Action Of Customs Assistant Commissioner In Selling Gold Jewellery Belonging To Assessee Is Illegal: Bombay High Court

The Bombay High Court has held that the action on the part of the Assistant Commissioner of Customs in disposing of or selling the gold jewellery belonging to the petitioners or assessee subject matter of the proceedings was illegal and unconstitutional.

The bench of Justice G. S. Kulkarni and Justice Jitendra Jain has directed the respondents or department to restore to the petitioners an equivalent amount of gold, namely 1028 gms, or to compensate the petitioners by making payments equivalent to the market value of the gold, as of date.

The petitioners were Iranian nationals. They arrived at Chhatrapati Shivaji Maharaj International Airport, Mumbai, by Oman Air Flight. The petitioners were wearing gold ornaments (bangles) with a net weight of 1028 grams. They were intercepted by the customs officials at Mumbai Airport, and the gold bangles worn by them were seized by the customs officials.

The Assistant Commissioner initiated proceedings under Section 110(1B) of the Customs Act so as to obtain an order from the Court of Metropolitan Magistrate for the identity of the gold jewellery for disposal of the gold jewellery. The application was allowed by the Metropolitan Magistrate.

The Deputy Commissioner of Customs issued a letter of authority authorizing the Air Customs Superintendent, Gold Disposal Section, to withdraw the gold jewellery packages from the strong room for the purpose of depositing them in the India Government Mint, Mumbai.

A show cause notice was issued to the petitioners, calling upon the petitioners to explain why the seized gold jewellery ought not to be confiscated and penalties imposed. However, before the show cause notice could be taken to its logical conclusion and an adjudication order could be passed, the gold jewellery belonging to the petitioners was sold by the State Bank of India.

The petitioner raised an important issue as to whether the action of the department to sell or dispose of the gold jewellery of the ownership of the petitioners, as seized from them, without notice to the petitioners, and before an order of confiscation under Section 111 of the Customs Act, 1962, can be said to be legal and valid.

The petitioner contended that the action of the department of seizure of the petitioners' gold jewellery and its disposal was patently illegal, being in breach of the provisions of not only the Customs Act but also the rights guaranteed to the petitioners under Article 300A read with Article 14 of the Constitution of India.

The department contended that disposal of the gold jewellery in question would not amount to a sale. The power conferred on the customs authorities to dispose of gold has not been assailed by the petitioners. The notifications issued by the customs authorities are fully applicable. Neither the circular nor the statutory provisions are assailed by the petitioners, and on that count, the petition ought not to be entertained.

The court held that the principles of law that would be required to be applied are that once the action of the respondents is held to be void, ab initio, illegal, and unconstitutional, there can be no second opinion that the rights of the petitioners in regard to illegal seizure would be required to be restituted.

“We also cannot be oblivious to the directions as issued by the Central Government in passing the orders dated September 19, 2022, on the petitioners' revision, whereby the Central Government has permitted the petitioners to re-export the gold jewellery,” the court said.

Counsel For Petitioner: Anil Balani

Counsel For Respondent: Devang Vyas

Case Title: Leyla Mohmoodi Versus The Additional Commissioner of Customs

Case No.: Writ Petition No. 467 Of 2023

Click Here To Read The Order