subject to certain ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was a case where the appellant in October November, 2016 imported MFDs without requisite permission viz., Multi-Function Device, Digital Photocopiers and Printers, which incidentally were also classified as other wastes under Rule 3 (1) (23) of the Hazardous Waste Management Rules, and the goods were confiscated with penalty imposed, declining relief of release/redemption. The challenge was upheld observing that: - 8. Unfortunately, both the Commissioner and the Tribunal did not advert to the provisions of the Foreign Trade Act. The High Court dealing with the same has aptly noticed that Sections 11(8) and (9) read with Rule 17(2) of the Foreign Trade (Regulation) Rules, 1993 provide for confiscation of goods in the event of contravention of the Act, Rules or Orders but which may be released on payment of redemption charges equivalent to the market value of the goods. Section 3(3) of the Foreign Trade Act provides that any order of prohibition made under the Act shall apply mutatis mutandis as deemed to have been made under Section 11 of the Customs Act also. Section 18-A of the Foreign Trade Act reads that it is in addition to and not in derogation of other laws. Section 125 of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Agricas (supra) whereas, it had not been the case in Atul Automations (supra) that the import was otherwise likely to affect the domestic market economy. In contrast to the case of Atul Automations, where the goods were permitted to be imported (albeit with authorisation) for the reason that they were not manufactured in the country, in the present case, the underlying feature for restricting the imports by quantum has been the availability of excessive stocks and adverse impact on the price obtainable by the farmers of the country. The decision in Atul Automations (supra), by no stretch of imagination, could be considered having any application to the present case. 155. Thus, we have no hesitation in holding that the goods in question, having been imported in contravention of the notifications dated 29.03.2019 and trade notice dated 16.04.2019; and being of import beyond the permissible quantity and without licence, are prohibited goods for the purpose of the Customs Act. 156. The unnecessary and baseless arguments raised on behalf of the importers that the goods in question are of restricted category, with reference to the expression restricted having been used for the purpose ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uestion is as to whether the exercise of discretion by the Adjudicating Authority in these matters, giving option of payment of fine in lieu of confiscation, could be approved? It is true that, ordinarily, when a statutory authority is invested with discretion, the same deserves to be left for exercise by that authority but the significant factors in the present case are that the Adjudicating Authority had exercised the discretion in a particular manner without regard to the other alternative available; and the Appellate Authority has found such exercise of discretion by the Adjudicating Authority wholly unjustified. In the given circumstances, even the course adopted in the case of Hargovind Das K. Joshi 10 (of remitting the matter for consideration of omitted part of discretion) cannot be adopted in the present appeals; and it becomes inevitable that a final decision is taken herein as to how the subject goods are to be dealt with under Section 125 of the Customs Act. 176. As noticed, the exercise of discretion is a critical and solemn exercise, to be undertaken rationally and cautiously and has to be guided by law; has to be according to the rules of reason and justice; and has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for redemption/release was declined under Section 125 of the Act. On being challenged, the High Court allowed the redemption/release but on challenge by the department, the decision of the High Court was set aside. It was held that the goods which had been seized in the matter could not have been imported into India without a license under Import Control Act and same did not amount to imported goods within the meaning of Section 2(25) of the Act, and therefore, importation of such goods i.e., rough diamonds were prohibited by law and the respondent firm was not entitled to its redemption/release. 61. The case of Abdul Razak v. Union of India (supra) was one where an attempt was made to smuggle gold by concealing the same in emergency lights, mixie-grinders and car horns weighing about 8 kg. It was held that although gold as such is not a prohibited item and can be imported, such import is subject to a lot of restrictions including necessity to declare the goods on arrival at the customs station and make payment of duty at the rate prescribed . It was further held that goods brought by indulging in smuggling would amount to importation of prohibitary goods and the appellant was not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... negative. However, on searching her, 40 gold bars, each weighing 10 tolas were found stitched with her undergarments. The long and short of the story is that later on when the petitioner applied for release/redemption of gold items, same were ordered to be confiscated instead with heavy penalty. It was held that import policy in force at the relevant time made a distinction between prohibited goods and restricted goods and the gold was not a prohibited item, and thus, the Adjudicating Authority was bound to offer an option to the importer to redeem the items on payment of fine, which was not to exceed the market price of the goods less duty payable thereupon. 64. The case of Suresh Kumar Raisoni v. Commissioner of Customs (supra) CSTA Mumbai 2004, was one where on personal search of one Jabbar Singh Thakur at the premises of a party at Jhaveri Bazar, Mumbai on 19.08.1997, led to recovery of 42 foreign marked gold biscuits valued at Rs. 22,26,000/-, which were seized under the Customs Act. The proceedings led to the passing of the impugned order for confiscation of gold under Section 111(D) of the Act besides imposition of penalty under Section 112 of the Act. In a nutshell, the Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lant passenger ingeniously concealing it in the stroller of the bag. It has also been indicated in this order that Government of India has consistently held the view in many cases that gold is not prohibited but restricted and allowed redemption of confiscated gold. (f) The Apex Court has also drawn a distinction between goods whose import is absolutely prohibited and those whose import is restricted under the Foreign Trade (D R) Act and redemption was allowed in the case of restricted goods. (g) Thus, while Section 125 allows the adjudicating authority the discretion to allow or not to allow redemption of prohibited goods. As far as gold, which is smuggled, is concerned, there appears to have been a gradual change in the approach of the Government. In the case of Ashok Kumar, Government of India allowed redemption of gold that was not only NOT Declared but ingeniously concealed in strolley bags. It has also been declared in this Revision order that GOI had consistently held the view that smuggled gold can be redeemed. 65. We are unpersuaded to countenance the aforesaid conclusions for reasons which follow. The case of Rajaram Bohra v. Union of India (supra) [Calcutta 2015] was one ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eferred provision, namely, Section 19 of the Sea Customs Act is in any way analogous to Section 111 of the Act and in any case, the cited case was not about smuggling of goods but a case of mis-declaration of its value so as to seek levy of lesser customs duty. 67. The cited case of Commissioner v. Prayag Exporters Ltd. 2003 (155) ELT 4 (SC) also has no application since it was a case where the goods in question were not prohibited for export and at the same time there was no provision for levy of export duty on the consignment. The decision in the case of Commissioner v. Suresh Jhunjhunwala (supra) was also one where the export consignment was held to be a case of over invoicing and the issue regarding redemption of goods was not considered with regard to violation of FERA. 68. The plea by the learned counsel for the appellants that RBI has never issued any circular under Section 58 of RBI Act 12 , 1934 regulating import of gold goes down the drain as it has been amply demonstrated that import of gold into India has been subject to various restrictions and mandatory requirements. It is no argument that restrictions to bring gold in a certain quantity falls under Section 25 of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ory condition under the Act as also in other relevant notifications/circulars issued by the DGFT, the RBI or the any other authority have not been complied with, or in other words the restrictions imposed by the concerned authorities have not been adhered to. We further have no hesitation in holding that the importation of the gold is a prohibited item within the meaning of Section 2(33) of the Act; and that redemption in case of importation of gold which is brought into India illegally in the form of smuggling does not entitle the owner or importer for automatic release/redemption of such item, and therefore, as a necessary corollary a decision to allow release/redemption of the goods confiscated with or without imposition of fine in addition to payment of requisite duty is vested in the discretion of the Adjudicating Officer, who needless to state is duty bound to exercise his discretionary powers not only after considering the facts and circumstances of each case before it, but also in a transparent, fair and judicious manner under Section 125 of the Act. 71. In view of the aforesaid proposition of law, we proceed to deal with each of the Writ Petitions individually. W.P. (C) No ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s (AIR) Chennai-1 v. Samynathan Murugesan [2009 (247) E.L.T. (Mad.)] which was upheld by the Apex Court, as well as the decision of the High Court of Bombay in the case of Union of India v. Aijaj Ahmad 2009 (244) ELT 49 (Bom.). The decision of the Adjudicating Authority to deny the redemption of the goods and order of absolute confiscation were ultimately upheld. Lastly, the plea that another passenger on the same day was apprehended with huge commercial quantity of gold, namely, Ridhima Bajaj but let off by the Custom Authorities in as much as release/redemption was allowed, is hardly of any legal consequence. By all means it is manifest that such decision was contrary to the law but then one bad precedent does not legally entitle the petitioner to claim similar benefit. 