Burden Under Customs Act To Prove Dutiable/ Prohibited Goods Not Meant For Smuggling Lies On Person Found In Possession: Telangana High Court

The Telangana High Court recently upheld the action of Customs officials seizing gold bars worth over Rs 2.3 crore from petitioners who had arrived in India at the Rajiv Gandhi International Airport in Hyderabad, from Bangkok.

The Court's reasoning hinged on the Customs Act, which places burden of proof on the person from whose possession the dutiable or prohibited goods, as the case may be, are seized (Section 123).

Division bench of Justices P. Sam Koshy and N. Tukaramji said this burden became substantial due to the petitioners' lack of an invoice for the gold, not having with them the requisite custom fee, and their failure to declare it at customs. The significant quantity of gold (over 3.7 kgs) further added weight to the suspicion, suggesting it wasn't for personal use.

The petitioners argued that they had legally purchased the gold and intended to declare it upon arrival, but were intercepted before reaching the customs declaration counter.

Court however took adverse view of their attempt to use the green channel, designated for travellers with nothing to declare. This action, the court believed, indicated an attempt to avoid customs duties and proper procedures, strengthening the customs department's case.

The petitioners' argument of potentially re-exporting the gold held no ground either. The court pointed that re-export rules under Section 80 of the Customs Act require a prior declaration under Section 77, which the petitioners neglected to do.

Finally, the court addressed the issue of confiscation and disposal. Central Government notification 31/1986 lists gold as an item that can be disposed of immediately after seizure due to its ease of marketability (Section 110(1A)). This provision became relevant because the court found the seizure justified based on the lack of declaration, large quantity, and attempt to bypass customs. Interestingly, the petitioners didn't contest the possibility of confiscation, only the initial seizure.

“Further taking into consideration the stand that the two petitioners took in the course of the interrogation wherein they have specifically stated that the gold was not purchased by them and it was given to them by some unknown persons at Bangkok and to be handed over to some unknown person at Hyderabad after coming out of the airport, gives a clear picture of the intention of the petitioners to smuggle the gold into India from Bangkok.”

While dismissing the writs, the bench noted that it could reach the conclusion with 'no hesitation' that the actions of the respondents in seizing the gold were not illegal or arbitrary.

Case tile: Shaik Mohammed Sadiq vs The Principal Commissioner of Customs & batch

Case no: WP 28523 of 2023 & other

Counsel for petitioner: N Krishna Sumanth

Counsel for respondent: Dominic Fernandes senior standing counsel for CBIC

Citation: 2024 LiveLaw (Tel) 111

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