CESTAT Orders Absolute Confiscation Of Gold Smuggled Without Payment Of Customs Duty

The Delhi Bench of Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) has ordered the absolute confiscation of gold smuggled without the payment of customs duty.

The bench of Rachna Gupta (Judicial Member) and Hemambika R. Priya (Technical Member) has observed that the gold was of foreign origin. It is also established that the appellants were attempting to smuggle the gold without payment of duty. The legal import of gold is governed by certain conditions, which the appellant does not fulfil.

The appellants arrived at New Delhi Airport from Bangkok and walked through Green Channel, and they were all intercepted near the exit gate of the Customs Arrival Hall. The appellants were asked whether they were carrying any dutiable goods or gold, to which they replied in the negative. They were diverted to scan of their baggage through the X-ray machine, and nothing objectionable was noticed in their baggage. All the appellants were made to pass through the door frame metal detector installed in the arrival hall, where a strong and long sound was heard when the appellant walked through the metal detector. No sound was heard when Ms. Sunita Luthra passed through. The personal search was conducted in the Customs Preventive Room in the presence of two witnesses. The searches resulted in the recovery of the gold from the appellants.

One bill for 1225.4 grams of gold in the name of Ms. Sunita Luthra was produced by Shri Rakesh Luthra (one of the appellants). The recovered gold was seized under different seizure memos under Section 110 of the Customs Act, 1962, on the reasonable belief that it was liable to be confiscated under Section 111 of the Customs Act, 1962.

The appellant contended that the demand for customs duty under Section 28 of the Customs Act, 1962, is based on the extracted statement of the appellant. It is settled law that unless the statement is corroborated by any other evidence, it cannot be admitted as evidence. There is nothing in the order or the show cause notice to show that the appellant had herself brought 2000 grams of gold apart from 1965. 4 grams, allegedly brought by her husband. The statement has been misinterpreted by the Commissioner to hold that the appellant had herself brought gold in the past.

The department contended that, as per Baggage Rules, 2016, on arrival at an international airport in India, passengers should proceed to the Red Channel and make a declaration to the customs officers in case they carry any prohibited or controlled items or any dutiable commodities. Passengers with bona fide baggage, as permissible under Baggage Rules, 2016, can opt for exit through the Green Channel. Passengers walking through the Green Channel with dutiable or prohibited goods when apprehended are liable to prosecution, penalty, and confiscation of goods. The import of “gold is permissible for the eligible passenger subject to fulfilment of condition 41 of Notification No. 50/2017-Cus dated June 30, 2017, as amended by Notification No. 25/2019-Cus dated July 6, 2019, which includes the conditionality of staying abroad (with permissible short visits). However, the appellants were frequent flyers and had visited India almost every month. Consequently, they did not satisfy the condition of being an “eligible passenger.”.

The tribunal held that all the appellants attempted to smuggle the gold with the intention of evading customs duty by not declaring the non-bonafide baggage, which was commercial in nature. It is also established that the appellants were “ineligible passengers to import gold in terms of Notification No. 50/2017-Cus dated June 30, 2017, and also provisions of the Foreign Trade (Development and Regulation) Act 1992, the Foreign Trade (Exemption from Application of Rules in Certain Cases) Rules 1993, and Foreign Trade Policy 2015–20. Section 80 of the Customs Act, 1962, provides for “temporary detention of baggage," which is applicable in respect of only to those goods for which a true declaration has been made under Section 77.

Counsel For Appellant: Girijesh Kumar

Counsel For Respondent: A.S. Hasija

Case Title: Rakesh Luthra Versus Commissioner of Customs

Case No.: Customs Appeal No. 50650 of 2020

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