74. Therefore, without further ado, we have no hesitation in holding that the discretionary powers were properly exercised by the Adjudicating Authority under Section 125 of the Act in passing the order-in-original dated 16 September 2016. The plea of the petitioner that she had been gifted the gold items of such huge quantity weighing about 3100 grams was considered and it was held that deed was neither bearing a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... set aside in appeal by the Appellate Authority vide order dated 18 July 2018, the Revisional Authority vide the impugned order dated 09 July 2021, upheld the order-in-original and held as under:- 7.3 The original authority has correctly brought out that, in this case, the conditions subject to which gold could have been legally imported have not been fulfilled. Thus, following the ratio of the aforesaid judgments, there is no doubt that the subject goods are prohibited goods . As such, the Commissioner (Appeals) has erred in holding that the impugned gold is not a prohibited item. 9. In view of the findings above, the Government holds that the Commissioner (Appeals) has proceed to allow redemption on the erroneous finding that the impugned gold bars are not a prohibited item. The Commissioner (Appeals) has also incorrectly interfered with the discretion exercised by the original authority by permitting redemption of these gold bars. 77. Finally, the Ld. Revisionary Authority, after considering the blameworthy conduct of the petitioner as well as the value of the subject goods held that she deserved no leniency. Thus, we are unable to find any legal infirmity, illegality or perversi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... judicating Authority took note of Section 7 of the FTDR Act as well as Rule 3 (1) (h) of the Foreign Trade (Exemption from application of rules in certain cases) Amendment Order, 2017. It was concluded that the petitioner was not an eligible passenger and her intention was to evade payment of customs duty and it was a clear case of mis-declaration under Section 77 of the Act. It was further held as under:- 8.3 I observe that gold once confiscated can be redeemed under Section 125 of the Customs Act, 1962. In the instant case, I am not inclined to give an option to the pax for redemption of the said goods as the passenger not only violated the Green Channel but also attempted an act of theft of goods detained by the Department. The intention of the pax was not to clear the goods on payment of applicable duty, fine and penalty but to clear the goods through Green Channel without payment of duty and then to clear the same by way of theft. Hence, the instant case is fit for absolute confiscation. 80. In short, the order-in-original dated 01 January 2021 was upheld in the appeal vide order dated 27 August 2021 and the revision application filed by the petitioner was also rejected vide i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... een legally imported, have not been fulfilled. Thus following the law laid down as above, there is no doubt that the subject goods are prohibited goods. 83. While denying the release/redemption of the goods, reliance was placed by the Ld. Adjudicating Authority on the decisions in Sheikh Mohd. Omer (supra), Om Prakash Bhatia (supra), M/s Raj Grow Impex (supra), Malabar Diamonds (supra), Garg Woollen Mills (supra), P. Sinnaswamy (supra), Raju Sharma (supra) and Mangalam Organics (supra). Hence, in the instant Writ Petition, we find that the decision of the learned Revisional Authority vide order dated 22 September 2021 whereby the goods weighing about 2000 grams were absolutely confiscated and penalty of Rs. 11 Lacs was imposed without an option of release or redemption does not suffer from any legal infirmity, perversity or incorrect approach in law. At the cost of repetition, the petitioner had failed to discharge the burden under Section 123 of the Act that he was the owner of the subject goods, and he had admitted his signatures on the panchnama as also statement made under Section 108 of the Act thereby acknowledging that he was smuggling gold into India. The learned Adjudicati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ustoms Declaration Slip and knowingly and intentionally did not make true and proper declaration before Customs officer as required under Section 77 of the Customs Act, 1962 . Hence find she is liable for penal action under Section 112 and Section 114AA of the Customs Act, 1962. 85. The above referred determination was made in keeping with various judicial pronouncements, which were held to have a bearing on the present case, viz., Sheikh Mohd. Omer (supra), Om Prakash Bhatia (supra), Jasvir Kaur [2009 (241) ELT 0521 (Tri.)], Alfred Menezes (supra) and Nine Star Exports (supra). The petitioner in the revision application assailed the aforesaid order-in-original as also in appeal on the ground that import of gold was not prohibited and should have been allowed to be released on payment of redemption fine. We have no hesitation in holding that the decision of the learned Adjudicating Authority ordering absolute confiscation of gold and imposing fine without option to the petitioner of its release/redemption suffers from no illegality. We further have no hesitation in holding that the learned Revisional Authority rightly rejected the revision application vide the impugned order dated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act, 1992 [FTDR] . 89. Learned counsels appearing for the petitioners as well as Mr. Tarun Gulati, learned senior counsel and amicus, would urge that in the absence of gold having been placed in the negative list, either in terms of a notification issued under Section 11 of the Act or Section 3(2) of the FTDR, it cannot be treated as falling in the category of prohibited goods. Mr. Gulati, the learned amicus, has laid stress upon the language employed in Section 11 which speaks of a prohibition, absolute or otherwise, being recognized to exist only if a notification indicative of the said intent had been duly published in the Official Gazette as contemplated under the statute. According to the learned amicus, the aforesaid position also stands fortified upon a reading of Section 3(2) of the FTDR which too contemplates an order being passed by the Union Government prohibiting, restricting or otherwise regulating the import of goods and such an order being published in the Official Gazette. 90. The learned amicus further submitted that Section 3(3) of the FTDR clearly stipulates that an order once made under sub-section (2) thereof would result in such goods being held to be prohibi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of goods specified in a notification issued in that respect, unless the exporter had furnished to the prescribed authority a declaration in terms as contemplated in that provision. Section 18 is thus structurally clearly distinct and distinguishable from the regime of prohibited goods which stands embodied in Section 2(33) of the Act. In fact, FERA did not even incorporate a defining provision for prohibited goods. 93. Reverting then to the submissions addressed by the learned amicus, we note that Sheikh Mohd. Omar was principally dealing with the provisions of Section 3 of the Imports and Exports Control Act 1947 [The 1947 Act] which employed the expressions prohibiting, restricting or otherwise controlling . Sheikh Mohd. Omar was a decision in which an order referable to Section 3 had been duly promulgated. This is evident from paragraph 6 of the report where the Supreme Court had noticed the promulgation of the Imports (Control) Order, 1955 [The 1955 Order] in exercise of powers conferred by Section 3 of the 1947 Act. In terms of the order dated 07 December 1955, the import of animals was made subject to a license and a customs clearance permit being granted by the Union Gover ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... must, however, be observed that Becker Gray was rendered in the context of Section 19 of the Sea Customs Act, 1878, and which was framed in the following words: - 19. Power to prohibit or restrict importation or exportation of goods. The Central Government may from time to time, by notification in the Official Gazette, prohibit or restrict the bringing or taking by sea or by land goods of any specified description into or out of [India] [across any customs frontier as defined by the Central Government]. 96. Significantly, Section 19 of the Sea Customs Act, 1878 was couched in terms distinct from Section 2(33) since it specifically alluded to the power to either prohibit or restrict . Mr. Gulati had also drawn our attention to the decision of the Tribunal in Prayag Exporters Pvt. Ltd. vs. CommissionerOrder dt. 18.08.2000, Appeal No. C/195-V/2000-Bom (CEGAT, West Zonal Bench, Mumbai) where while dealing with the validity of a confiscation order passed by the Adjudicating Authority on the basis of over-inflating the value of a footwear consignment had held as follows: - 2. It has been the consistent view of this Tribunal that clause (d) of section 113 of the Act did not apply in such ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e established that attempt to export the goods was contrary to any prohibition imposed under any law for the time being in force. 9. Further, Section 2(33) of the Act defines prohibited goods as under: 2. (33) prohibited goods means any goods the import or export of which is subject to any prohibition under this Act or any other law for the time being in force but does not include any such goods in respect of which the conditions subject to which the goods are permitted to be imported or exported have been complied with; 10. From the aforesaid definition, it can be stated that: (a) if there is any prohibition of import or export of goods under the Act or any other law for the time being in force, it would be considered to be prohibited goods; and (b) this would not include any such goods in respect of which the conditions, subject to which the goods are imported or exported, have been complied with. This would mean that if the conditions prescribed for import or export of goods are not complied with, it would be considered to be prohibited goods. This would also be clear from Section 11 which empowers the Central Government to prohibit either absolutely or subject to such condition ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... goods. In a detailed judgment, this Court not only took into consideration the provisions of the Customs Act, but also the provisions of Section 15 of the Foreign Exchange Regulation Act and the rules framed thereunder, as also the notifications issued by the Central Government from time to time. The Court opined that for determining the export value of the goods, it is necessary to refer to the meaning of the word value as defined in Section 2(41) of the Act, and the same must be determined in accordance with the provision of sub-section (1) of Section 14, stating: (SCC p. 169, para 16) 16. Section 14 specifically provides that in case of assessing the value for the purpose of export, value is to be determined at the price at which such or like goods are ordinarily sold or offered for sale at the place of exportation in the course of international trade, where the seller and the buyer have no interest in the business of each other and the price is the sole consideration for sale. No doubt, Section 14 would be applicable for determining the value of the goods for the purpose of tariff or duty of customs chargeable on the goods. In addition, by reference it is to be resorted to and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the decision of the same Bench in Prayag Exporters [(2007) 12 SCC 401 : (2003) 155 ELT 4 (SC)] is applicable being related to the DEPB Scheme. The question, in our opinion, has to be considered having regard to the provisions of the definition of the prohibited goods , entry of goods together with the provisions of the Foreign Exchange Regulation Act. **** **** **** 25. In view of the order proposed to be passed by us, we do not intend to enter into the factual controversy of this matter any further. The Tribunal, in our opinion, should have considered the matter from another angle, namely, as to whether the respondents have violated the provisions of the Foreign Exchange Regulation or not. As regards the finding arrived at by the Tribunal that the respondents had not overvalued the goods, inter alia, on the ground that no expert opinion regarding the value of the export goods had been adduced, the Tribunal did not advert to the materials which had been brought on records during investigation, whereupon the Commissioner relied upon. 26. We are, therefore, of the opinion that the impugned judgment cannot be sustained, which is set aside accordingly. The appeal is allowed. The matte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd parity of treatment for the present consignment also. The defence that DGFT had declined to issue such authorisation does not appeal to the Court. 8. Unfortunately, both the Commissioner and the Tribunal did not advert to the provisions of the Foreign Trade Act. The High Court dealing with the same has aptly noticed that Sections 11(8) and (9) read with Rule 17(2) of the Foreign Trade (Regulation) Rules, 1993 provide for confiscation of goods in the event of contravention of the Act, Rules or Orders but which may be released on payment of redemption charges equivalent to the market value of the goods. Section 3(3) of the Foreign Trade Act provides that any order of prohibition made under the Act shall apply mutatis mutandis as deemed to have been made under Section 11 of the Customs Act also. Section 18-A of the Foreign Trade Act reads that it is in addition to and not in derogation of other laws. Section 125 of the Customs Act vests discretion in the authority to levy fine in lieu of confiscation. MFDs were not prohibited but restricted items for import. A harmonious reading of the statutory provisions of the Foreign Trade Act and Section 125 of the Customs Act will therefore n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hose goods would cease to be prohibited goods. This is why the exclusion clause contained in the second part of Section 2(33) uses the expression any such goods . Therefore, it appears that the Customs Act recognizes only two types of goods namely: (1) those that are prohibited; and (2) those that are not prohibited. The Act also recognizes the fact that even prohibited goods could be imported or exported subject to certain conditions. If those conditions are fulfilled, prohibited goods would automatically become non-prohibited goods. 15. Section 11 of the Act empowers the Central Government, by Notification in the official gazette, to prohibit either absolutely or subject to such conditions to be fulfilled before or after clearance of the import or export of goods of any specified description. The expression illegal import is defined in Section 11A(a) of the Customs Act, 1962 to mean the import of any goods in contravention of the provisions of the Customs Act or any other law for the time being in force. ***** ***** ***** 23. Therefore, despite the fact that the goods, whose import is restricted in terms of the Foreign Trade Policy, should be construed to be prohibited goods, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bare reading of the provision aforesaid makes it evident that a clear distinction is made between prohibited goods and other goods . As has rightly been pointed out, the latter part of Section 125 obligates the release of confiscated goods (i.e., other than prohibited goods) against redemption fine but, the earlier part of this provision makes no such compulsion as regards the prohibited goods; and it is left to the discretion of the Adjudicating Authority that it may give an option for payment of fine in lieu of confiscation. It is innate in this provision that if the Adjudicating Authority does not choose to give such an option, the result would be of absolute confiscation. The Adjudicating Authority in the present matters had given such an option of payment of fine in lieu of confiscation with imposition of penalty whereas the Appellate Authority has found faults in such exercise of discretion and has ordered absolute confiscation with enhancement of the amount of penalty. This takes us to the principles to be applied for exercise of the discretion so available in the first part of Section 125(1) of the Customs Act. **** *** *** 176. As noticed, the exercise of discretion is a c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... claimant and his claim of equity remain incompatible and cannot stand together. 185. The overt suggestions on behalf of the interveners that demand and supply of pulses is dynamic and not static in nature have only been noted to be rejected. In our view, meeting with the requirements of demand and supply is essentially a matter for policy decision of the Government. No equity could be claimed with such submissions by the importers. Similarly, if, for whatever reason, any consignment of the subject goods has been released, such release had not been in accord with law and no equity could be claimed on that basis. 106. It was pointed out by Mr. Gulati, that the decision in Raj Grow Impex too must be appreciated bearing in mind that it was rendered in the context of a specific order issued by the Union Government and referable to Section 3(2) of the FTDR. According to the learned amicus, the aforenoted decisions in Atul Automation as well as Raj Grow Impex lay down the correct position in law and consequently in the absence of a product being covered under a notification issued either under Section 11 of the Act or one referable to Section 3(2) of the FTDR, it must be recognised to fa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ubmitted that more fundamentally, it must be borne in mind that RBI is essentially concerned with the discharge of central banking functions pertaining to payments made to and from India and regulation of monetary policy. The learned amicus submitted that the RBI does not have the jurisdiction or authority to either allow, regulate or restrict imports. For the purposes of highlighting the functions discharged by the RBI and it not being concerned with the import or export of goods, our attention was drawn to the decision rendered by the Karnataka High Court in Commissioner of Customs v. Sri Exports Judgment dt. 16.10.2020, CSTA No. 13/2019. The relevant passages of that decision are extracted hereinbelow: - 6. We have considered the submissions made by Learned Counsel for the parties and have perused the record. The Foreign Trade (Development and Regulation) Act, 1992 is an Act to provide for development and regulation of foreign trade by facilitating imports into, and augmenting exports from, India and for matters connected therewith or incidental thereto. Section 3 of the Act deals with Powers of the Central Government to make provisions relating to imports and exports. Section 3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ules were imported on 21-9-2017 and thereafter DGFT issued a Notification dated 18-12- 2019 by which import policy was amended and gold in any form was allowed only to be imported through nominated agencies as notified by the Reserve Bank of India in case of Banks and for other agencies by the DGFT. Thus, it is evident that on the date when the gold granules were imported i.e., on 21-9-2017, there was no restriction on its import and the restriction was imposed subsequently on 1812-2019 by the DGFT by way of Notification. Thus, when gold medallions and gold granules were imported, they were freely importable and the same was brought under the restricted category subsequently. 11. It is not the case of the respondent that it is a nominated agency. It is pertinent to mention here that the Circulars issued by the Reserve Bank of India apply where the gold is imported by nominated banks as notified by Reserve Bank of India and nominated agencies as notified by DGFT. The gold medallions as well as the gold granules fall under CTH 7114 19 10 and 7108 13 00 respectively. It is pertinent to mention here that the Circulars issued by the Reserve Bank of India apply in case the Banks nominate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... osed by or under the Act or any other law for the time being in force, would be liable for confiscation. Similarly, for dutiable or prohibited goods found concealed in any manner in any conveyance would also be liable to confiscation. As per Section 2(39) the term smuggling would mean in relation to any goods, any act or omission which will render such goods liable to confiscation under Section 111 or Section 113. Thus, clearly Section 111 of the Customs Act prohibits any attempt at concealment of goods and bringing the same within the territory of India without declaration and payment of prescribed duty. Term prohibited goods as defined under Section 2(33) means any goods, the import or export of which is subject to any prohibition under the Act or any other law for the time being in force but does not include any such goods in respect of which the conditions subject to which the goods are permitted to be imported or exported have been complied with. This definition therefore, comes in two parts. The first part of the definition explains the term prohibited goods as to mean those goods, import or export of which is subject to any prohibition under the law. The second part is exclu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hibited goods into India, they cannot be permitted to be re-exported. They can only be confiscated. As already pointed out, the petitioners were carrying gold as well as electronic goods. Electronic goods are obviously not prohibited items. They can be cleared after making declaration and paying the applicable customs duty. Gold is also not a prohibited item for import. It would only come under the regulated/restricted category. Of course, the Division Bench of the Madras High Court in the decision reported in 2016 (341) E.L.T. 65 (Mad.) (Malabar Diamond Gallery P. Ltd. v. Addl. Dir. General, Directorate of Revenue Intelligence, Chennai), went on to hold that though gold is not notified as one of the prohibited goods, when there is failure to comply with the conditions subject to which goods are to be imported, they are liable for confiscation. Prohibited goods has been defined in Section 2(33) of the Customs Act, 1962. The Division Bench held that the provision cannot be narrowly interpreted so as to hold that gold is not an enumerated prohibited goods to be imported into the country. Section 11A(a) defined illegal import as meaning the import of any goods in contravention of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... issues in public interest. 13. It is, therefore, evident that the gold could be imported only against a Special Import Licence or by the agencies authorised by the Reserve Bank of India. 14. The entire case of the writ petitioner/respondent is that they have purchased gold from Standard Chartered Bank which was meant for sale. The said question is essentially a question of fact and as such we need not consider the same in this proceeding as such a question will have to be determined by the statutory authority. 15. Having regard to the provisions of the Customs Act as also the 1992 Act, we are of the opinion that keeping in view the fact that a legal fiction has been created in terms of Section 3(3) of the said 1992 Act, there cannot be any doubt whatsoever, that gold would come within the purview of a prohibited item. A legal fiction as is well known must be giving its full effect. In Gajraj Singh Ors. v. State Transport Appellate Tribunal Ors. reported in 1997 (1) SCC 650 it has been held as under Legal fiction is one which is not an actual reality and which the law recognises and the court accepts as a reality. Therefore, in case of legal fiction the court believes something to e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d industries are so closely connected with each other that taking into account the balancing charge (i.e. deemed profits) before computing the 8% deduction under Section 80-E(1) would amount to extending the legal fiction within the limits of the purpose for which the said fiction has been created. We are unable to agree with the submissions of Shri Ranbir Chandra that reference to the language of Section 41 (2) in Cambay Electric case was only incidental. It is evident from the meaning and effect of Section 41(2) of the Act in that case, which it did. The two provisions namely Section 10(2) (vii) second proviso of the 1922 Act and Section 41(2) of the Act both create a legal fiction, difference in language notwithstanding. 17. In Aluminium Industries Ltd. v. Collector of Central Excise reported in 1998 (99) E.L.T. 486 (S.C.) = (1998) 9 SCC 404 , it has been held as under: - 4. By virtue of this proviso a legal fiction has been created. The price fixed under any law for time being in force has to be taken as the normal price of the goods. In that view of the matter, in the instant case, the price fixed by the notification dated 18-10-1978 will have to be taken as the normal price o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ption specified in column (2) of the Table below and falling under Chapter 71 of the First Schedule to the Customs Tariff Act, 1975 (51 of 1975), when imported into India by an eligible passenger, from so much of the duty of customs leviable thereon which is specified in the said First Schedule, as is in excess of the amount calculated at the rate as specified in the corresponding entry in column (3) of the said Table and from the whole of the additional duty leviable thereon under Section 3 of the said Customs Tariff Act. ... (2) The exemption is subject to the following conditions, namely:- the duty shall be paid in convertible foreign currency; the quantity of gold imported in any form shall not exceed ten kilograms per eligible passenger, and the gold is either carried by the eligible passenger at the time of his arrival in India or is imported by him within fifteen days of his arrival in India.... Explanation : For the purpose of this notification, eligible passenger means a passenger of Indian origin or a passenger holding a valid passport, issued under the Passports Act, 1967 (15 of 1967), who is coming to India after a period of not less than six months of stay abroad; and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s that goods are not prohibited goods, when import or export of which, does not include any such goods, in respect of which, the conditions subject to which the goods are permitted to be imported or exported have been complied with. The expression subject to any prohibition under this Act or any other law for the time being in force and compliance of the conditions, subject to which, the goods are permitted to be imported or exported, are the determining factors, to understand and to give effect to the meaning of the words, prohibited goods . 42. Literal interpretation of the words, prohibited goods and the contention that gold is not notified and therefore, to be released, would cut down the wide ambit of the inbuilt prohibitions and restrictions in the Customs Act, 1962 and any other law for the time being in force. (i) In Poppatlal Shah v. State of Madras reported in AIR 1953 SC 274 , the Supreme Court held that, It is settled rule of construction that to ascertain the legislative intent all the constituent parts of a statute are to be taken together and each word, phrase and sentence is to be considered in the light of the general purpose and object of the Act itself. (ii) It i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es with the context and promotes in the fullest manner the policy and object of the legislature. The paramount object, in construing penal as well us other statutes, is to ascertain the legislative intent and the rule of strict construction is not violated by permitting the words to have their full meaning, or the more extensive of two meanings, when best effectuating the intention. They are indeed frequently taken in the widest sense, sometimes even in a sense more wide than etymologically belongs or is popularly attached to them, in order to carry out effectually the legislative intent, or, to use Sir Edward Cole's words, to suppress the mischief and advance the remedy. (vii) In Commissioner of Sales Tax v. Mangal Sen Shyamlal reported in (1975) 4 SCC 35 = (1975) 4 SCC 35 : AIR 1975 SC 1106, the Apex Court held that, A statute is supposed to be an authentic repository of the legislative will and the function of a court is to interpret it according to the intent of them that made it . From that function the court is. not to resile. It has to abide by the maxim, ut res magis valiat quam pereat , lest the intention of the legislature may go in vain or be left to evaporate into t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Supreme Court held that, Contextual reading is a well-known proposition of interpretation of statute. The classes of a statute should be construed with reference to the context vis-a-vis the other provisions so as to make a consistent enactment of the whole statute relating to the subject-matter. The rule of ex visceribus actus should be resorted to in a situation of this nature. (xii) In State of Gujarat v. Salimbhai Abdulgaffar Shaikh reported in (2003) 8 SCC 50 , the Supreme Court held that,- Broadly speaking, therefore, an appeal is a proceeding taken to rectify an erroneous decision of a Court by submitting the question to a higher Court . ..It is well settled principle that the intention of the legislature must be found by reading the Statute as a whole. Every clause of Statute should be construed with reference to the context and other clauses of the Act, so as, as far as possible, to make a consistent enactment of the whole Statute. It is also the duty of the Court to find out the true intention of the legislature and to ascertain the purpose of Statute and give full meaning to the same. The different provisions in the Statute should not be interpreted in abstract but s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... into the territorial waters of the country, they become imported goods. At this juncture, it has to be seen, as to whether, such goods are legally or illegally imported, whether they fall within Section 11 of the Customs Act, 1962, which defines, an illegal import as, import of any goods in contravention of the provisions of the Customs Act, 1962 or any other law for the time being in force. Goods imported, contrary to the enumerated subject matters in chapters IV and IV-A of the Customs Act, 1962, which deal with prohibition on importation and exportation goods and detection of illegally imported goods prevention and disposal thereof, more fully described in Sections 11 and 11A of the Act, are also to be treated as prohibited. Goods imported from outside of the territory waters of the country, against any prohibition or restriction under the Customs Act, 1962 or any other law, time being in force, are to be treated as prohibited goods. 79. There is one thing to state that gold is not one of the enumerated prohibited goods and another, to state that goods are not permitted to be brought into the country, by smuggling, which, means any act or omission which would render such goods l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on of Foreign Exchange and Prevention of Smuggling Activities Act, 1974, rules framed by way of delegated legislation, like the Baggage Rules, 1998, framed in exercise of the powers conferred under Section 79 of the Customs Act, 1962 or for the matter, Section 77 of the Customs Act, 1962, which mandates, the owner of the baggage for the purpose of clearing the goods, to make a declaration of the contents of the baggage to the proper office and also the customs Notification No. 3/2012, dated 16.01.2012, that only passengers of Indian origin or a passenger in possession of a valid passport, issued under the Passport Act, 1967, who have stayed abroad for six months and above alone are eligible to import gold of foreign origin and clear the same on payment of customs duty, at the rate prescribed. 116. Proceeding then to deal with the prayer for provisional release, the Madras High Court pertinently observed as under:- 93. While considering a prayer for provisional release, pending adjudication, whether all the above can wholly be ignored by the authorities, enjoined with a duty, to enforce the statutory provisions, rules and notifications, in letter and spirit, in consonance with the o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... seized and liable for confiscation, can be released provisionally, pending adjudication, and in that context, the role of the Courts, in exercise of the powers, under Article 226 of the Constitution of India, should be confined only to test such satisfaction, arrived at, by the competent authority, with regard to the objects of the Customs Act, 1962 and any other law for the time being in force. When the competent authority, under the Customs Act, 1962, makes a plea that there is a prima facie case of smuggling and that the appellant has failed to discharge the burden, in terms of Section 123 of the Customs Act and when the adjudication proceedings are pending, we are of the considered view that it would be appropriate to direct provisional release? **** **** **** 100. Going through the material on record, and in the light of the decisions considered, in particular, Om Prakash Bhatia's case (cited supra), we are of the considered view that the discretion exercised by the competent authority, considering the objects of the Customs Act, 1962, or any other law for the time being in force, cannot be held as not in conformity with the Customs Act, 1962, or any other law, for the ti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iable to confiscation under Section 111 or Section 113 of the Act. **** **** **** 17. The notification issued by the Central Government in exercise of the powers conferred by Section 25(1) of the Act exempts the articles enumerated in the Table annexed when imported into India from payment of duty under the Act. The language used in the notification is plain and unambiguous. Therefore, we are required to consider the same in their ordinary sense. A construction which permits one to take advantage of one s own wrong or to impair one s own objections under a statute should be disregarded. The interpretation should as far as possible be beneficial in the sense that it should suppress the mischief and advance the remedy without doing violence to the language. From the wording of the above exemption notification, it is clear that the benefit of the exemption envisaged is for those goods that are imported. **** **** **** 21. In short, question before us is: whether goods that are smuggled into the country can be read within the meaning of the expression imported goods for the purpose of benefit of the exemption notification? We are of the view that smuggled goods will not come within the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... comes pertinent to note that the Act defines imported goods to mean any goods which are brought into India from a place outside. Undisputedly, the rough diamonds which formed the subject matter of consideration in Amba Lal had been imported. The principal question which however arose for the consideration of the Supreme Court was whether the importer could avail the benefits of the exemption notification once it had been found that the goods had been smuggled. It was in the aforesaid context that the Supreme Court observed that the since the goods had been smuggled into India, it would be antithetical and contrary to the purpose of the exemption notifications to accord the benefit meant for imported goods on smuggled goods. What Amba Lal seeks to espouse as a principle is the imperative of import conditions being strictly adhered to and in case of a violation of the conditions which may apply, an importer being rendered ineligible to benefits under an exemption notification. 120. Our attention was also invited to a recent decision rendered by the Gujarat High Court in Abdul Hussain Saifuddin Hamid v. State of Gujarat Neutral Citation No. 2020: GUJHC:39311-DB, where while dealing wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion goods and detection of illegally imported goods prevention and disposal thereof, more fully described in Sections 11 and 11A of the Act, are also to be treated as prohibited. Goods imported from outside of the territory waters of the country, against any prohibition or restriction under the Customs Act, 1962 or any other law, time being in force, are to be treated as prohibited goods. 52. There is one thing to state that gold is not one of the enumerated prohibited goods and another, to state that goods are not permitted to be brought into the country, by smuggling, which, means any act or omission which would render such goods liable to confiscation under section 111 or section 113. There may not be total prohibition for import of goods, but if import is not done lawfully, in other words against any prohibition or restriction, which are inbuilt in the Customs Act, 1962 or any other law for the time being in force, then such goods should fall within the definition of Section 2(33) of the Act. 53. A conjoint reading Sections 2(33), 11 or 11A of the Act and other provisions in the Customs Act, 1962, and any other law, for the time being in force, would also make it clear that imp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... also provides for detection, prevention and punishment for evasion of duty. 58. The expression, subject to prohibition in the Act and any other the law for the time being in force. In Section 2(33) of the Customs Act, has wide cannotation and meaning, and it should be interpreted, in the context of the scheme of the Act, and not to be confined to a narrow meaning that gold is not an enumerated prohibited good to be imported into the country. If such narrow construction and meaning have to be given, then the object of the Customs Act, 1962, would be defeated. 59. The Provisions in the Customs Act, 1962, dealing with prohibition/restriction or any other law for the time in force, have to be read into Section 2(33) of the Act. Section 11A of the Act, as to what is 'illegal import', cannot be thrown to winds while interpreting, what is prohibited goods , in terms of Section 2(33) of the Customs Act, 1962. To add, while interpreting Section 2(33) of the Customs Act, 1962, as to what is prohibition, imposed in other laws, for the time being in force, one cannot ignore, the Conservation of Foreign Exchange and Prevention of Smuggling Activities Act, 1974, rules framed by way of de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f goods. It also took note of the restriction of its import being allowed only against a license and in accordance with any public notice that may have been issued. 124. Our attention was then invited to the Notification of 28 January 2004 issued by the Ministry of Commerce and Industry which had taken note of the Export and Import Policy 2002-07 while dealing with the subject of import of gold and the amendments which were sought to be introduced in the import policy. Gold which fell under Exim Code 7108 while declared to be free was provided to be subject to RBI regulations. Para 3 is extracted hereinbelow:- 3. After amendment the following entries would read as under: S.No. Exim Code Item Description Policy Conditions relating to the Policy 1 27160000 Electrical Energy Free 2 71061000 Powder Free Subject to RBI Regulations. 3 71069100 Unwrought Free Subject to RBI Regulations 4 71069210 Sheets, plates, strips, tubes and pipes Free Subject to RBI Regulations. 5 71069290 Other Free Subject to RBI Regulations. 6 71081100 Non-monetary: Powder Free Subject to RBI Powder Regulations. 7 71081200 Other unwrought forms Free Subject to RBI forms Regulations. 8 71081300 Other semi-manufact ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rporation (HHEC); (3) State Trading Corporation (STC); (4) Project and Equipment Corporation of India Ltd (PEC); (5) STCL Ltd; (6) MSTC Ltd; (7) Diamond India Limited (DIL); (8) Gems Jewellery Export Promotion Council (G J EPC); (9) A Star Trading House (only for Gems Jewellery sector) or a Premier Trading House under paragraph 3.10.2 of Foreign Trade Policy; and (10) Any other agency authorised by Reserve Bank of India (RBI) ; 3. DGFT has specified minimum supply criteria of 15% by nominated agencies (other than the designated banks nominated by RBI and Gems jewellery units operating under EOU and SEZ scheme) and laid down procedure and condition to be followed by these nominated agencies (other than the designated banks nominated by RBI and Gems jewelry units operating under EOU and SEZ scheme) vide Policy circular No. 77 (RE-2008)/2004-09 dated 31.03.2009 as amended from time to time. Relevant notifications No57/2000-Cus dated 08.05.2000 and 52/2003-Cus dated 31.03.2003 have been suitably amended vide notification No. 106/2009-Customs dated 14.09.2009 allowing aforesaid nominated agencies duty free import of precious metals for supply to exporters for manufacture of jewellery an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1992, the Foreign Exchange Management Act, 1999 and the rules made thereunder, (v) the Commissioner of Customs may allow more than one Nominated Agencies to keep their imported goods in the same vault provided the quantities are kept segregated and separate accounts are maintained; (vi) the Nominated Agencies will be required to keep the imported duty free goods for supply to the exporters segregated from the quantities imported for domestic consumption on payment of duty; (vii) the Nominated Agencies shall be exempt from following the double lock system. Physical presence of the Bond Officer will not be required for bonding or ex-bonding the goods. No cost recovery charges would be payable by the Nominated Agencies; (viii) the Nominated Agencies can be visited by Custom officers for surprise audit or checks. The Commissioner should devise a system of random audit at least once in 6 months initially and once in a year subsequently; (ix) the exporters intending to receive precious metal from the Nominated Agencies will register themselves with their jurisdictional Asstt. Commissioners who will issue them a onetime Certificate specifying therein the details of their units such as nam ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to receive precious metal from the Nominated Agencies on submission of EP copy of the shipping bill Nominated agencies shall also monitor the export proceeds realization of such shipments against which they have replenished precious metal, on the basis of Bank certificate of realization in Appendix 22A to be submitted by exporters to the nominated agencies, as a proof of having exported the jewellery. 127. We also take note of the Customs Notification dated 17 March 2012 and which amended the relevant provisions of the Customs Tariff Act, 1975. The said Notification while dealing with gold dore bars, gold bars and coins provided as under:- S.No. Chapter or Heading or subheading or tariff item Description of goods Standard rate Additional duty rate Condition No. 318. 71 Gold dore bar, having gold content not exceeding 95% Nil 400[8.75%] 5 and 34 4 [321] 71 or 98 (i) Gold bars, other than tola bars, bearing manufacturer s or refiner s engraved serial number and weight expressed in metric units, and gold coins having gold content not below 99.5%, imported by the eligible passenger. 141[10%] Nil 35 487 [323. 71 (i) Gold bars, other than tola bars, bearing manufacturer's or refiner& ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ian origin or a passenger holding a valid passport, issued under the Passports Act, 1967 (15 of 1967), who is coming to India after a period of not less than six months of stay abroad; and short visits, if any, made by the eligible passenger during the aforesaid period of six months shall be ignored if the total duration of stay on such visits does not exceed thirty days and such passenger has not availed of the exemption under this notification or under the notification being superseded at any time of such short visits. 128. Our attention was then drawn to the Master Circular on Import of Goods and Services as issued by RBI on 02 July 2012 and which while dealing with the subject of gold import explained the extant position as under:- C.13. Direct Import of Gold AD Category - I bank can open Letters of Credit and allow remittances on behalf of EOUS, units in SEZs in the Gem Jewellery sector and the nominated agencies / banks, for direct import of gold, subject to the following i. The import of gold should be strictly in accordance with the Foreign Trade Policy. ii. Suppliers' and Buyers' Credit, including the usance period of LCs opened for direct import of gold, should no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reafter issued another Circular on 04 June 2013 regulating the import of gold by nominated banks and agencies. The relevant extracts of that Circular are extracted hereunder:- Attention of Authorised Persons is drawn to our AP. (DIR Series) Circular No. 103 dated May 13, 2013 on the captioned subject in terms of which, it was decided to restrict the import of gold on consignment basis by banks, only to meet the genuine needs of the exporters of gold jewellery. It has now been decided to extend the provisions of this circular to all nominated agencies/ premier / star trading houses who have been permitted by Government of India to import gold. Accordingly, any import of gold on consignment basis by both nominated agencies and banks shall now be permissible only to meet the needs of exporters of gold jewellery. 2. It has further been decided that all Letters of Credit (LC) to be opened by Nominated Banks / Agencies for import of gold under all categories will be only on 100 per cent cash margin basis. Further, all imports of gold will necessarily have to be on Documents against Payment (DP) basis. Accordingly, gold imports on Documents against Acceptance (DA) basis will not be permit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ther agency authorized by Reserve Bank of India (RBI). 3. Import of gold by the banks/agencies/entities specified in para 2 above, henceforth referred to as Nominated Agencies for the purpose of this Circular, shall be subject to the following: a. Import of gold in the form of coins and medallions is prohibited. b. It shall be incumbent on the nominated banks/agencies/entities to ensure that at least one fifth, i.e., 20%, of every lot of import of gold imported to the country is exclusively made available for the purpose of exports and the balance for domestic use. A working example of the operations of the 20/80 scheme is given in the Annexure to the RBI Circular dated 14-8-2013, as revised. c. Entities/units in the SEZ and EOUS, Premier and Star Trading Houses shall be permitted to import gold exclusively for the purpose of exports only and these entities shall not be permitted to clear imported gold for any purpose other than for exports (irrespective of whether they are nominated agencies or not). d. Gold made available by a nominated agency to units in the SEZ and EoUs, Premier and Star Trading Houses shall not qualify as supply of gold to the exporters, for the purpose of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Act, 1994 covering Service Tax, the Prevention of Money Laundering Act, 2002, the Foreign Trade (Development Regulation) Act, 1992, the Foreign Exchange Management Act, 1999 and the Rules made thereunder, vii. the Commissioner of Customs may allow more than one Nominated Agencies to keep their imported goods in the same bonded warehouse provided the quantities are kept segregated and separate accounts are maintained; viii. the Nominated Agencies shall be exempt from following the double lock system. Physical presence of the Bond Officer will not be required for bonding or ex-bonding the goods. No cost recovery charges would be payable by the Nominated Agencies; ix. the Nominated Agencies can be visited by Custom officers for surprise audit or checks. The jurisdictional Commissioner should devise a system of random audit at least once in 3 months during the first year and twice in a year subsequently; x. the Nominated Agencies, intending to clear gold to an exporter, shall file an ex-bond Bill of entry, clearly stating the name, address and details of owners/promoters/Managing Director/Partners etc of the exporter to whom the gold is being sold, with the jurisdictional customs off ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r) deposit the amount of duty calculated at the effective rate leviable on the quantity of precious metal not exported within 7 days of expiry of the period within which the jewellery manufactured out of the said quantity of gold was supposed to be exported. The Nominated Agencies will settle their claim with the exporter at their own level. The Nominated Agencies shall also report the cases of failure to export the jewellery made out of gold released to the exporter, to the Commissioner of Customs in whose jurisdiction the gold was originally warehoused; xvi. the customs officer shall ensure that all clearances of gold from the customs bonded warehouse are in accordance with the RBI circular, especially that the quantity of gold imported by the Nominated Agency, in the third consignment onwards from the date of notification of the RBI Circular dated 14-8-2013, as revised, does not exceed five times the quantity of gold contained in the exported products for which proof of export and realization of payments related thereto, has been submitted to the customs officer; xvii. the reconciliation of exports and calculation of quantities for subsequent imports shall be done nominated agen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ined gold shall be for the supply to the exporters only and remaining can be cleared in accordance with the RBI circular dated 14-8-2013, as revised; viii. for each consignment of gold dore bars imported, the license holder shall submit a report on utilization of gold dore bars, gold produced after refining, gold issued to exporters and the proof of export for the goods manufactured and exported by these exporters to the central excise officer under whose jurisdiction the refinery of the license holder is registered. A copy of the same, duly authenticated by the central excise officer, shall be submitted to the customs officer under whose jurisdiction the consignment was initially imported. 6. This Circular shall be deemed to be modified as and when, and in the manner RBI issues any circular to amend the policy related to import of gold as contained in their circular dated 14-8-2013 as revised. 131. In order to lay in place a comprehensive review of the circulars and notifications issued on the subject, we may, before parting on this subject, profitably refer to the notification of the Ministry of Commerce dated 30 November 2018 which reads thus:- Subject: Amendment of import polic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... anks) and DGFT (for other agencies). However, Import under Advance Authorisation and supply of gold directly by the foreign buyers to exporters under para 4.45 of FTP against export orders are exempted. This issues with the approval of Minister of Commerce Industry. 133. The last notification which merits consideration is one dated 05 January 2022 which too regulates the import of gold in purported exercise of powers conferred by Sections 3 and 5 of the FTDR. The relevant parts of that notification are extracted hereunder:- Subject: Amendment in import policy conditions of gold under Chapter 71 of Schedule - I (Import Policy) of ITC (HS), 2017 S.O. (E): In exercise of powers conferred by Section 3 read with Section 5 of FT (D R) Act, 1992, read with paragraph 1.02 and 2.01 of the Foreign Trade Policy, 2015-2020, as amended from time to time, the Central Government hereby amends the import policy conditions for gold in any form, other than monetary gold and silver in any form under Chapter 71 of ITC (HS), 2017, Schedule- I (Import Policy) as under: ITC (HS) Code Item Description Policy Existing Policy Condition Revised Policy Condition 71081100 Powder Restricted Import is allowed on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... concept of prohibition must therefore and necessarily draw colour and meaning from the specific exclusion of goods which have come to be imported or exported upon due compliance with the conditions prescribed. If compliance with conditions for import or export were irrelevant and the expression prohibition were to be understood in absolute terms, there clearly does not appear to be any justification for the definition clause to also deal with those goods which enter the territory of India after complying with the various conditions for import that may have been prescribed. In our considered opinion, this is the first aspect which appears to indicate that the word prohibition is intended to also extend to a restriction or regulation under the Act. 135. When one travels further to Section 11 of the Act, the aforesaid intent becomes further evident. Section 11 comprises the power to prohibit importation or exportation of goods. The provision empowers the Union Government to prohibit the import or export of goods of any specified description either absolutely or subject to such conditions (to be fulfilled before or after clearance) .. . The language of the provision thus clearly indic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the territory of India. However what Section 3(3) does is place even those goods, the import or export of which may be restricted or regulated under an order issued under sub-section (2) thereof, to be placed in the category of prohibited goods as contemplated under Section 11 of the Act. This too would appear to lend credence to the word prohibition as used in Section 2(33) of the Act extending even to goods, the import or export of which, is restricted or regulated. In any case the concept of prohibited goods must necessarily be understood and interpreted on a conjoint reading of Sections 2(33) and 11 of the Act along with Section 3 of the FTDR. 140. The learned amicus had commended for our consideration subsection (4) of section 3 of FTDR and which according to him has significantly altered the landscape against which the expression prohibited goods is liable to be understood. According to Mr. Gulati, Section 3(4) which came to be introduced in terms of Act 25 of 2010 clearly confers an overriding effect upon the provisions of the FTDR and any orders that may be issued thereunder. It was his submission that Section 3(4) encapsulates the clear intent of the Legislature to mand ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f prohibition as explained and interpreted by us in the preceding parts of this decision. 143. We further find that sub-section (4) of Section 3 also uses the expression prohibited . Forming part of the larger umbrella of the policy making power as well as the authority to regulate foreign trade and which is the subject of Section 3 itself, the word as appearing therein cannot possibly be read or interpreted in a manner distinct or different from what we have noted hereinabove. 144. For the purposes of reiteration, we step back to Section 3(2) and the power of the Union Government to prohibit, restrict, or regulate the import or export of goods and the said order resulting in the goods covered therein being placed by way of a statutory fiction in the category of prohibited goods under Section 11 of the Act. In our considered opinion, Sheikh Md. Omar has clearly enunciated the meaning to be assigned to prohibited goods and as defined by Section 2(33). The enunciation of the legal position as appearing in Sheikh Md. Omar cannot be said to have been diluted in any manner by the introduction of sub-section (4) of Section 3 of the FTDR. In any view of the matter, the dictum laid down in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rescriptions forming part of the ITC (HS). Those restrictions which are clearly referable to Section 5 of the FTDR and the relevant provisions of that enactment would clearly be a restriction imposed under a law for the time being in force. Once the concept of prohibited goods is understood to extend to a restrictive or regulatory measure of control, there would exist no justification to discern or discover an embargo erected either in terms of Section 11 of the Act or Section 3(2) of the FTDR. This more so since, for reasons aforenoted, we have already found that the power to prohibit as embodied in those two provisions itself envisages a notification or order which may stop short of a complete proscription and merely introduce a restriction or condition for import. 148. A concluding note then on the various precedents which were cited for our consideration. We note that in Becker Gray, the Supreme Court had found that Section 12 of the Sea Customs Act did not extend to an undervaluation of goods. It must however be borne in mind that Section 111 of the Act clearly contemplates undervaluation of goods resulting in that transaction falling in the category of improper import and thu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e framing of monetary policy and it cannot be recognised to have been conferred with any statutory authority or jurisdiction to regulate the import or export of goods. It was in the aforesaid backdrop that the learned amicus had sought to draw support from the decision of the Karnataka High Court in Sri Exports. 151. We deem it apposite to note that Sri Exports essentially turned upon the fact that gold medallions had been imported prior to a restriction coming to be imposed by the Union Government. Admittedly, the gold granules too had been imported prior to a notification being issued by the DGFT apprising all that in terms of the amended import policy, gold could be imported only through nominated agencies as notified by the RBI. Sri Exports essentially rested upon the aforesaid circumstance. In any case that decision cannot be read as a precedent ruling against the authority or the power of the RBI to formulate a regulatory measure with respect to import of gold for reasons which follow. 152. Sri Exports had also noticed the response submitted by the Central Office of State Bank of India while responding to a query raised by the Principal Commissioner of Customs. The question w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the subject. We express our gratitude to learned counsels for having taken out their valuable time to assist the Court. OPERATIVE DIRECTIONS 156. The Court holds that an infraction of a condition for import of goods would also fall within the ambit of Section 2(33) of the Act and thus their redemption and release would become subject to the discretionary power of the Adjudging Officer. For reasons aforenoted, the Court finds no illegality in the individual orders passed by the Adjudging Officer and which were impugned in these writ petitions. 157. Accordingly, and for all the aforesaid reasons, the Court finds no merit in the challenge raised to the impugned orders in the present batch of writ petitions. They shall, consequently, stand dismissed. ---------------- Notes: 1. 112 Penalty for improper importation of goods, etc. Any person, (a) who, in relation to any goods, does or omits to do any act which act or omission would render such goods liable to confiscation under section 111, or abets the doing or omission of such an act, or (b) who acquires possession of or is in any way concerned in carrying, removing, depositing, harbouring, keeping, concealing, selling or purchasing, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der this section shall be twenty-five per cent. of the duty or interest, as the case may be, so determined: Provided further that the benefit of reduced penalty under the first proviso shall be available subject to the condition that the amount of penalty so determined has also been paid within the period of thirty days referred to in that proviso: Provided also that where the duty or interest determined to be payable is reduced or increased by the Commissioner (Appeals), the Appellate Tribunal or, as the case may be, the court, then, for the purposes of this section, the duty or interest as reduced or increased, as the case may be, shall be taken into account: Provided also that where the duty or interest determined to be payable is increased by the Commissioner (Appeals), the Appellate Tribunal or, as the case may be, the court, then, the benefit of reduced penalty under the first proviso shall be available if the amount of the duty or the interest so increased, along with the interest payable thereon under section 28AB, and twenty-five per cent. of the consequential increase in penalty have also been paid within thirty days of the communication of the order by which such increas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the conditions (to be fulfilled before or after clearance) subject to which any baggage may be passed free of duty. (3) Different rules may be made under sub-section (2) for different classes of persons. 6. As published on the official website of Directorate of Revenue Intelligence, obtained from https://dri.nic.in/writereaddata/dri_report_dat_1_12_20.pdf 7. Report published by the Indian Gold Policy Centre, IIM-Ahmadabad IGPC has been sent up under a grant from the World Gold Council and was closely with the Government and the Industry for providing meaningful policy advisory. Report on ‗Gold Smuggling in India and its Effect on Bullion Industry , as obtained from https://www.iima.ac.in/sites/default/files/2023-06/Maria%20Immanuvel.pdf 8. Lok Sabha, Unstarred Question No. 28 titled Gold Smuggling Cases , as on Session IV answered on September 14, 2020 as obtained from https://sansad.in/ls/questions/questions-and-answers. 9. The case of Union of India v. Agricas LLP, (2020) SCC OnLine SC 675 was one where the constitutional validity of the notification issued by the Central Government under Section 3 of the FTD R Act was assailed for imposing quantitative restrictions on impo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which the balance-sheet of the Bank shall be drawn up and in which the accounts shall be maintained; (n) the remuneration of Directors of the Bank; (o) the relations of the scheduled banks with the Bank and the returns to be submitted by the scheduled banks to the Bank; (p) the regulation of clearing-houses for the 5[the banks (including post office savings banks)]; 6[(pp) the regulation of fund transfer through electronic means between the banks or between the banks and other financial institutions referred to in clause (c) of section 45-I, including the laying down of the conditions subject to which banks and other financial institutions shall participate in such fund transfers, the manner of such fund transfers and the rights and obligations of the participants in such fund transfers;] (q) the circumstances in which, and the conditions and limitations subject to which, the value of any lost, stolen, mutilated or imperfect currency note of the Government of India or bank note may be refunded; and (r) generally, for the efficient conduct of the business of the Bank. 7[(3) Any regulation made under this section shall have effect from such earlier or later date as may be specified ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... following information was provided: Total Amount of Gold Seized Year 2020 2154.58 kgs 2021 2383.38 kgs 2022 3502.16 kgs 2023 (up to February) 916.37 kgs In response to question (c), it was stated that Customs as well as the DRI keep constant vigil and take operational measures. Further that Modus Operandi Circulars related to the methods used by smugglers are issued In response to questions (d) and (e), it was provided that the NIA is undertaking investigations. (The same has been extracted from https://sansad.in/rs/questions/questions-and-answers) 15. 132. False declaration, false documents, etc. Whoever makes, signs or uses, or causes to be made, signed or used, any declaration, statement or document in the transaction of any business relating to the customs knowing or having reason to believe that such declaration, statement or document is false in any material particular, shall be punishable with imprisonment for a term which may extend to 1[two years], or with fine, or with both. 16. - 113 (b) any goods attempted to be exported by land or inland water through any route other than a route specified in a notification issued under clause (c) of section 7 for the export of such go ..... X X X X Extracts X X X X X X X X Extracts X X X X
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